Update on Regulation of Branchless Banking in India

Presenting CGAP's findings on branchless banking regulation in India
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This update of CGAP’s 2008 "Notes on Regulation of Branchless Banking in India" incorporates research conducted by CGAP in January 2010. It is one of 11 country updates produced by CGAP as a part of the G20 Access through Innovation (ATI) Sub-Group’s workplan.

The paper states that Reserve Bank of India issued a circular in 2006 that allowed banks to use third-party business correspondents (BCs) to deliver financial services outside bank branches. A 2009 revision to the circular removed key restrictions. Current legal framework for branchless banking in India includes regulations regarding agents, anti-money laundering/combating the financing of terrorism, and e-money. Guidelines issued by RBI in October 2008 provide that:

  • Only banks licensed and supervised in India and with a physical presence in India can offer mobile banking to customers;
  • Mobile banking services are limited to existing customers of banks;
  • Cross-border and foreign currency remittances are not allowed;
  • Services must be interoperable across mobile network providers within six months of offering;
  • Daily transactions are limited to approximately USD 110 for transfers and approximately USD 220 for purchases involving goods and services;
  • Banks offering mobile banking services must obtain a one-time prior approval of RBI.