India's Mobile Market Growth Gives RBI Pause

Ed Kountz | July 24, 2008, 09:20 AM

With Indian mobile phone subscriptions growing at about 8 million a month, mobile banking services have been available from Indian institutions (and the Indian operations of some non-Indian banks, including Citi) for several years. To help standardize and coordinate development, India’s central bank (the Reserve Bank of India, or RBI) has taken a leading role in helping qualify how such services should work within India, and in June 2008 published an extensive set of draft guidelines outlining its recommendations.

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Final guidelines are forthcoming ... but growth in India's mobile banking and payments market has apparently outstripped the RBI’s ability to keep up, and given RBI reason to urge caution. An RBI notice released July 22, located

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noted that, for banks which have seized the initiative and already rolled out mobile banking, “RBI has no objection for use of mobile channel to provide basic services such as mobile alerts for credit or debit entry, balance enquiry etc. which are in the nature of providing information, due care needs to be taken for permitting the channel for customers to initiate payment instructions.”

It recommends that banks keep on hold their mobile payment services till issuance of the final Guidelines, and dissociate themselves from any mobile based money transfer service which has not received explicit approval of RBI.