The banking and monetary regulator, Reserve Bank of India, has refused mobile network operators from providing cash out facility to debit card holders until they provide services as banking business correspondents.
Announcing the apex bank's decision, RBI Deputy Governor HR Khan said, "We don't want to permit cash-out facility by the mobile network operators (MNOs). We are very clear that they should not bypass the banking regulations. However, this facility can be given to them if they work as business correspondents of banks."
Talking further on the use of mobile banking facility for cross border remittances, he said that security is a major concern in funds flow quality, Know-your-customer (KYC) rules and anti money laundering rules among others. He also said that India is one of the four or five countries which are a target of terrorists and so bank to bank remittances may be possible and that development is taking place in this area.
Cash out facility provides the customer the convenience of not having to visit an ATM or a bank to withdraw money. It is also a cheaper option as only one banking transaction takes place. For people living in rural areas, it is the only way to withdraw money from their accounts.
A banking correspondent is a bank's agent who provides banking services to people on their doorstep in unbanked areas.