inching towards mobile banking..!!

Mobile banking has become a buzzword in many western economies. It envisages an infrastructure based on information technology whereby payments for small ticket items like cinema or plane ticket can be made through one's mobile phone. Moreover, money can be transferred from one person to another across geographies. It will offer sweeping advantages as it will reduce transaction costs and increase the speed of flow of money. Thus , a person in London will be able to send money to his parents in a remote village in India just by the use of mobile technology.

However, there are some demerits which can derail the phenomena of mobile banking. The task of ascertaining the identity of the customer can prove to be difficult and as such the technology can be misused by terrorists for funding of clandestine operations. Secondly, it can instigate fraudulent tendencies with regard to flow of capital in a country like india whose currency is not capital account convertible.

Moreover, the increased velocity of money transfer due to mobile banking can create unlimited amount of credit and thus it may severely hamper the duty of RBI with regard to taming of inflationary expectations by controlling credit.

The unique identity project recently launched by the government can be used along with mobile banking to ensure inclusive growth by ensuring the transfer of credit to the desired target segment through mobile phones and thus getting rid of middlemen.