Mobile banking framework unveiled; withdrawl pegged at Rs 5K

"The framework envisages creation of Mobile linked No-Frills Accounts by the Banks, which will have various transaction limits," said the Inter Ministerial Group (IMG) in its report to Telecom Regulatory Authority of India (Trai).

Under the framework, a person with mobile-linked account will be allowed to undertake five basic transactions through banking correspondents (BCs) or their sub-agents appointed by banks.

IMG, constituted by Cabinet Secretary in 2009, has suggested that 1.55 lakh post offices across the country should be used to provide banking services with the help of cellphones to people in rural areas.

As mobile banking is in the nascent stages in the country, the IMG framework aims at comprehensive set of rules and providing greater regulatory clarity.

The report assumes significance considering the growing number of mobile subscribers among the rural population and the disadvantaged sections. India has around 65 crore mobile phone subscribers, with many of them in unbanked areas.

IMG has suggested that people can keep money in their no-frills accounts, where there is no requirement of minimum deposit. Such account holders are not issued any chequebooks.

The framework has suggested that the Reserve Bank should exempt banks from issuing passbooksor statements to account holders to keep the transaction cost at the minimum.
The ceiling for withdrawal of money from such accounts has been suggested at Rs 5,000 per day and Rs 25,000 per month.

With mobile subscribers in rural areas far outstripping bank account holders, a large section of rural population now has access to mobile telephony but not to financial services.

The five basic financial transactions on such accounts (cash deposit, credit customer's mobile linked no-frills account, cash withdrawal, peer to peer transfer and balance inquiry) can be executed through a mobile based PIN system.

Transactions can be done through "Mobile Banking Points of Sale" or through bio-metric based "micro ATMs" of the BCs or their sub-agents, the report said.

IMG has identified different stakeholders in the framework and has defined their roles.

The group has also suggested that there should be a simplified common template for the Know Your Customer (KYC) requirements for the mobile-liked account, which is acceptable to all service providers.

It suggested that RBI may constitute a committee with key stakeholders to create a simplified common template for KYC requirements for the Mobile linked No-Frills Accounts, based on the norms and associated verification procedures evolved by UIDAI, which will be share-able across service providers.

It said that till such guidelines are finalised, the KYC requirements of no-frills accounts should remain applicable for mobiles, which will also facilitate transfer of funds of various Government schemes like MNREGS, to account holders.

As far as fee for such service is concerned, the IMG has recommended that the charges levied in this regard should be regulated by telecom regulator Trai and through competitive market forces, to ensure that they sufficiently cover costs incurred for secure communications without resulting in inordinate profits.

IMG suggested that a committee constituted by Trai may also draw up guidelines to ensure high availability of associated communication services.

Many banks are providing mobile banking facility in the country. Earlier this week, State Bank of India tied up with Airtel to provide banking facility through the use of mobile phone. Besides, ICICI Bank also tied up with Vodafone to offer similar services across the country.