5 likely RBI moves to push digital transactions

From improving digital transactions’ speed to monitoring online security, here are five major areas where RBI is expected to work over the next two years


The RBI will be spending time and resources to beef up the availability of acceptance infrastructure for digital payments across merchants. Photo: Aniruddha Chowdhury/Mint
The RBI will be spending time and resources to beef up the availability of acceptance infrastructure for digital payments across merchants. Photo: Aniruddha Chowdhury/Mint

Mumbai: With the launch of the BharatQR on Monday, the Indian banking and payments system has moved another step in the direction of reducing the dependence on cash for transactions. This, along with the Unified Payments Interface (UPI), Bharat Bill Payment System (BBPS), the National Unified USSD Platform (NUUP) and the Aadhaar Payment Bridge, are all moves in this direction, supported by the banking sector regulator.

The Reserve Bank of India (RBI) had released its vision statement on payment and settlement systems for the period 2015-2018, in June 2016. In its statement, the RBI mentioned a number of areas which it will closely monitor and act upon to push digital transactions in the country.

Here’s a look at five major areas where we will see action over the next two years:

Improving speed of transactions: While the BharatQR is built around the concept of promoting interoperability, the central bank has said that it will be focussing on making digital payments quicker and more reliable.

Also read: BharatQR code unveiled: An explainer

In its statement, the RBI has specifically pointed out at the increased adoption and usage of the National Electronic Fund Transfer (NEFT) over the last few years, which will be reviewed to enable faster payment processing through introduction of more frequent settlement cycles. Another area of focus is allowing quicker and easier mobile banking services to the large number of feature phone users, allowing them higher access.

Improving accessibility: The RBI will be spending time and resources to beef up the availability of acceptance infrastructure for digital payments across merchants. The central bank has said that a policy framework will be put in place for setting up necessary acceptance infrastructure, including automated teller machines (ATMs) and point of sale (POS) terminals, across various geographical and industry segments such as groceries, education, transport, utilities, government services and healthcare.

The regulator will also try to expand the scope of payments under BBPS, going beyond payments for utilities such as power, water, gas, telephone and direct-to-home (DTH) cable networks. Trade Receivables Discounting System (TReDS), which is an institutional mechanism for facilitating the financing of trade receivables of micro, small and medium enterprises (MSMEs) from corporate buyers through multiple financiers, will be made fully operational, the RBI has said.

Push for customer education and training: The regulator has said that it will be working with various stakeholders to improve education and customer awareness around electronic payments. The RBI will implement electronic banking awareness and training (e-BAAT) programmes, it said. Further, the RBI will prepare a framework requiring payment system operators (PSOs) to transparently disclose all fees they charge as part of their service along with the applicable terms and conditions, including liability and use of customer data.

The central bank will encourage payment system providers to adopt best practices for protecting customer interest by putting in place fraud and risk monitoring systems. In addition, a regulatory framework to limit customer liability in case of unauthorised transactions will be put in place.

Improving security of digital transactions: The RBI will push for migration to chip- and PIN-enabled Europay Mastercard Visa (EMV) cards from magnetic strip cards by December 2018, for which it has already laid out a roadmap. The regulator will continue monitoring the progress made by the banks to ensure adherence to the timelines under this roadmap.

Also read: From BharatQR code to Aadhaar Pay, here are India’s govt backed payment apps

It will also ensure that all ATMs read card data from the chips in them and not from the magnetic strips on these cards, which is the current practice. The regulator will also holistically examine the physical and logical safety and security requirements of ATMs’ infrastructure and issue necessary guidelines to strengthen them, it said.

Data collection and interpretation: In its statement, the central bank has said that it will enable banks to report instances of fraud and developments in cyber security electronically. With automation of regulatory reporting and generation of large volumes of data, studies would be undertaken to identify the emerging trends/attributes of payment system, seasonality, pattern analysis, etc. This will strengthen the regulatory decision support system, the RBI said.

More From Livemint