Indian central bank sets out m-banking guidelines

On 22 September 2008, The Reserve Bank of India (RBI) issued guidelines on various mobile banking services that can be offered by providers in the country. This move has increased uncertainty over the future of remittances in India. According to the guidelines only banks, which are licensed, supervised and have a physical presence in the country are permitted to offer mobile services. These services have to be rupee-denominated domestic payments.

These guidelines prohibit cross-border transfers and are likely to stall the plans of firms such as PayMate, Obopay and Western Union of providing global remittance services through mobile phones. These guidelines make it mandatory to get mobile transactions verified by two-factor authentication with end-to-end encryption. The providers also have to ensure that regular money laundering and know your customer (KYC) rules are adhered to, and also have interoperability by using message formats as designed by Mobile Payments Forum of India (MPFI). The central bank further added that its long term objective is to create an infrastructure that enables real time transfer of funds to and from any bank and is independent of a mobile network.