Mumbai: The Reserve Bank of India (RBI) will review rules governing various payment and settlement agents, build a robust payment infrastructure and strengthen existing payment systems, the central bank detailed in its vision document for payment and settlement systems released on Thursday.

Titled “Vision 2018", the document said RBI would take further measures “to encourage greater use of electronic payments by all sections of society so as to achieve a “less-cash" society". It added that it had been encouraged by the vast improvements in electronic payments over the past three years.

The vision document comes at a time when the share of electronic transactions has increased exponentially and that of paper-based and cash transactions have reduced. The share of electronic channels such as mobile banking, and internet banking in the total transaction volume in April was 27%, up from about 8% in March 2012, when RBI had detailed its vision document for 2012-15, data from the central bank shows. Credit and debit card transactions have also increased at a fast pace, while paper-based transactions have fallen.

“New policies that are proposed to be framed under Vision 2018 with focus on electronic payments will influence the trends in payment systems in the country," it said.

With the help of stakeholders, RBI aims to further bring down the share of paper-based transactions through means such as cheques, increase usage of digital channels, boost the customer base for mobile banking and push for greater Aadhaar usage, the document said.

RBI also aims to make it easy for customers to switch between service providers by increasing interoperability of payment systems as well as provide greater access to a vast set of payment options for more customers, the vision document said. RBI will increase the supervisory mechanisms and set an oversight framework to ensure that any newly introduced systems are resilient.

The Unified Payments Interface will enable interoperability, making it convenient for customers to use digital channels to make payments for a host of activities ranging from mobile bills to restaurant payments. RBI said it would also encourage digitization of toll collections on a pan-India basis and ensure interoperable payment mechanisms for mass transit systems.

The central bank plans to set up a Payment System Advisory Council with representatives from across segments. The council will be responsible for managing new technological innovations and forming new guidelines and policies.

“Taking into account the rapid developments and innovations in the area of payment systems, the Vision 2018 envisages a more responsive regulatory framework based on consultations with stakeholders. The policy framework will support payment system initiatives that enhance access to payment services," RBI said in its document.

The central bank also said it would bring in necessary amendments to the Payment and Settlement Act for greater oversight on central counter parties (CCPs) and in helping resolve issues such as insolvency of CCPs.

It has proposed to make rules for governance, capital and authorization of foreign CCPs along with norms for risk management. Further, the central bank would also look at revising rules for payment gateways and aggregators.

RBI would also study, monitor and frame rules as and when required for innovative technology in the financial technology space such as blockchains, distributary ledgers, etc., it said.

Another focus area would be strengthening the safety and security of digital channels. Usage of Aadhaar for authentication would be encouraged, the physical safety of ATMs would be fortified as well as migration of all ATMs to EMV chip cards for safeguarding transactions would be ensured, RBI said.

Even as new technologies have developed, existing participants have also shown robust growth, RBI noted. Thus, a relook at the norms governing prepaid payment instruments, mobile banking and white-label ATMs is necessary, the central bank said.

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