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June 15, 2008

RBI guidelines on mobile payments

Mukul Singhal of Canaan Partners has started an interesting discussion on the implications of the Reserve Bank of India's new Draft Operating Guidelines for Mobile Payments in India.
* This would bring services like eWallet / mWallet / Store value cards under RBI scanner and I see a regulatory risk in such businesses

* The bank has recognized the long term goal of mobile payments to enable Peer to Peer (or Peer to Business) money transfer. However; RBI has also limited this scope to bank accounts. Implications: I think businesses like Paypal might not pass regulatory hurdle in India. All operators & service providers have to partner with banks to enable payments involving mobile. I also don’t see any hope for relaxing this in future.

* RBI has also raised the entry barriers for new entrants. Banks have to take board approval for offering such services to their customers. It would mean longer sales cycle – good for existing players but bad for new ones.

Arun Natarajan is the Founder & CEO of Venture Intelligence, the leading provider of information and networking services to the private equity and venture capital ecosystem in India. View free samples of Venture Intelligence newsletters and reports.