RBI urges banks to set up payment corporation

Reserve Bank of India (RBI) will encourage banks to set up a payment corporation to streamline the payment system.

Y V Reddy, Governor of RBI, said: "A payment regulatory board has already been set up within RBI, which also held its first meeting. We are advising Indian Banks Association (IBA) and other banks to come forward to set up a payment corporation."

"The payment corporation would help speedy and hassle-free cheque clearance," he added.

Reddy was speaking to reporters at the Institute of Insurance and Risk Management (IIRM) today.

Intereacting with students of IIRM, Reddy said the role of RBI was fast changing from a controller to a regulator. "There has been a transition from the control regime to the role of a regulator and manager," he said.

Expressing satisfaction about the current state of markets, Reddy said the liquidity adjustment facility, which is being monitored once in a day by RBI, can be changed if the need arises. "We are even prepared to monitor the market twice or thrice a day," he added.

C S Rao, chairman of Insurance Regulatory and Development Authority of India (Irda), said a model should be worked out for expanding bancassurace in the country.