Regulations must not create unintended barriers to financial inclusion: Guv

Only a matter of time when cross-border payments will become much easier and cost-effective, says RBI Governor Sanjay Malhotra

Stressing the importance of making financial systems safe, Reserve Bank of India Governor Sanjay Malhotra on Wednesday said that policy makers need to be mindful of customer rights and convenience and regulations must not create unintended barriers to financial inclusion.

 

“India has made substantial and remarkable progress. As per our information, more than 94 per cent of the adult population has a bank account, many of them have more than one, but there is still a need to continue to widen and deepen it,” he said at the Financial Action Task Force (FATF) Private Sector Collaborative Forum.

 

He also highlighted that while it is important to make financial systems safe and secure against money laundering and terrorist financing, policy makers need to be mindful that their measures are not overzealous and do not stifle investments.

 

He underscored that India has made huge strides in applying digitalisation for customer onboarding and customer due diligence processes.

 

“The digital KYC and video KYC are shining examples of this. The Central KYC Records Registry with more than 1 billion records is another example which has the potential of ushering in a new era of customer onboarding by making it easier and seamless not only for the customers, but also for the regulated entities to perform customer identification and due diligence,” Malhotra said.

 

He, however, cautioned that there is a need to make the system more robust, more effective and efficient so that all regulated entities can coordinate and make it easier for everyone to conduct the KYC process so that there is no repetition of unnecessary KYC multiple times by different regulated entities for the same person.

 

Malhotra highlighted that India will continue to work towards fulfilling its commitment to the effective implementation of the next phase of the G20 roadmap towards inclusive cross-order payments by 2027.

 

“It is only a matter of time, I think, that cross-border payments will also become much easier and cost-effective,” Malhotra said.

 

“Developing countries like India have made huge progress in making digital payments accessible, affordable and convenient. While card networks have helped the developing economies in improving fast payment systems, systems like the UPI that we have in India have assisted emerging markets and developing economies to leapfrog in this area,” he added.