 "RBI, Raghuram Rajan")
The Reserve Bank of India (RBI) has decided to redefine the concept of branch banking by enumerating what constitutes a bank and how a lender can reach out to customers.
“Given that regulations are written in terms of branches, with a view to facilitating financial inclusion and providing flexibility on the choice of delivery channel, it is proposed to redefine branches and permissible methods of outreach, keeping in mind the various attributes of the banks and the types of services that are sought to be provided,” RBI said in its first monetary policy review in FY17. The regulator has also decided to simplify the process of registration of non-banking financial companies (NBFCs). It will also be looking at ways to strengthen the business correspondent (BC) network. For this, RBI has decided to introduce training and certification of BCs, in coordination with external training institutes. It has also decided to have an online registry of BC agents, to help consumers as well as banks keep track of the agents.
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RBI is also looking at monitoring the peer-to-peer (P2P) lending space that has been gaining momentum in the past couple of years. In this regard, the regulator is planning to come out with a concept note by the end of the month, after which rules will be formed in consultation with the Securities and Exchange Board of India.
“P2P lending has shown accelerated growth over the past year. While encouraging innovations, the Reserve Bank cannot be oblivious to the risks posed by such institutions to the system,” said the monetary policy statement.
P2P lending allows an individual to loan money to unrelated individuals without assistance from any financial intermediary.
With the rise in digital money and focus on technology, the regulator has also decided to do a detailed examination of information technology (IT) used by banks on a pilot basis during the current year. For this, it has also formed an expert panel for ‘IT Examination and Cyber Security’ to provide broad guidance.
“It is a risk that across the world we understand too little of. We need to take steps and we have been doing that. We have identified now a leader for a cyber security subsidiary and will start recruiting people into it and that this will serve both RBI and the system,” said RBI Governor Raghuram Rajan.
