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The Reserve Bank of India’s Deputy Governor, Dr K.C. Chakrabarty, has ruled out the possibility of providing e-transactions free of cost given the viability issues.
Earlier this month, the Finance Ministry had asked the banking regulator to work out a framework under which funds could be transferred electronically free of charge from one account to the other.
“Anything (product and services) that is offered free of charges can never be scaled up…It cannot be commercially viable and viability is the key,” Dr Chakrabarty said at a Banking Tech summit organised by the Confederation of Indian Industry here on Thursday.. He added that with greater use of technology the cost of transactions come down and customers should bear just the incremental cost.
At present, banks charge between Rs 5 and Rs 55 for electronic transfer of funds up to Rs 1 lakh from an account of one bank to another through National Electronic Fund Transfer (NEFT) and Real Time Gross Settlement (RTGS).
Earlier this month, the Finance Ministry had asked the banking regulator to work out a framework under which funds could be transferred electronically free of charge from one account to the other.
“Anything (product and services) that is offered free of charges can never be scaled up…It cannot be commercially viable and viability is the key,” Dr Chakrabarty said at a Banking Tech summit organised by the Confederation of Indian Industry here on Thursday.. He added that with greater use of technology the cost of transactions come down and customers should bear just the incremental cost.
At present, banks charge between Rs 5 and Rs 55 for electronic transfer of funds up to Rs 1 lakh from an account of one bank to another through National Electronic Fund Transfer (NEFT) and Real Time Gross Settlement (RTGS).
Customer is the key
According to Dr Chakrabarty, there is no standardisation amongst banks even with regard to account numbers and customers have to learn, unlearn and re-learn banking operations with each bank.
Dr Chakrabarty called for greater customer focus by providing suitable cost-effective technology and efficient multi-channel delivery model; standardisation of systems, customised products and services to reach out to small and marginalised customers; efficient business models that are viable but not exploitative; data integrity with cost and speed; comprehensive MIS and increased information literacy for everyone while also making the quality of information better.
On a lighter note, he said, “Innovation is about providing risk-free returns but technology today has collapsed and is providing return free risks.”
Amid some criticism levelled upon the RBI, Dr Chakrabarty observed that, “There is a thin line of demarcation between what can be called an ‘innovation’ and a ‘violation’. Our purpose is to stop the latter.” He further said it was the RBI’s job to reduce negative outcomes of technology and innovation while retaining the benefits.
Dr Chakrabarty called for greater customer focus by providing suitable cost-effective technology and efficient multi-channel delivery model; standardisation of systems, customised products and services to reach out to small and marginalised customers; efficient business models that are viable but not exploitative; data integrity with cost and speed; comprehensive MIS and increased information literacy for everyone while also making the quality of information better.
On a lighter note, he said, “Innovation is about providing risk-free returns but technology today has collapsed and is providing return free risks.”
Amid some criticism levelled upon the RBI, Dr Chakrabarty observed that, “There is a thin line of demarcation between what can be called an ‘innovation’ and a ‘violation’. Our purpose is to stop the latter.” He further said it was the RBI’s job to reduce negative outcomes of technology and innovation while retaining the benefits.
‘I do not go to an ATM’
The RBI Deputy Governor, Dr K.C. Chakrabarty, brought the house down saying that he never used ATMs after hearing the number of complaints made by customers.
While the ATM machine was one of the greatest innovations in the last 50 years in terms of technology products, it did have drawbacks. “It facilitates faster dispensation of cash provided the transaction is successful. Though there have been 98 per cent successful ATM transactions, there have been no failed transactions at a branch. So where is the evolution?” he exclaimed.
“The problem faced by the aam aadmi today is ‘terrorisation of ATMs’. Some (ATM machines) will swallow your cards, some require only swiping; some require keys and some do not, some provide cash on the tray while some do not, and some do not return money…,” he quipped.
beena.parmar@thehindu.co.in
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