Soon after mobile penetration started evolving into a big success story in India, policymakers voiced recognition of the fact that mobile telephony could become an important medium for achieving financial inclusion in the country. But many a regulatory hiccup has kept this movement from gathering momentum. Prospects of such hiccups getting smoothened gathered weight this week, with Trai and RBI reaching an understanding over how mobile banking would be regulated in India. Interconnection issues will be dealt with by Trai, while RBI will watch over banking aspects. At a time when Ulips are caught in a regulatory crossfire between Sebi and Irda, telecom operators would be grateful that they won’t suffer similar travails. Notwithstanding this neat regulatory division, problems remain with the way in which the bank-led model has been preferred to the one led by mobile operators. Global success stories of mobile banking delivering financial inclusion across under-banked populations have derived, after all, from the latter model rather than the former. RBI considers the bank-led model safer. And it is indeed the case that if mobile banking is to truly take off, security measures will need to be stepped up and consumer data will need to be provided greater protection than is available at present. The bottom line, however, is the extent of our ambitions. Even the RBI governor has conceded that the mobile operator-led model helps accelerate financial inclusion.
An inter-ministerial group set up to establish a framework for delivering financial services via mobiles put things more strongly: “The choice is not whether to embrace change or resist it. The choice is whether to drive change with a plan or be overtaken by it without one.” We have seen the government plan for change in various ways, whether via RBI increasing the daily ceiling for banking transactions through mobile phones or with the latest clarification on regulatory roles. But there is an important difference between allowing a scaling up of operations for existing bank customers—who can deposit, withdraw and transfer cash or simply check their account balance or pay their bills over the phone—and extending financial services to the unbanked population. If RBI and the government keep the bulwark up for the bank-led model for too long, they won't be doing mobile banking any favours.