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Thursday, May 21, 2015

RBI discussion paper on cashless transactions soon

To promote more cashless transactions, the Reserve Bank of India is in discussions with the Government on ways to reduce cash usage in the system and will soon be coming out with a paper on the same, RBI's Executive Director G Padmanabhan said.

"We are looking at various ways to incentivise cashless transactions, and various aspects are being considered like looking at charges for card payments," Padmanabhan told reporters on the sidelines of a National Payments Corporation of India (NPCI) event.

As black money has been a burning debate in the country, the central bank and the Government are looking at solutions which will take into consideration the local conditions and make cashless transactions as easy as the cash ones.

Both the government as well as the RBI are doing many things to promote cashless transactions as much as possible, Padmanabhan said, adding that a discussion paper on the topic has been cleared and will be made public soon.

Infrastructure and Cost

Highlighting the tax incentives given for cashless transactions in South Korea, Padmanabhan said methods have to be devised as infrastructure penetration is low.

According to him, the focus on moving to a cashless economy should not hurt the infrastructure roll-out and industry will be incentivised.

"Initially, we can't have a solution which will take away the incentives to put up the infrastructure. That is why we are having a prolonged discussion," he said.

At present, a commission of up to 2 per cent is charged for card transactions, which many feel is a deterrent for the agenda of cashless society.

Padmanabhan said he has also cleared the guidelines for mobility cards and they will be published in a fortnight.

Mobility cards will be multipurpose and interoperable cards.

Padmanabhan asked the banking system to devote sufficient attention to safety and security, saying there have been instances of data compromises in electronic transactions.

Industry players should also work towards minimising the cost of transaction, he said, hinting that a regulator-prescribed pricing may not be desirable.

The USSD-based framework, which will enable a user of low cost feature phones to use mobile banking services, has overcome the initial hiccups and is now ready for a take-off, Padmanabhan added.

Source : Thehindubusinessline


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