NEW DELHI: With consumers gradually getting attuned to it and the growth of Mobile Apps and OTT requiring mobile banking, the Telecom Regulatory Authority of India has started an exercise to find the best way of making or receiving payments through the mobile.

As a first step, it has issued a Consultation paper on regulatory framework for the use of USSD for mobile financial services. Stakeholders have been sent a set of ten questions and have to respond by 31 August with counter-comments by 14 September 2016.

Keeping in view the success achieved by many countries in delivering financial servicesthrough mobile telephone, the Government of India, in November, 2009, constituted an Inter-Ministerial Group (IMG) to submit a report and recommendations on the framework fordelivery of basic financial services using mobile phones. The framework proposed in the IMGreport has been accepted as the basis for delivery of basic financial services using mobile technology by a Committee of Secretaries under the chairmanship of the Cabinet Secretary in April 2010. The IMG framework envisages opening of mobile linked ‘no- frills’accounts, which would be operated using mobile phones. These accounts would be held bybanks and the money would be stored in the banks and not in the users’ mobile phones; thecustomer would be able to perform five basic transactions cash deposit, cash withdrawal,balance enquiry, transfer of money from one mobile-linked account to another, and transferof money to a mobile-linked account from a regular bank account. The IMG framework alsoenvisaged compensation to the key players after taking into account the actual costs incurred bythem. In the IMG framework, TRAI was expected to provide the required regulatory framework governing the quality of service, provisioning and pricing of mobile services for delivery of basicfinancial services.

Mobile financial services can be delivered using any of the following communication modes:
(i) Interactive Voice Response (IVR)
(ii) Short Messaging Service (SMS)
(iii) Wireless Access Protocol (WAP)
(iv) Stand-alone Mobile Application Clients (Mobile Apps)
(v) Unstructured Supplementary Service Data (USSD)
(vi) Using SIM tool Kit (STK)

With about 22.5 crore Jan-dhan accounts in the country, more than 100 crore Aadhar cardissued to the citizens and more than 100 crore mobile connections in the country (of whichabout 45 crore are in rural areas), it was expected that the USSD-based mobile banking servicewould gain popularity amongst the unbanked/ under-banked population (the target masses of financial inclusion) with passage of time and would soon achieve a critical mass. However, evenafter two years since August 2014, when it became available to all GSM subscribers in thecountry, the progress of USSD-based mobile banking is below expectations. In May 2016,only about 37 lakh mobile banking transaction attempts (over USSD channel) reached NPCI’splatform (*99#). Clearly, something is amiss. The situation demands a comprehensive review toensure that the service which has successfully deliver.