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Report : 'Mobile wallet adoption to remain low unless withdrawals okayed'

The first wave of telco-backed payments banks is slated to charge up India's mobile banking turf but explosive growth in mobile money transactions, mirroring the Africa experience, won't happen unless the Reserve Bank of India (RBI) allows direct cash withdrawals under mobile wallet services, leveraging the countrywide reach of telecom retail networks, mobile operators and sector analysts told ET.

If India's central bank agrees, a migrant construction worker in Delhi would, typically, be able to send cash directly from his mobile wallet to a brother in Bihar's backwoods, who in turn, would collect the cash at his nearest mobile retail point, even if there is no bank or ATM in the vicinity.

Wallet services are typically offered by telecom firms. A mobile wallet is a software application in a handset that functions as a 'virtual' container where cash is stored digitally and can be used for DTH service top-ups, mobile recharges, paying utility bills, buying rail to movie tickets.

But the RBI does not currently allow cash withdrawals from a mobile wallet to a telecom retail point. Which is why, a telco like Bharti Airtel has to team up with a partner bank to offer 'cash-outs' to a specific bank account under its wallet service.

This issue is likely to be partly addressed once telco-operated payments banks hit the scene as RBI's draft norms on payments bank licences suggest they can open customer accounts and offer remittance services, including cash-outs