Transferring money or undertaking any other basic banking activity like balance enquiry by using a mobile handset was permitted by the Reserve Bank of India amid much fanfare last year. A year on, even the central bank now admits, the activity has not picked up as envisaged.

Availing banking services by using the mobile comes at a minimal cost, as low as Rs 50 a year or Rs 2-4 a transaction depending on the bank one chooses.

Technology, too, is not expensive, as even the cheapest of mobile handsets are Java-enabled, the platform required to support banking transaction. So, fee and technology are definitely not an issue for the customer.

Yet, with 21 banks currently providing the service out of 32 permitted by the regulator, the service has not caught on. "Awareness among bank customers to use the handset to do basic banking operations is still not there. And among those who are aware, many do not have the confidence to do a transaction, especially the older generation," said B R Bhatt, general manager of Corporation Bank [Get Quote].

The Mangalore-based bank, known as being more tech-savvy among public sector banks, launched the service soon after RBI allowed the facility. Though the bank has 100,000 customers who had enrolled for the mobile banking facility, only 4,000-5,000 accounts use the service on a regular basis.

Similarly, Union Bank of India [Get Quote], one of the earliest entrants in mobile banking, sees less than 10 per cent of the 26,246 mobiles registered for availing the service actually using it.

RBI had allowed fund transfer of Rs 5,000 a transaction and the cap for transactions at merchant establishments is Rs 10,000. Though banks are not seeing most customers exhausting the limits -- the average value for Corporation Bank is about Rs 1,500 a day -- they feel the limit needs to be enhanced.

The central bank admits the need for revising the limit. However, it also questions why low-value transactions are not facilitated.

"The transaction limits of Rs 5,000 and Rs 10,000 needs to be revised upwards. Banks point out that these limits do not permit transactions like airline ticket purchase, etc," said K C Chakrabarty, deputy governor of RBI, at a seminar in New Delhi on Friday.

Though Chakrabarty says banks' request to increase the cap is being contemplated, he also conveyed some concerns of the regulator.

"Are the banks targeting only the customers who can book airline tickets or such large-ticket transactions only? Mobile being a cheap mode for delivery which essentially facilitates low-value transactions why are low-value transactions not being facilitated?" Chakrabarty asked.

Bankers have suggested increasing the limit to Rs 25,000, thus bringing it in line with the automated teller machine transaction limit.

Banks also say they are facing difficulties in entering into a partnership with individual telecommunication service providers for enabling a mobile banking service.