By 2012 the number of mobile banking subscribers in urban areas of India will reach 65 million, up from 24 million now, predicts Celent. However of these subscribers, only around 12 million will be "active users".

In addition, urban mobile bankers use the service as a "fifth channel" for accessing bank account information and instead turn to online banking and other methods to make payments.

However, this could be about to change, with regulatory changes enabling bigger ticket transactions, paving the way for a growth in merchant payments through handsets.

Meanwhile, people in rural areas, who are less likely to have bank accounts, are already far more liable to use their handsets for payments, says Celent.

The growth in rural mobile banking will be driven by government financial inclusion projects. Business correspondents, which act as banking representatives in rural areas, use mobile banking for their transactions. The employment guarantee scheme deployment is already happening over the mobile channel across 9000 villages.

Celent predicts that by 2012, 60 million rural users will use mobile banking through business correspondence. This growth is also being helped by regulatory changes, with the Reserve Bank of India relaxing KYC requirements.

Sreekrishna Sankar, Celent, says: "The rural mobile banking segment is a high growth area, due to the adoption of the business correspondent model and relaxed Know Your Customer norms, but financial literacy remains a big issue for retaining the rural adopters."

Separately, local press reports claim Nokia has hinted it is preparing to embark on a nationwide roll out of its mobile money system following a successful pilot in Pune.

The handset manufacturer teamed with Yes Bank on the six month pilot in February. A spokesman for told reporters a final decision on extending the service has yet to be taken but that feedback from the trial so far has been "extremely encouraging".