h r khan : customising mobile banking in india – issues and challenges address by shri h r khan, deputy governor of the reserve bank of india, at the fibac 2012 on “ sustainable excellence through customer engagement, employee engagement and right use of technology ”, organized by the federation of indian chambers of commerce and industry ( ficci ) and the indian banks ’ association ( iba ), mumbai, 5 september 2012. * * * the speaker acknowledges the contributions of shri g srinivas, shri subhas chand and shri. surajit bose of reserve bank of india. 1. distinguished delegates to the fibac 2012, ladies and gentlemen. as i was reading the theme of the conference “ sustainable excellence through engaged customers, employees and right use of technology ” three words ( sustainable, engaged and right use ) helped me to decide how i can use this opportunity to relate with all the stakeholders of the payment system industry to introspect the issues and challenges confronting customization of mobile banking in india. 2. i am sure you would all recollect how cumbersome it used to be get a draft for outstation payment, clearing used to take a lot of time, outstation cheques would take all the more time, reconciliation and maintaining books by the bank branches would require additional manpower and customers were never satisfied. during the last one decade, things have changed and changed at a rapid pace and all because of technology. the initial steps of tapping technology came in the form of adoption of the core banking systems ( cbs ) which led to near collapse of geographical location of parent branch. how many of us really need to visit our branches to transact business? not many i am sure as most of us would be tapping the technology led internet banking and interconnected atm network. our desktop pcs became our anytime bank branches. then came the next revolution – mobile banking which added anywhere to the truly anytime banking. weaning the customer from physical banking and building customer awareness and confidence in these non face - to - face modes of banking has been a herculean task for the banking industry. in this exciting and challenging journey, the reserve bank, as a pro - active regulator, has defined enabling policies and, at times, has goaded the industry in achieving the desired results. the governments, both at the central and the state levels, have also been taking measures in encouraging electronic payments and receipts, such as, electronic benefit transfers and e - mode of transactions for their receipts and payments

often not appreciated when citing these success stories that only one service, i. e., a remittance product, is being offered and not the complete bouquet of financial services envisaged by us. the other three products identified under financial inclusion can obviously not be offered by a non - bank. moreover, particular environments in a few countries enabled the non - bank led model to be successful viz. presence of a monopoly operator, very poor banking infrastructure and availability of a source – npci. bis central bankers ’ speeches national identification number. is it not surprising that the same success story has not been repeated by the same service operator in a neighbouring country? cross border remittance through mobile banking 14. an issue that has been often raised is that if mobile banking has the potential of reaching anywhere, why cross - border remittance through mobile banking is not permitted liberally or why it is not taking off? one of the regulatory challenges in encouraging inward remittance from abroad is to maintain a balance between regulatory - compliant flow of funds ( for example, whether they are bona - fide current / capital account flows ) and ease of transfer of funds to the beneficiary. given the higher level of anonymity in cross - border transactions, concerns on the associated aml / cft related risks and the fact, as has been acknowledged in a world bank report, that with a very few exceptions, supervision of m - money has really not been implemented effectively, reserve bank has allowed only banks and authorized entities to undertake such cross - border transactions. to obviate any operational difficulty in remitting and receiving funds, bank account - to - bank account cross - border remittance has been permitted under the money transfer service scheme ( mtss ). realizing the need for facilitating hassle - free withdrawal of funds at the beneficiary end, reserve bank has also permitted transfer of funds to the beneficiary ’ s account or to a pre - paid instrument ( ppi ) issued by banks which could be m - wallet also. the underlying rationale is to ensure flow of cross border funds through the banking channel only irrespective of the media, ( which could also be mobile sets ) opted for undertaking the transactions. customer ownership and grievance redressal 15. the most often faced problem in mobile banking is as to who owns the customer – the mobile network operator ( mno ) or the bank? whom shall the customer contact in case of