we have consciously adopted the bank led model for mobile banking, while the non - banks, including mobile network operators, have been permitted to issue mobile wallets, where cash withdrawal is not permitted as of now. the key to cheap and universal payments and remittances will be if we can find a safe way to allow funds to be freely transferred between bank accounts and mobile wallets, as well as cashed out of mobile wallets, through a much larger and ubiquitous network of business correspondents. the nachiket mor committee suggests the creation of payment banks as a step towards this goal. other suggestions include interoperable business correspondents who will get the scale economies to serve in remote locations, and the usage of nbfcs as banking correspondents. we will examine all this. in the meantime, interesting solutions are emerging. cashing out is important for remittances, because we have a large recipient population in the country, most of whom do not have access to formal banking services. we have recently approved the in - principle setting up of a payment system which will facilitate the funds transfer from bank account holders to those without accounts through atms. essentially, the sender can have the money withdrawn from his account through an atm transaction. the intermediary processes the payment, and sends a code to the recipient on his mobile that allows him to withdraw the money from any nearby bank ’ s atm. the system will take care of necessary safeguards of customer identification, transaction validation, velocity checks etc. we need more such innovative products, some of which mobile companies are providing. in india, despite the high mobile density, it is also a reality that most of the handsets are very basic ones and many of the mobile connections are prepaid subscriptions. these are important constraints. the rbi ’ s technical committee on mobile banking has recommended, among others, the need for a standardized and simplified procedure for registration / authentication of customers for mobile banking services, a cohesive awareness programme to be put in place, the adoption of a common application platform across all banks to be delivered to the customers independent of the handset being used, along with use of sms and ussd technology for providing necessary level of security ( through encryption ) for such transactions. the telecom regulatory authority of india ( trai ) has prescribed optimum service parameters, as also a ceiling on charges for provision of ussd services by telecom operators to the banks and their agents. we have a great opportunity for banks

daniel k tarullo : industry structure and systemic risk regulation speech by mr daniel k tarullo, member of the board of governors of the federal reserve system, at the brookings institution conference on structuring the financial industry to enhance economic growth and stability, washington dc, 4 december 2012. * * * it is a pleasure to be at brookings today for this forum on the industrial organization ( io ) of the financial industry. as i have suggested previously, when one considers the significance of issues concerning industry structure for the design of an effective and efficient regulatory system to contain systemic risk, it is surprising that relatively little research has been undertaken in this area, even in the aftermath of the financial crisis. 1 of course, good empirical research takes time, and i welcome this opportunity to contribute to a discussion of an agenda for research on industry structure. i will begin by briefly explaining why this agenda is both important and challenging. then i will address one issue of particular significance – that of scale and scope economies, especially as they relate to policy proposals directed at the too - big - to - fail ( tbtf ) problem in financial markets. the promise and challenge of an io research agenda for the financial industry the value of an io research agenda for shaping a regulatory system to protect financial stability lies both in ascertaining costs that may result from specific regulatory measures and in revealing industry dynamics that may suggest how regulatory measures may be more effective. the importance of understanding the costs of various regulatory measures is self - evident. as i will discuss shortly, io can help determine the circumstances in which firm size or industry concentration is associated with economies of scope and scale that carry social benefits. any reduction in such benefits would be an unintended cost of financial stability policies. conversely, if firm size or industry concentration is found to stem only from market power or from funding advantages associated with too - big - to - fail policies or perceptions, then some policies aimed at diminishing systemic risk would have the added benefit of mitigating market failures. less obvious, perhaps, is the potential for io research to inform financial stability regulation by illuminating industry dynamics that may not be intuitively apparent. for example, unlike firms in most other industries, large financial institutions transact with one another on a nearly continuous basis and regularly maintain contractual relationships carrying substantial future obligations. the daily operations of most firms in the financial industry depend to a much greater extent on the conditions of their competitors than do such operations of firms in other industries