The Reserve Bank of India (RBI) will bring global payment systems such as MasterCard International and Visa International under its regulatory framework. Once the Draft Payment and Settlement System Bill gets the Parliament nod, these companies will have to share the information sought by the central bank. | |
"Our intention is to bring Mastercard and Visa under the regulatory framework," said A P Hota, chief general manager, department of payment and settlements systems, RBI, on the sidelines of an electronic payments seminar, organised by the Indian Banks' Association and Venture Infotek.
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Currently, the central bank has to make a "request" for information from the global payment settlement companies.
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The Draft Payment and Settlement System Bill plans to bring all payment systems, including those owned by non-banking companies, under the RBI's regulatory framework.
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"The Bill will empower the RBI to supervise and regulate payment systems. Non-banking entities such as card companies and remittance companies will also be brought under the regulatory framework," said Hota.
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A parliamentary committee had last week submitted its report on the Bill, which is likely to be tabled in the monsoon session of Parliament.
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The RBI may also look at bringing initiatives such as Itz Cards, a pre-paid card, under the regulatory fold.
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The central bank wants the share of electronic payments in total non-cash payments to increase four-fold to 80 per cent from around 20 per cent in three years, especially by shifting high value clearing to electronic platforms.
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At the end of March 2007, the share of electronic payments in total non-cash payments was 22 per cent in volume and 65 per cent in value.
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"The electronic payment system saw volumes of 386 million last year. This has the potential to double in three years to around 700-800 million. Of the 120 million cheque transactions in a month, half can be moved on to the electronic clearing system," said Hota.
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However, the RBI has no plans to discourage cheque users.
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It wants banks to reduce cost of electronic transactions and increase convenience. The RBI has been receiving innumerable complaints about exorbitant service charges for electronic payments, said Hota.
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| Indian banks saw 1.3 billion cheque transactions in 2006-07. While growing in absolute terms, the rate of growth has declined from 10 per cent in 2005-06 to 6.3 per cent at the end of March 2007. |
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