To make electronic payments efficient and more secure, the Reserve Bank of India today said it will issue revised directions by October 11 to allow 'inter-operability' among prepaid payment instruments (PPIs). PPIs are the substitute for paper currency or cash that prepaid payments industry issues in the form of paper coupons, mobile wallets or electronic formats. It is expected that PPIs can inter-operate within six months of the revised directions, RBI said in the 'Statement on Developmental and Regulatory Policies' today. "Inter-operability amongst KYC compliant PPIs shall be implemented within six months of the date of issuance of the revised master directions, which will be issued within a week, i.e., by October 11, 2017," it said. The first guidelines for issuance and operations of PPIs came in April 2009 with the objective to create an ecosystem and earlier in March this year, the RBI asked for feedback on the PPI industry so far. "The feedback received has been examined and it has been decided to rationalise the operational guidelines with a view to encouraging competition and innovation and strengthening safety and security of operations, besides improving customer grievance redressal mechanisms," the RBI said. The RBI said revised framework will pay the way for inter-operability into the usage of PPIs, as per the vision for Payment and Settlement Systems in the country. The vision envisages for India to migrate to electronic payments and ensure that such payments are safe, secure, authorised, efficient and accessible. Among others, the regulator has also eased processes for cooperative banks to open the current account with the RBI that will enable them to maintain sufficient liquid funds for clearing or settlement, transactions of government securities, remittance services and currency chest operations. As of now, non-scheduled cooperative banks (NSCBs) face problems in opening current accounts with the RBI due to certain prescribed requirements. Reviewing directions on short selling in government securities (g-secs), the RBI said a short seller will not be needed not borrow securities for notional short sales when it is held in the held-for-trading/available-for-sale/held-to-maturity portfolios of banks.
It has also allowed settlement of G-secs by foreign portfolio investors (FPIs) on T+1 or T+2 basis. Further, to boost retail participation in G-secs, RBI in consultation with capital market regulator Sebi has allowed specified stock exchanges, in addition to banks and primary dealers, to act as aggregators for retail investor bids in the non-competitive segment for g-secs and treasury bills. Final guidelines on these will be issued by end-October. RBI has also initiated a number of steps for development of states' market borrowing programme including consolidation of their debt through reissuances and buyback to improve liquidity in state development loans (SDLs); weekly auction of SDLs and disclosing high-frequency data of state finances. "These guidelines will constitute the initial steps in overall reforms to be unveiled by the Reserve Bank of India over the next 12 months to reduce the currently inadequate reflection of risk asymmetries across states in the SDL market," the RBI said.
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