September 20, 2008
The front pages are still preoccupied with the carnage in the investment banking world, but yesterday the RBI quietly announced something which is going to be huge three years down the line: the draft guidelines for mobile banking. There’s an Indian Express article on it here, and the original guidelines are available here (plain HTML) and here (official PDF, 18 KB). Making transactions with a mobile phone instead of a card is finally official.
First, the bad news:
- Mobile banking is limited to existing bank account holders and is going to be linked to existing debit or credit card holders. The biggest advantage of mobile banking is that it’s much cheaper than transactions through debit or credit cards – the customer buys the mobile phone herself, and the merchant doesn’t need to buy a card swipe machine. This is why mobile banking is talked about as a way for banks to reach the poor, but if it’s going to be limited to existing account holders, that’s not going to happen. Score one against financial inclusion.
- You can’t use your mobile phone for a transaction of more than Rs. 2500, and you can’t have transactions totaling more than Rs. 5000 a day. Oh well.
Now, the good news:
- At least we finally have mobile banking guidelines for account to account transactions at all. Now that we do, banks can start pushing mobiles as a substitute for debit and credit cards instead of an addition to them. So it’ll probably take another few years given the pace at which the RBI works, but we’ll get there. It’s a shame about all the people who’ll have to wait till then though.
- The guidelines include inter-bank account transfers. Sweet! This means the money transfers aren’t going to be limited to people with accounts in the same bank as you.
- The RBI has told banks they can go ahead with bilateral or multilateral settlement agreements until there’s a nationwide settlement infrastructure in place. So it won’t be too long before basic services are launched.
This is going to be very interesting.
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Finance | Tagged: Bank account, consumer banking, financial inclusion, mobile banking, rbi, retail banking, transaction banking | 
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Posted by Aadisht
June 4, 2008
I have an article on how finance is actually infrastructure and financial sector reforms out in this month’s edition of Pragati. The link to the article gives you an excerpt and you’ll have to download the PDF version (slightly less than 2 MB) to read the full thing.
The article had a checkered history. I had almost finished researching it when I suddenly had to dash to Delhi. When I returned to Bangalore I fell sick and told Ravikiran and Nitin I wouldn’t be able to write it after all. The fact that I had no furniture in this point and writing would have to be done propped up against a wall may have contributed. Then I came to Bombay where I had a guesthouse with a dsek, and called up and offered to write it after all.
By this time I was five days over deadline and had to write it in a mad rush between ten and two in the morning at my guesthouse. The next day I had to check out of the guesthouse and didn’t have a new one to shift to, so I finished the article between noon and three in the afternoon while squatting in an unoccupied cabin next to an FX dealing room. Sadly, I had finished the bit about currency markets and was writing about financial inclusion and regulation by then.
Anyway, the result of all this was that I wrote the article in practically stream-of-consciousness style. As a result, not only was it a week over deadline, it was 1200 words over the word limit. It is a tribute to Ravikiran’s mad editing skillz that the article is now within the limit and still readable.
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Posted by Aadisht
November 6, 2007
The Jagadguru says:
What I am against is the deregulation of the banking sector. Cutting off or weakening the regulatory arm is not good for the country. Letz have private players, with a strong regulatory body, under the control of a democratically elected government. I think this will ensure the best of both worlds. We will have private players in the industry bringing in the much needed competition (and hence better service) and we will also have strong regulations ensuring that needy people are not sucked out of their blood.
…
The only way to stop such misuse is by having strong regulations on the market. Only strong regulations can stop ICICI kinda atrocity or zamindari system.
The RBI had come up with a regulation against employing goons or intimidation for collections two years ago. But ICICI kinda atrocity wasn’t stopped. Why is this?
Dumbhead free market fundamentalists will tell you it’s because regulation makes honest people overcautious while not changing the behaviour of rogues. But they are wrong. The true reason the strong regulation failed was because K V Kamath has not let the Jagadguru into his heart. When he surrenders himself to the Jagadguru, ICICI Bank will be transformed, and so will its outsourced collections agencies.
Even strong regulations are useless if we do not surrender ourselves to the Jagadguru.
Leave a Comment » | Business, Finance, Think Deeply | Tagged: collection agencies, collections, credit cards, goons, icici bank, jagadguru, lending, rbi, regulation, unsecured | Permalink
Posted by Aadisht
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