The Hindu : Karnataka / Bangalore News : RBI frames norms for mobile banking

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Monday, Oct 13, 2008
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Karnataka

Karnataka - Bangalore

RBI frames norms for mobile banking

B.S. Ramesh

Only banks which have physical presence in India allowed to offer the service
All transactions can be based on Indian rupee and within the country

BANGALORE: Concerned over the lack of common rules relating to mobile banking in the country and the fact that more and more banks are now switching over to cellphones to inform their customers of banking transactions, the Reserve Bank of India (RBI), on October 8, came up with a set of operating guidelines for all commercial scheduled banks offering these services.

The RBI has issued circulars/directions to all commercial scheduled banks and asked them to adhere to certain norms it has formulated while dealing with customers through the mobile phones.

In its circular, the RBI says it has decided to regulate services through mobile phones as India has been witnessing an unprecedented growth in mobile telephony.

Banks, it says, have been exploring the feasibility of using mobile phones as an alternative channel of delivery of banking services.

The RBI notes that some banks have already started offering information based services like balance enquiry, stop payment instruction of cheques, transactions enquiry, location of the nearest ATM/branch services to their customers through mobiles. It says acceptance of transfer of funds instruction for credit to beneficiaries of same/or another bank in favour of pre-registered beneficiaries have commenced in a few banks.

It says only banks which are licensed and supervised in India and have a physical presence in India will be permitted to offer mobile banking services and that these services shall be restricted only to customers of banks and/or holders of debit/credit cards.

Besides, only Indian Rupee based domestic services should be provided through the mobile phone.

Restriction

The RBI has prohibited use of mobile banking services for cross border inward and outward transfers.

It has permitted banks to utilise the services of business correspondent appointed in compliance with its guidelines, for extending this facility to their customers.

Only banks which have implemented core banking solutions (CBS) will be permitted to provide mobile banking services.

It says that banks shall file Suspicious Transaction Report (STR) to Financial Intelligence Unit – India (FIU-IND) for mobile banking transactions as in the case of normal banking transactions.

Confidentiality

Acknowledging that information security is most critical to mobile banking services, it says the technology used to provide these services must, therefore, be secure and should be geared to ensure confidentiality, integrity and authenticity.

It says banks offering mobile banking service must ensure that customers having mobile phones of any network operator is in a position to avail of the service.

Restriction, if any, to the customers of particular mobile operator(s) is permissible only during the initial stages of offering the service, up to a maximum period of six months subject to review.

The long term goal of mobile banking framework in India, it says, will be to enable fund transfer from account in one bank to any other account in the same or any other bank irrespective of the mobile network a customer has subscribed to.

This will require inter-operability between mobile banking service providers and banks and development of a host of message formats.

Message formats

To ensure inter-operability between banks, and between their mobile banking service providers, banks have been asked to adopt the message formats like ISO 8583, with suitable modification to address specific needs.

It says banks have been permitted to offer this facility to their customers subject to a daily cap of Rs. 5,000 a customer for funds transfer and Rs. 10,000 a customer for transactions involving purchase of goods/services. Banks may also put in place monthly transaction limit depending on the bank’s own risk perception of the customer.

It says banks wishing to provide mobile banking services shall seek prior one time approval of the Reserve Bank of India, by furnishing full details of the proposal.

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