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In the same order, mobile banking is getting wider acceptance, but the convenience it offers has its own share of risk. It is, therefore, even more important to be aware of the safeguards for the secure usage of this medium for financial transactions. Thousands of people from
rural areas across Indian states are likely to get their social security pension and wages paid under the National Rural Employment Guarantee Act (NREGA) Scheme with the help of mobiles in the near future.

Mobile banking pilots and full-scale operations are being conducted across different states of Indian Union and the entire eco-system is being managed by the government with the help of the Reserve Bank of India, other banks, leading telecom operators and technology implementation partners. The eco-system is important since banking regulations in India currently do not allow cash for exchange of another 'unit' such as 'airtime' in the case of mobiles. Only banks and the Indian Post (through money-orders) are currently allowed such transfers.

The country's financial regulatory body, Reserve Bank of India, has relaxed the norms for mobile banking by raising the caps on fund transfers as well as mobile-based payments. Continuing with its earlier announced draft guidelines for mobile banking services in India, RBI has increased fund-transfer limit from Rs. 2,500 a day to Rs. 5,000 a day.

The regulator has also provided a cap of Rs. 10,000 for purchases through mobile. The move was made after requests from banks to raise the limits for mobile banking transactions. According to RBI, banks should ensure mobile banking services to customers of all network operators. Long term goal of mobile banking is to enable funds transfer from account in one bank to any other account in the same or other bank in real time. The Central Bank is also planning to relax the registration procedure for mobile banking on a case-to-case basis, when banks apply for their licenses. Presently, banks are required to get a form signed by all their customers.

These guidelines definitely provide the vision of our regulators in terms of ensuring a secure payments environment. The specific focus on security is very welcome and the changes made to the transaction limits moving towards only daily limits will allow more flexibility to the customers for their payments as well as the banks for defining their risk parameters. A Rs. 10000 limit for purchase of goods / services covers most of the basic transactions except purchase of electronic / high-end luxury goods, or air-ticketing. However, it is hoped that this would be relaxed to a certain degree at some later stage once the confidence is gathered in the system to bring in all commerce into the mobile payments net.

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Dr. Gursharan Singh Kainth started his career as Lecturer at Post Graduate Dept. of Economics, Government College, Gurdaspur, and later at Khalsa College; Amritsar, specializes in Quantitative & Development Economics. Has the distinction of serving Punjab Agricultural Univ, Ludhiana, for more than 2 decades and remained Director-Principal of Saint Soldier Management & Technical Institute, Jalandhar. Currently, heading GAD Institute of Development Studies, Amritsar, a self-financed research institute. Has been honoured with various awards, including Guru Draunacharya Samman, Vijay Rattan Award, etc.
Article posted on December 1, 2008.