For greater adoption of mobile banking in the country, a Reserve Bank of India panel has recommended that all mobile network operators (MNOs) load single mobile banking application on all new SIMs (subscriber identification modules), which use encrypted SMS (short messaging service) for transaction processing.

In the case of existing SIMs, the MNOs load the single mobile banking application in SMS encrypted environment and the common mobile banking application can be pushed over-the-air.

Further, the single mobile banking application may be pre-loaded in the handset, with the Government mandating all handset manufacturers / resellers in India. Handset manufacturers should burn the application on all new handsets.

The RBI’s technical committee on mobile banking suggested that the Government of India can explore the options of offering fiscal incentives / economic subventions to the stakeholders in order to ensure participation of various players to offer mobile banking solutions.

The central bank observed that the developments in mobile telephony, as also the mobile phone density in the country, with over 87 crore subscribers, presents a unique opportunity to leverage the mobile platform to meet the objectives and challenges of financial inclusion.

The committee, headed by B. Sambamurthy, Director, Institute for Development and Research in Banking Technology, recommended that customers should not be required to visit the bank branch for mobile number registration.

Alternate channels for mobile number registration may be made available, such as interoperable ATM network across banks as well as the Business Correspondent/ / agent network using biometric authentication, so that the customer can register the mobile number conveniently.

The process of M-PIN (mobile personal identification number) generation may also be simplified and standardized without necessitating a visit to the bank branch by the customer, so that the customer can be on-boarded in an easy manner and start transacting using mobile payments, and reduce barriers to entry.

For better authentication of the transaction by the bank, MNOs could facilitate the mobile banking transaction by providing the mobile number from where transaction is originated when customers transact using mobile banking application (Currently the mobile number in the header is suppressed).

For facilitating funds transfer using mobile banking, the remitting customer may be facilitated to effect person-to-person funds transfer using just the mobile number and bank or just the Aadhaar number of beneficiary.

To overcome the challenges faced by each bank in tying up with a large number of MNOs, and to facilitate the reach and usage of mobile banking through USSD (unstructured supplementary service data: a protocol used by mobile phones to communicate with the service provider's computers), there is a need for common USSD gateway for mobile banking.

A common USSD Gateway based mobile banking service offers an opportunity to provide convenient, cost effective and user friendly payment option for all customers and thus a very convenient mechanism for banks for furthering financial inclusion objectives of Government of India.

The committee observed that the limit of unsecured transaction (without end to end encryption) may be raised from the existing Rs.5000 to Rs.10000, subject to having certain velocity checks at the bank side.

The banks may take the decision of limit enhancement depending on their security policy and internal risk management control measures.

(This article was published on February 7, 2014)
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