The Reserve Bank of India said in its latest Financial Stability Report that take-up of mobile banking in India has been encouraging but slower than expected over the last three years.

Only banks that are licensed and supervised in India by the Reserve Bank of India are allowed to offer mobile banking there. Currently, 78 banks including a number of regional rural banks and urban cooperative banks have been given permission to provide mobile banking services in India, the Central Bank said.

According to the Financial Stability Report, the mobile banking channel has the potential to be one of the key tools for achieving financial inclusion in India. "Helped by the rapid spread of use of mobile telephony, the growth in mobile banking has been encouraging over last three years," the report noted. "However, the growth and acceptance of mobile banking as a channel for accessing banking services has been below expectation."

Apart from low levels of awareness and acceptance, challenges for faster growth include the inability of banks to link mobile numbers with (bank) account numbers, a lack of compatibility of handsets with mobile banking applications, an absence of collaboration and revenue-sharing models between banks and mobile network operators and difficulties in getting a USSD (Unstructured Supplementary Service Data) channel in operation for mobile banking.

USSD is a mobile communications technology that provides an alternative to SMS text messaging for mobile banking.

Learn more about mobile banking and trends/statistics.