Kotak Mahindra Bank Ltd. has joined the interbank funds-transfer service National Payments Corp. of India launched last fall. The Mumbai-based bank launched the service on March 24 for the bank’s customers across the country, an official at the institution tells PaymentsSource.
National Payments, a government-owned company, rolled out the service in November to enable customers of partner banks in India to exchange funds with one another (
To use the service, customers register with their banks, which will issue them a seven-digit mobile-money identifier and a mobile-banking PIN. To transfer funds, the sender first must download the mobile-money application and enter the PIN, the beneficiary’s mobile-phone number and mobile-money identifier, and the amount to be sent.
The beneficiary receives a text confirmation when the funds are sent, and he may deposit the funds into his account, withdraw them at an ATM, or approach a business correspondent to secure the cash. A business correspondent is a bank-appointed official who assists customers in performing basic banking functions on mobile terminals, mostly in rural areas.
The Reserve Bank of India permits banks to offer the mobile services to their customers, subject to a daily cap of 50,000 rupees (US$1,095 or 820 euros) per customer.
In November, ICICI Bank Ltd., HDFC Bank Ltd. and Axis Bank Ltd. were the biggest private banks, by customer base, among the seven founding institutions supporting the service. Some smaller state-owned banks have since joined in (
With more than 2 million customers in India, Kotak Mahindra is by far the largest new bank to launch the service. The institution plans to offer the service to customers for free for until June, after which it may assess a fee.
National Payments recently informed banks that it would charge remitting institutions 0.1 rupees (0.002 U.S. cents or 0.0015 euros) for every mobile transaction that flows through its switch beginning April 1. Such institutions as ICICI Bank and State Bank of India Ltd. have indicated they may impose a charge for the service at that time.
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