State Bank of India (SBI), the country’s largest retail bank,
has confirmed it will launch its mobile banking service in early
July. Private sector rivals ICICI, Standard Chartered and Barclays
have all launched m-banking products in the country this year
(see RBI 585); other
state-run banks Bank of India and Union Bank of India are also
preparing to launch m-banking services.

With the rapid growth in the number of mobile phone subscribers
in India (about 261 million at the end of March and growing at
about 8 million a month, according to the country’s central bank),
Indian banks have been keen to explore the feasibility of using
mobile phones as an alternative, cheap distribution channel.

In addition to offering balance enquiries and transaction
alerts, SBI’s m-banking product will enable customers to transfer
funds up to INR1,500 ($35). The bank, which developed its m-banking
service in partnership with Indian telecoms provider Spanco
Telesystems, plans to add mobile wallet and merchant payment

An urgent need for guidelines

The launch from SBI coincides with the country’s central bank,
The Reserve Bank of India (RBI), publishing draft
operating guidelines to regulate the country’s rapidly developing
mobile banking market. The RBI stated: “There has been an
urgent need for a set of operating guidelines that can be adopted
by banks.”

The long-term goal of the mobile payments market in India is,
added the central bank, to enable funds to be transferred from an
account in one bank to another account in the same or any other
bank on a real-time basis “irrespective of the mobile network”. And
it warns that to meet the long-term objective of a nationwide
mobile payment framework in India, “a robust clearing and
settlement infrastructure operating on a 24×7 basis will be

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The m-banking launch by SBI comes at a busy time for the group.
It is still in the process of merging its six associate banks into
itself, and recently opened its 10,000th branch (see RBI 592).

At the end of June, SBI signed a multi-year remittances
partnership agreement with Western Union looking to capitalise on
India’s position as the number one remittance recipient destination
in the world, with more than $27 billion remitted into the country
in 2007.