Mobile banking only for card holders: RBI

SMALL-ticket payments and remittances from mobile phones will become a reality soon.Keeping in mind the superior reach of mobile phones as a delivery channel, The Reserve Bank of India on Friday released its final operative guidelines for mobile banking.
The central bank has decided to keep the limit on the ticket-size for mobile banking at Rs 2,500 per transaction, and Rs 5,000 per day. Banks have also been allowed to put in place a monthly transaction limit, depending on the bank’s risk perception of the customer.
While the guidelines will enable lenders such as State Bank of India and Axis Bank to go ahead with their launch of mobile-banking services, the central bank has decided to restrict the services only to holders of debit and credit cards. The card user base in the country is 80 million, with 55 million debit card users and 25 million credit card users.
However, it comes as a blow to players who intended to use mobile banking to reach out to the underbanked in rural India. A number of microfinance institutions and mobile payment operators such as mChek, PayMate and Obopay had tied up to offer mobile-based financial inclusion products in the hinterland. Banks, however, have been allowed to use the services of banking correspondents for extending this facility to consumers.
Only Indian rupee-based domestic services shall be provided on the mobile-payment platform, and the use of mobile-banking for cross-border transactions have been strictly prohibited. Banks which are based, licensed and supervised in India will be allowed to offer such services. Further, only banks which have implemented the core banking platform will be allowed to offer mobile banking.
At the same time, the RBI has recommended that all mobile banking transactions are validated through a two-factor authentication system, thereby complying to the latest security and encryption standards. The RBI has also said the long-term goal of the mobile-payment framework in India would be to enable funds transfer from and account in one bank to any other account in any bank on a real-time basis, irrespective of the mobile network the customer has subscribed to. The guidelines also recommend that banks do not compromise on their know-your-customer and anti-money laundering guidelines. They will also be required to file suspicious transaction reports (STRs) to the Financial Intelligence Unit for all mobile banking transactions, as in the case of regular banking transactions.
It has also been recommended that banks explicitly state the risks to the customer and also get them to sign a contract before the service is adopted. It has also asked banks to make their mobilebanking services available across all phone networks.
The number of mobile phone connections in the country was at about 296 million at the end of July this year and it is growing at about 8-9 million per month, according to telecom regulator Trai. Banks have been exploring the feasibility of using mobile phones as an alternative channel of delivery of banking services. Some banks have also started offering information-based services like balance enquiry, stop payment instruction of cheques, transaction enquiry, location of the nearest ATM or branch, etc. Acceptance of transfer of funds, instruction for credit to beneficiaries of same or another bank in favour of preregistered beneficiaries have also started in a few banks, the RBI said.

3G, more than just a mobile phone

What are 3G phones?
Third generation mobile technology or 3G technology is one more stage in the transformation of the mobile phone from a simple communication device to a multi-function device. It was launched first in Japan in 2001. This technology which uses higher band width will enable users to send and receive data at speeds from 114 to 2000 kbps (or 2 Megabits per
second bps) depending on whether the user is stationary or in motion which is way over (6 to 35 times more) the speed offered by any landline modem. Hence a 3G system can be used as a modem for laptops to get access to the internet and it can take on the role of WAN (wide area network) or LAN (local area network). The goals of this new protocol are high quality multi-media and advanced global roaming (in-house, cellular, satellite, etc).
How different were the earlier generation phones?
The first generation phones introduced in the 1980s used analog radio technology. Japan launched the first commercial mobile phone system in 1979. By early 1990s, the second generation or 2G phones replaced the first generation. The main difference was that 2G phones were digital, which meant that the voice itself during a call is encoded to digital signals whereas in 1G it is only modulated to higher frequency, typically 150MHz and up. The other major advancement was that 2G phones allowed text messaging (SMS). 2G networks were built mainly for voice data and slow transmission.
But with rising user expectations the networks soon moved on to the 2.5G phones with general packet radio service (GPRS) that enables mobile phones to access certain websites. However GPRS can only go up to 144 bits per second compared to 3Gs 2 Megabits per second speed. Coloured screens with camera featured mobile phones, gaming and
MP3 music were also introduced at the 2.5G stage.
What are the new services that 3G promises?
Two main services are M commerce (mobile commerce) and global positioning. A 3G user can access, organise and carry out financial transactions, trade stocks, manage payments etc. Global positioning enables the user to know their current location, get information about traffic conditions and get directions to reach a certain place. Live streaming of radio and television to 3G handsets is seen as the future with some companies recently announcing these services.
What is the scenario for 3G phones in India?
The government came out with its 3G policy, including spectrum usage and spectrum pricing. Though Indian operators are yet to start 3G services, they seem ready to launch as soon as the government auction the spectrum which is likely to happen by end of year . A number of handset vendors have already introduced 3Gready phones in the country.BSNL and MTNL are planning to launch 3G by starting of year 2009 as they are sure about getting spectrum in their circles of operation.
How popular are 3G phones?
3G networks worldwide had 295 million subscribers by the end of 2007, which is about 9% of the worldwide subscriber base. The 3G telecom services generated over $120 billion dollars in revenues during 2007. In many markets, the majority of new phones activated were 3G phones. Second generation phones have been almost completely phased out in Japan and South Korea. Many mobile phone users are switching to 3G phones saying it is no
more just a phone or an advanced communication system but like a mobile personal computer.
What is the next anticipated development of mobile phones?
Work has already started on the next generation 4G phones, which it is claimed will be 50 times faster than 3G phones and this enhanced capacity is expected to enable three dimensional renderings and other virtual experiences. This phone, which is expected to be out by 2010, is expected to be able to receive data at 100 Mb per second on the move
and up to 1 GB per second while static. An entire DVD could be downloaded within a minute! The technology being worked on is supposed to increase download speeds by using multiple radio frequencies to the send the same data stream.