RBI panel for simplified mobile banking

Inspired by high mobile phone penetration in the country, a Reserve Bank panel today suggested that customers should be allowed to make payments at merchant outlets and transfer funds by using mobile numbers.
It also recommended that banks should simplify system for mobile banking so that the facility could be availed on any type of phone handsets with suitable level of security.
Limit of unsecured transaction may be raised from the existing Rs 5,000 to Rs 10,000 depending upon bank's security policy and internal risk management control, it added.
"Customer may be able to make merchant payment using just his mobile number and M-PIN/OTP on the merchant interface... The merchant based interfaces can accept OTP (One-Time Password) for authentication," said the RBI-appointed expert panel.

RBI Governor Raghuram Rajan in September had set up the committee to expand the reach of mobile banking to examine possibility of using encrypted SMS based fund transfer.
The RBI has given approval for mobile banking services to 80 banks, of which 64 have commenced operations. The customer base of banks who have subscribed to mobile banking services stands at nearly 30 million as of October 2013.

The mobile banking has been reflecting a growing trend with the volume and value increasing by 108.5 per cent (53.3 million in 2012-13 versus 25.56 million in 2011-12) and 228.9 per cent (Rs 59.9 billion in 2012-13 against Rs 18.21 billion in 2011-12), respectively, according to RBI.

The report further said the Government can explore the options of offering fiscal incentives or economic subventions to stakeholders in order to ensure participation of various players.
It suggested that banks need to explore other means of facilitating customer/user registration process for mobile banking which does not require a visit to the bank branch.
The process of M-PIN generation, it said, may also be simplified without necessitating a visit to the bank branch.
"The customer may be able to set and change his M-PIN from the handset itself using authentication parameters defined by the banks permissible by their security guidelines," it added.

Another important recommendation of the panel is that 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.
It said Mobile Network Operators (MNOs) too can benefit by cooperating with banks in expanding mobile banking reach.
"Mobile banking can result in customer stickiness and reduce churn for MNOs. Mobile banking can increase revenue to MNOs and reduce costs to banks," it said.