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Chakrabarty for paperless, chequeless, cashless banking

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of India () Deputy Governor today called up on banks to begin a journey onto the path of paperless, chequeless and stating that the future of banking lies there.

"The next big challenge for our banks is to make banking paperless, chequeless and cashless," he told the sixth Banking Technology Summit organised by CII here.

"I know the answers to these questions are not easy and nobody has a readymade answer. But this should put us on the track to think differently and think big. It would definitely take time to achieve these goals but it is not impossible as it is already happening globally," he noted.

Noting that technology is changing the cultural and business landscapes beyond recognition, the deputy governor said the world over, organisations are using transformative power of technology to create business value for today, and step-function growth for tomorrow. And the banking sector cannot be any exception, he added.

With financial inclusion gaining faster currency, he admitted that role of the banker is very challenging today as at one end of his spectrum lies the demand to achieve financial inclusion as nearly 50% are yet to be covered under the formal system of banking and at the other end lies the task to fulfil the needs of the existing customer.

Stating that core banking is one of the top priorities of RBI, Chakrabarty said, "the first priority is to get all banks on adopting core banking solution, including all RRBs. The next is a multi-channel approach using handheld devices, mobiles, cards, micro-ATMs, branches, kiosks etc can be used."

The RBI had recently released its IT Vision document for 2011-17 that envisages transforming RBI into a knowledge organisation using IT as a strategic resource, IT governance. It also looks at banks moving from core banking to enhanced use of IT in areas like regulatory reporting, risk management, MIS, financial inclusion and CRM.

On the need for curbing the rising instances of cyber fraud in banks, he said it is necessary to improve controls and examine the need for pro-active fraud risk assessments and management processes in commercial banks.

"My belief is that commerce or banking to the poor is always more viable than commerce or banking for the rich. That's why corporates get money at 7-8% and MFI borrowers pay at 60%. It is viable provided you have the ability to do business with the poor.

"What we are saying is that don't subsidise the poor, but don't exploit them, because so long as the rich get a thing cheaper, they will not allow that item to reach the poor. And this has to change, at least in banking," Chakrabarty said.

On whether RBI is happy with the progress of the inclusion programme so far, he said, "we are never happy with anything nor are we depressed. It is not that nothing has happened on the inclusion front. Many things have happened, but we have to scale up."

Stating that the real issue is not about viability, but the ability of banks to do it properly, he said, "banks are not able to do this because they don't have the capacity to do so. That is why we are asking them to build their capacities through technology and new delivery models."

Comparing inclusion banking to buying a house, he said, "you have to invest first to make future profits. You will never say your are spending money on your house, but investing in your house. Banks have to look at the inclusion project as an investment and over a period of time they will get the return on their investment."

Asked whether instead of each bank being pushed to do inclusion banking, should not the government set up a separate bank to handle this programme by diverting the money it annually infuses into PSU banks, he quipped, "No, the government should not get into any business as it can never be a good businessman."

"Its job is to facilitate, encourage and regulate business so that is it done in an ethical and in a non- exploitative manner," he concluded.

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