Driven by the rapid growth in the number of mobile phone subscribers in India, the Reserve Bank of India (RBI) has finally issued guidelines for mobile banking.

Because the technology is relatively new and due care needs to be taken on the security of financial transactions, the RBI had earlier felt the need for a set of operating guidelines that can be adopted by banks. 

According to the guidelines, a transaction limit of $55 (Rs 2,500) will be imposed on all mobile banking transactions, and there will also be an overall cap of $110 (Rs 5,000) per day, per customer. The guidelines also say that the banks may also put in place a monthly transaction limit, depending on the bank’s own risk perception of the customer.

Banks are also required to put in place other risk mitigation measures such as a transaction velocity limit, fraud checks and AML checks, depending on the bank’s own risk perception.

There will also be a number of restrictions on implementing the service. Only those banks which are licensed and supervised in India and have a physical presence in the country would be permitted to offer mobile banking services, and it would be subject to one-time approval of the Reserve Bank of India, after furnishing full details of the proposal.

Proper levels of encryption and security are to be implemented at all stages of the transaction processing to ensure end-to-end encryption of the mobile banking transaction. Adequate safeguards would also be put in place to guard against the use of mobile banking in money laundering, frauds and so on.

The banks providing mobile banking services have to comply with the security principles and practices for the authentication of mobile banking transactions like validation through a two factor authentication - mPIN or any higher standard. X