Saturday, February 18, 2017

RBI mulls giving banks freedom to fix bank service charges for transactions



In an attempt to promote cashless transactions in the country, Reserve Bank of India (RBI) has given banks the freedom to fix bank service charges for transactions, stated Santosh Kumar Gangwar, Minister of State in the Ministry of Finance, in Lok Sabha on Friday. 

RBI has deregulated interest rates on credit card dues. Interest rates are determined by banks with the approval of their respective Board of Directors subject to regulatory guidelines on the interest rate on advances issued by RBI from time to time. RBI does not maintain information on the rate of commission charged. 

National Bank for Agriculture and Rural Development (NABARD) has approved a scheme for giving 0.5 percent incentive on payments made through the Aadhaar Enabled Payment System (AEPS) to merchants. 

With regards to debit card transactions on PoS devices, between January 1 and March 31, 2017, Merchant Discount Rate (MDR) has been capped at 0.25 percent for transaction up to Rs. 1,000, and for debit card transactions value between Rs. 1,000 and Rs. 2,000, MDR has been capped at 0.5 percent. 

RBI has decided that till March 3, 2017, banks and prepaid payment instrument issuers shall not levy any charges on customers for transactions up to Rs. 1,000 settled on Immediate Payment Service (IMPS), Unstructured Supplementary Service Data (USSD) and Unified Payments Interface (UPI). 

Further, Government has issued a direction in public interest to all public sector banks not to charge fees for transactions settled on IMPS and UPI in excess of rates charged for National Electronic Funds Transfer (NEFT) for transactions above Rs. 1,000, with service tax being charged at actual; for USSD transactions till March 3, 2017, above Rs. 1,000, a further 50paise discount is provided. 

NPCI has waived switching fees for RuPay Card transactions (both for PoS and e-commerce), IMPS, UPI, National Unified USSD Platform (NUUP) and AEPS, with effect from January 1 to March 31, 2017. 

Credit card, debit card, charge card and other payment card services by banks have been exempted from payment of service tax for transactions of up to Rs. 2,000. The government has introduced Lucky Grahak Yojana for customers and Digi Dhan Yojana for merchants to promote means of cashless transactions. 

In terms of Office of Controller General of Accounts Office Memorandum dated December 14, 2016, the applicable Merchant Discount Rate (MDR) charges on debit cards for payment up to Rs. 1, 00,000 shall be absorbed by the Government. 

In terms of Department of Public Enterprises letter dated December 9, 2016, all Central Public Sector Enterprises (CPSEs) are required to ensure that transaction fees, MDR charges associated with payment through digital means shall not be passed on to the consumers and all such expenses shall be borne by CPSEs. 

RBI has also cautioned the users, holders and traders of Virtual Currencies (VCs), including Bitcoins about the potential financial, operational, legal customer protection and security related risks that they are exposing themselves to. The creation, trading or usage of VCs including Bitcoins, as a medium for payment have not been authorised by the Reserve Bank of India. 


Rs 27,000 crore saved under Direct Benefit Transfer scheme since November 9

Union Minister, RuPay, Haryana, Haryana Education Minister, DBT

Since digital transactions took off rapidly from November 9, 2016, Rs 27,000 crore has so far been saved under the Direct Benefit Transfer scheme, this was informed at an event held at Panchkula today.
Also, about 35 per cent people have taken to debit card, RuPay card and e-wallet services for making payments in Haryana.
This was disclosed in the presence of the Union Minister of State for Social Justice and Empowerment, Krishan Pal Gujjar, and the Haryana Education Minister, Ram Bilas Sharma, at the inaugural function of the ‘Digi Dhan Mela’ and ‘Basant Utsav’, at Panchkula, near here, today, a Haryana government statement said here.
Speaking on the occasion, Gujjar said that 100 Digi Dhan Melas were being organised in the country to encourage people to adopt cashless transaction system for making payments.
So far, 56 such melas have been held. This is the third such mela in Haryana after Gurugram and Sonipat.
Gujjar urged the people to make digital transactions to realise the dream of Prime Minister Narendra Modi, and also encourage others to adopt this system.
The main aim of Digi Dhan Mela is to give people message of ‘Mera Mobile-Mera Bank-Mera Batua’, he added.
Speaking on the occasion, Ram Bilas Sharma thanked Arjuna awardee Sanjay Phogat, international shooter, Gauri Sheoran, and Kings XI Punjab (IPL) player, Manan Vohra, and others for attending the mela and expressed hope that such events would inspire people to adopt digital payment methods.
Vice-Chairman, National Payments Corporation of India, Pushpendra Singh, and Deputy Director, NITI Aayog, Sukhdeep Kaur, gave detailed information about various digital schemes.

Sunday, January 22, 2017

Issue of RuPay cards jumps post-demonetisation


Banks in the country have issued nearly 60 per cent more RuPay cards for Pradhan Mantri Jan Dhan Yojna (PMJDY) account-holders in the two months following demonetisation of ₹500 and ₹1,000 currency notes on November 8 than they had issued a year prior to that.
Banks had added around 2.83 crore new RuPay cards from November 25, 2015, to November 9, 2016. Compared to this, in just two months following demonetisation, nearly 1.56 crore RuPay cards were issued.
The number of RuPay cards increased to 19.43 crore by November 9, 2016 from 16.6 crore as on November 25, 2015.
Of the 26.68 crore PMJDY account-holders, nearly 21 crore (78.71 per cent) had RuPay cards by January 11.
RuPay card is an initiative by the National Payments Corporation of India (NPCI) to allow all Indian banks and financial institutions to participate in electronic payments.
Aadhaar seeding
In spite of the Prime Minister’s endorsement of JAM (Jan Dhan, Aadhaar and mobile) vision on several forums, the seeding of Aadhaar numbers with PMJDY accounts remained at 42 per cent of the total PMJDY accounts in November 2015. Of the 19.34 crore accounts, only around 8.19 crore were seeded with Aadhaar numbers as on November 25 2015.
The Prime Minister had stated that the JAM vision would serve as the bedrock of many initiatives to come.
Aadhaar seeding with bank accounts crossed the 50 per cent mark only in August 2016.
In the one year to November 2016, banks seeded 5.49 crore more accounts with Aadhaar numbers.
Of the 25.51 crore PMJDY accounts, around 13.68 crore were seeded with Aadhaar by November 9, 2016. During the post-demonetisation period between November 9, 2016, and January 11, 2017, banks seeded 1.67 crore more accounts with Aadhaar numbers.
Of the 26.68 crore PMJDY account-holders, nearly 15.36 crore (57.58 per cent) were seeded with Aadhaar numbers by January 11.

Centre pushes for fingerprint money transactions through Aadhaar Pay



Keen to push digital payments among the poor and illiterate in rural areas of the country, the government is pushing to popularise Aadhaar Pay which ensures financial transactions by just using fingerprint.



Aadhaar Pay, which is merchant version of the already in use Aadhaar-enabled payment system (AEPS), will become an alternative for all online and card transactions which require password and PIN.



The app facilitates merchants to take cashless payments from a customer who is only required to give his Aadhaar number, name of the bank (from where the money is to be deducted) and finger print for authentication. Unique Identification Authority of India (UIDAI) CEO AB Pandey said Aadhaar Pay works on any android-based phone, even a low cost one, with an attached finger biometric device.



"This ensures digital transactions which are cardless, PINless... There is no need of smartphone for the customers," he added. In order to popularise the use of Aadhaar Pay among merchants, the government has asked banks to enrol 30-40 merchants per branch so that they are able to take cashless payments from customers.



At present five banks — Andhra Bank, IDFC Bank, IndusInd Bank, State Bank of India and Syndicate Bank — have gone live over Aadhaar Pay and several banks are in the process of launching pilots on the app.



A senior official said the plan is to identify Aadhaar Pay transactions separately and to incentivise merchants for long-term sustainability and scalability of the system. As it needs a biometric device costing about Rs 2,000, the government is also working on an incentive model so that cost of the device is amortised over time and the merchants are encouraged to use it.

Rejecting security concerns over AEPS, the UIDAI CEO said transactions using Aadhaar Pay are much more secure than any other digital mode of transaction, both in terms of technology and process. Besides the merchant using the app being enrolled in the bank and the customer's bank account linked to Aadhaar, he said the biometric data get encrypted leaving little scope for any misuse. 

"Fingerprints can't be copied as it get encrypted. Even if any merchant or customer tries to misuse the fingerprints, he will be caught immediately as the location of merchants using the app is known to the bank," he explained.



The AEPS platform, launched in December 2012, enabled people to carry out banking transactions over hand-held devices (micro ATM) using the Aadhaar number and fingerprints. The Andhra Pradesh government has launched cashless payments at most of the fair price shops (FPS) and Gujarat, in partnership with CSC e-governance, has launched cashless payments using AEPS platform at over 3,000 fair price shops.

Friday, December 30, 2016

PM Narendra Modi's Mastery Of The Message To Be Tested As India Enters 2017

PM Narendra Modi's Mastery Of The Message To Be Tested As India Enters 2017: Foreign Media

Prime Minister Narendra Modi will go into 2017 watchful but unbowed.

In what will be a busy year of state elections, economists are slashing India's growth forecasts because Prime Minister Narendra Modi's unprecedented cash clampdown is denting demand. The experiment has missed its first marker of success and the almost-daily regulatory flip flops are enraging citizens.

Yet, analysts point to the fact that India hasn't seen bloody riots of the kind witnessed in Venezuela, which followed PM Modi in banning higher-value banknotes before it reversed the move. Perhaps most importantly, a fractured opposition hasn't been able to capitalize on the social pain triggered by the world's most sweeping currency policy change in decades.

"So far there has been no successful mobilization of public opinion against demonetization," said Sanjaya Baru, New Delhi-based director at the International Institute of Strategic Studies and media adviser to Narendra Modi's predecessor, who's written books analyzing former administrations. "Though we can't say what's going to happen in the future, at least so far it would seem like Modi is on top."

The move tests PM Modi's reputation as the master of the message. He has touted the cash ban as India's strongest step against tax evasion and graft in a nation where rising economic inequality helped him sweep to power with the biggest electoral mandate in 30 years.

PM Narendra Modi on Nov. 8 banned 500 and 1,000 rupee notes, removing 86 percent of currency in circulation. With TVs beaming pictures of serpentine queues spilling out of banks and newspapers carrying stories of rural distress, he pleaded with Indians to give him until Dec. 30 to ease the strife.

Here's the impact: India's economy is projected to grow 6.5 percent October-December instead of the 7.8 percent economists had predicted earlier. Moody's Investors Service says asset quality at Indian banks -- reeling under a pile of bad loans -- will weaken. Small businesses, the biggest creators of jobs, are estimated to forfeit transactions worth $9 billion.

International observers such as former U.S. Treasury Secretary Lawrence Summers and former World Bank Chief Economist Kaushik Basu have criticized Modi's move.

"Even if consumption revives quickly on the back of remonetization, investment could remain muted for longer," said Pranjul Bhandari, Mumbai-based economist at HSBC Holdings Plc. "The output gap, that is the slack in the economy, will likely remain negative for two quarters longer than we had initially estimated, making it unattractive for investors."

Medium as Message

And while the potential impact on state polls due in 2017 is not yet clear, the subdued outlook hasn't dented the performance of Narendra Modi's party in municipal elections over the past month.

One reason could be his ability to channel his message via social media, as President-elect Donald Trump does, allowing Narendra Modi to speak directly to the public without any media filter.

"This shows the importance people attach to good governance," PM Modi tweeted on Dec. 20 of the election results.

He, however, hasn't held a single national press conference since taking office and interviews are vetted. Instead, Narendra Modi relies on public speeches and has used the medium more than 10 times since Nov. 8 to defend demonetization.

Narendra Modi's speeches brim with rhetorical flourish and his bold cash clampdown became important part of his narrative as he approached the half way mark in his term early November.

"Modi presented himself as someone with fire in the belly, willing to change things in the country," said Ullekh NP, author of War Room: The People, Tactics and Technology Behind Narendra Modi's 2014 Win. "People at least for now believe his message; that he's incorruptible, that he has no family, that he's focused on the nation. But unlike an election campaign, where promises suffice, here there's prolonged hardship for people."

Support for Narendra Modi will waver if opposition parties form alliances in Uttar Pradesh, Ullekh said by phone from the key electoral state.

Shifting Goalposts

Narendra Modi's skill in rebranding has allowed him to recast his message even as massive deposits of old notes being turned in at banks robbed him of his main reason for the demonetization.

Indians have deposited 13 trillion rupees of the 15.4 trillion rupees invalidated by Narendra Modi's move, undermining the government's estimate that about 5 trillion rupees of this was unaccounted money and wouldn't reach banks.

"It seems very likely that the original aim of the demonetization drive -- forcing illicit wealth holders to come to light -- has already very nearly failed," said Vaninder Singh, an analyst at NatWest Markets, adding that this has pushed the government to change its commentary to fostering a cashless economy. "At what level of economic pain will we see an inflection in Modi's ratings? The answer depends upon how 'patriotic sacrifice' interacts with economic pain."

Political rivals allege that the shifting goalposts indicate Narendra Modi's Nov. 8 decision was never intended to target black money. Leaders from the main opposition Indian National Congress party said they'll have to hold smaller rallies in Uttar Pradesh due to the cash clampdown. The state's Chief Minister Akhilesh Yadav, from the Samajwadi Party, said he's sure to win because the lines of harassed citizens queuing up at cash machines will now shift to vote for him at polling booths.

Faith and Fear

Uttar Pradesh is due to vote by mid-May. It is India's most populous state and the biggest contributor to farm output. Elections will be held before that in four other states, including Punjab, called the 'bread basket of India.'

"Farmers are hurting," said Ajay Vir Jakhar, chairman of lobby group Farmers' Forum and grandson, son, and brother of Congress politicians. "Demonetization will have limited impact politically because opposition isn't able to take advantage of the pain."

Investors will focus on the government's first growth forecast for the year through March -- due Jan. 7 -- to assess the economic impact. Meanwhile, tax officials are raiding homes and offices across the country in a China-style crackdown on corruption, seizing bundles of currency notes and stashes of gold and jewelry.

Narendra Modi should follow his cash ban by lowering corporate and income tax rates in the budget -- likely Feb. 1 -- to encourage compliance, said analysts at Kotak Institutional Equities Ltd., adding that critics of his Nov. 8 decision are underestimating the "psychological" impact of the step.

The move "will reinforce the faith of the general population in the government's efforts to clean up the system and instill fear in a section of the society, which hitherto has had little regard for the laws of the land," they wrote in a Dec. 19 report. "Faith and fear."

Frequent rule changes done to corner the corrupt: PM Modi

Image result for modi demonetization

Prime Minister Narendra Modi has justified frequent amendments and U-turns in the implementation of government's demonetisation policy, saying one required to "stay a step ahead of the enemy+ ".



In an interview to India Today, Modi seemed to suggest that frequent changes in the implementation of the policy were deliberately done to corner those who were trying to defeat the purpose of demonetisation by circumventing it.



"Regarding the frequent modifications, one must be able to distinguish between niti (policy) and ran-niti (strategy) and not put them in the same basket. The decision of demonetisation, which reflects our niti, is unequivocally clear, unwavering and categorical. Our ran-niti, however, needed to be different, aptly summarised by the age-old saying of 'Tu daal-daal, main paatpaat'.



To stay a step ahead of the enemy," Modi said. Modi hit out at his detractors, saying the decision to demonetise "is so huge that even our best economists remain confused in their calculations. India's 1.25 billion citizens, however, have welcomed it wholeheartedly and supported it even in the face of great personal difficulties+ , intuitively understanding its impact and importance."



He said demonetisation was done not for some short-term windfall gain, but for " a long-term structural transformation+ ". Attacking the Congress, the PM said he "pitied" its leadership for the "desperation" it had been exhibiting on this issue. "On the one hand, they say took this decision for political dividends, and on the other, they say the people have been troubled and are deeply unhappy. How can the two go together?" he said.

Modi was scathing in his attack on his predecessor, Manmohan Singh, who had described the execution of demonetisation as 'monumental mismanagement' while speaking in Parliament. "It is interesting that the words 'monumental mismanagement' come from a leader who has been at the helm of India's economic journey for around 45 years - from being the chief economic advisor to the DEA secretary, RBI governor, Planning Commissiondeputy chairman, finance minister and Prime Minister — all the while during which large sections of our society have continued to live in poverty and deprivation," Modi said.

Friday, December 23, 2016

Gujarat shock for Narendra Modi: 56 per cent RuPay cards ‘inactive

After announcing his much-debated decision to demonetise Rs 500 and 1000, Prime Minister Narendra Modi has been pitching for a cashless economy. (Reuters Image)

After announcing his much-debated decision to demonetise Rs 500 and 1000, Prime Minister Narendra Modi has been pitching for a cashless economy. To achieve that, the country needs to have a sound banking infrastructure and a strong digital penetration. But a report suggested that PM Modi’s home state Gujarat is lacking at that front. According to a State Level Bankers’ Committee (SLBC) report released Monday, about 56 per cent of the RuPay Cards issued to bank account holders in the state under Pradhan Mantri Jan Dhan Yojana were found to be “inactive”. “After the withdrawal of legal tender character of Rs 500 and Rs 1,000 from November 9, 2016, and various measures initiated by the government to give thrust to cashless and digital economy, the RuPay card distribution and activation has assumed a very high importance,” stated the report that was released after bankers in Gujarat met for the first time after demonetisation, The Indian Express report said.
There are over 90 lakh Jan Dhan accounts in Gujarat. Of these, RuPay cards have been issued against 73.85 lakh accounts. However, the number of people using RuPay Cards linked to these Jan Dhan accounts is considerably low. “Of the 73.85 lakh RuPay cards issued, only 44 per cent or 32.63 lakh RuPay cards are active,” said Vikramaditya Singh Khichi, convener, SLBC, Gujarat. Citing Lack of financial literacy is seen as a major reason for such high volumes of inactive RuPay cards, the report pointed out that despite Gujarat having 49 Financial Literacy Centers (FLC), not one has been opened in rural areas. “Out of the 49 FLCs, one FLC is in metro, 33 are in semi-urban and 15 are in urban areas, whereas no FLC is opened in rural areas,” the report stated.
Besides, of the 5,860 bank mitras or business correspondents engaged by banks in places were bank branches are unavailable, around 1,000 bank mitras were found to be inactive. “After initiation of the demonetisation move, providing banking services to the rural masses through digital mode has become all the more important, therefore, banks are requested to immediately make necessary improvement in their business correspondent model,” stated the report.
Reserve Bank of India data for October 2016 showed the number of debit cards in the country stands at 94.2 crore. People used debit cards for transactions worth Rs 2.63 lakh crore in October but over 90 per cent of these were done at ATMs. Only 8 per cent utilised these cards at POS (Point of Sale) terminals to purchase goods and services. That means nine of ten cards are used solely for cash withdrawals at ATMs. Nearly 50 per cent of the total number of debit cards are being actively used but the utilisation rate for goods and services is much lower — around 6-8 per cent. This is despite the fact that there are 15.12 lakh POS terminals across the country as against a total of 2.20 lakh ATMs.