Wednesday, March 4, 2015

NPCI to come out with virtual form of RuPay debit card

After launching the RuPay debit card, National Payments Corp (NPCI) is set to come out with its virtual form in the next few months, a move that will give further push to smartphone-based transactions.

"We are planning to go for pilot of a virtual RuPay card over the next 4-5 months," NPCI Managing Director and Chief Executive A P Hota said here today.

 

NPCI is the nodal agency for all retail payment systems under the Jan Dhan scheme.
The physical plastic RuPay card carries a 16-digit number. Under the virtual form, there will be no need of a physical card and a transaction can be done with the help of the 16-digit number alone.
The initiative will enable all account-holders send and receive money from their smartphones with a single identifier which may include the Aadhaar number, mobile number or virtual payment address without entering any bank account information.

Average value of the card payment system per head as on date was Rs 1,500 and an average remittance stands at Rs 2,500. Under the new virtual system, the amount would be much less and may include school fee and grocery payments, he said.

The proposed payments banks are likely to provide this virtual card facility from the beginning, Hota said. "The specifications standards are now available for payments banks and hence it is a great opportunity for them."

Around Rs 8,000 crore worth of transactions are taking place through IMPS (immediate payment service) per month. What we are doing now is just putting another extra layer on the already existing system so as to make transaction more easy, Hota explained.

Currently, only around 20 per cent of the total transactions are happening through IMPS and hence NPCI is working on further simplification of the facility so as to make it more popular in future, he added.

Talking about authentication system for the virtual RuPay card, former Chairman of UIDAI Nandan Nilekani said "with everybody having cellphones, going forward the single- factor authentication can be the cellphone, replacing the physical cards."

"Later, Aadhaar-based authentication will come on mobile phone in 12-18 months. Second factor of authentication will be the Aadhaar number. We hope millions of transactions to take place through this mode in the country in days to come," Nilekani said.

Government, NPCI differ over insurance for RuPay cardholders

Differences have emerged between the government and the National Payment Corporation of India (NPCI), the issuer of RuPay debit card that is given free with every bank account opened under the Pradhan Mantri Jan-Dhan Yojana, over the insurance cover on the inactive cards.



NPCI is of the view that any cardholder who has not swiped the debit card even once in 45 days should not be entitled to insurance cover, while the government says that any such condition defeats the purpose of the national mission for financial inclusion.

Officials told ET that NPCI has argued that imposition of this condition will prompt the cardholders to be active users of RuPay, which competes with established players like Visa and Mastercard. It has proposed that if the government wants to ex tend the duration of swipe to 90 days or 180 days, it should be willing to pay a part of premium expenses that are currently borne by NPCI.

Currently, private insurer HDFC Ergo provides personal accident cover up to Rs 1 lakh to the RuPay cardholders, only if the card is swiped within 45 days of the incident.

Originally, NPCI had called for a tender with a clause mandating a swipe within 45 days, but later it issued a fresh tender, seeking bids for insurance cover for various durations. It called for bids that would cover personal accident when the swipe is within 45 days, 90 days and 180 days of the incident. The bid ding, which closed last week, invited tenders for the next fiscal and only one of the durations will be accepted in consultation with the government.

We have conveyed to the government that we will pay premiums, only if there is a swipe once in 45 days. However, if the government desires to extend it to 90 days or 180 days, it should pay the difference in the premium between 45 days and 90 days or 180 days, whichever period it chooses," said AP Hota, MD and CEO of NPCI.

As a late entrant in the card business, NPCI feels that the condition to swipe the card within the stipulated time will help establish it as a prominent player, particularly since big banks already have tie-ups with its rivals Visa and Mastercard.

The company has called for bids for all cardholders, which are estimated at 20 crore. The cover will include death and permanent disability due to accident. The claim has to be intimidated within 90 days of incident and settled within 10 days of receiving all documents.

Govt forms panel to suggest ways on promoting Rupay card transaction

The government has formed a committee which will come out with structures that can be put in place to encourage use of credit or debit cards, Finance Secretary Rajiv Mehrishi said today.

"We have formed a committee to look at what are the best ways to incentivise use of credit or debit cards ... The committee will look at what structures can be put in place to encourage use of credit or debit cards," Mehrishi told reporters here.

Finance Minister Arun Jaitley in his maiden full-year Budget had said the government will announce incentives to encourage card usage by consumers to curb black money flow into the system.

"One way to curb the flow of black money is to discourage transactions in cash. Now that a majority of Indians has or can have, a RuPay debit card, I, therefore, propose to introduce soon several measures that will incentivise credit or debit card transactions, and disincentivise cash transactions," Jaitley had said .

Elaborating further, the Finance Secretary said, "Several things are in considerations, for example incentivising banks ... You know there are transaction costs which government can perhaps share."

"But there are also otherwise, you know what I would say to disincentivise cash transaction, any expenditure by a person in a five star hotel above Rs 5,000 have to be settled using credit card, there can be also decisions like that."

Till January 31, over 11 crore Rupay cards have been used under Pradhan Mantri Jan Dhan Yojana. This will definitely help banks to encourage customers to go digital with their transactions.

Monday, February 2, 2015

Gramin Bank introduces Rupay cards for minors


M.G. Bhat, Chairman of PKG Bank (centre) along with his colleagues, displaying the Junior ATM Rupay Debit Card to be distributed among school going children having bank accounts.
Pragathi Krishna Gramin Bank, headquartered in Ballari, with jurisdiction over 11 districts, will be the first Regional Rural Bank (RRB) and one among a few commercial banks in the country to launch a new initiative of introducing banking to schoolchildren

M.G. Bhat, Chairman of the Bank, told presspersons here on Wednesday that as part of the initiative, the bank will distribute Junior ATM Rupay Debit Cards to schoolchildren above 10 years of age, introducing them to banking and helping inculcate the habit of saving money. 

A child can open a savings bank account in any of the 632 branches in the 11 districts by submitting a filled-in application form with passport size photograph, along with a declaration-cum-no objection certificate from the guardian to open the savings bank account and issue of Junior ATM Rupay Debit card, a certificate from school authorities and ‘know your client’ documents of the guardian. The account can be opened with zero balance and the account holder gets a passbook and Junior ATM Rupay Debit Card. With the child attaining 18 years of age, the account gets converted into a normal account after a few simple formalities, he said. 

In turn, the child could use the card to draw cash upto Rs. 5,000 a day from any of the ATMs and also make payments upto Rs. 2,000 at point of sale. Guardians would receive SMS alerts to their registered cell phones to enable them to know about the cash withdrawals and transactions of their child. Guardians could remit funds to their children’s account through NEFT/RTGS/mobile banking anytime. 

He said that 35,000 cards would be distributed to as many children simultaneously in bank branches from Thursday. 

G.R. Chintala, Chief General Manager, Regional Office of National Bank for Agriculture and Rural Development (NABARD) Bengaluru, will be launching the scheme in Ballari at St. Philomena High School. 

S. S. Bhat, Chief General Manager, Canara Bank, Bengaluru, will preside. Pushpinder Singh from National Payments Corporation of India, Mumbai, will be among other chief guests.

Government pushes use of RuPay cards with cashback offer



The government, which is striving to take banking to every household in the country and reduce the number of cash transactions, is aggressively promoting the use of state-backed RuPay cards by offering 1% cashback, in a direct challenge to card companies such as Visa and MasterCard.

RuPay is an Indian domestic card scheme launched by the National Payments Corporation of India that can be used at ATMs, PoS terminals and e-commerce websites. Apart from all public sector banks, regional rural banks and co-operative banks issue RuPay cards in an effort to promote financial inclusion. Other countries have encouraged the use of plastic money by incentivizing people through cash-back and lower tax.

"South Korea had offered similar encouragement and the result was phenomenal," said AP Hota, managing director and CEO, National Payment Corporation of India, adding, "There are places where if you pay by card, tax on goods is lowered." Under the Pradhan Mantri Jan-Dhan Yojana, the number of accounts opened was 11.5 crore as of January 17 after a survey of 21.02 crore households.

Of the total bank accounts opened, 3.23 crore have deposits worth Rs 9,188 crore, finance minister Arun Jaitley had said on Tuesday. RuPay cards have been issued to more than 10 crore beneficiaries so far under the scheme as the government tries to move to a cashless society in the long-run. There is an overdraft facility under the scheme.

All RuPay cardholders under the Jan-Dhan scheme are eligible for personal accident as well as life insurance cover, the charges of which are lower than other cards in the market. But despite the lower processing fee compared with MasterCard and Visa, the RuPay isn't widely used as yet.

Uttar Pradesh farmers to get 4.2 mn RuPay credit cards




and (RRB) would issue over 4.2 million Kisan Credit Cards (RuPay KCC) to farmers across the state.

National Bank for Agriculture and Rural Development (NABARD) has sanctioned Rs 30 crore to these financial institutions for the purpose.

RuPay KCC is a smart card used by farmers at automated teller machines (ATM) or point of sales (PoS) machines, where it could be swiped for withdrawing cash or making payments. It does away with the necessity of visiting Primary Agriculture Cooperative Societies (PACS) or bank to operate the account.

Under the project, has extended support of Rs 19 crore and Rs 11 crore respectively to all seven RRBs and 15 cooperative banks operating in the state.

To ensure doorstep delivery of banking services to farmers, NABARD has also supported these financial institutions to deploy over 11,000 micro-ATMs/PoS machines at all their branches.

Recently, NABARD UP region chief general manager K K Gupta had convened a meeting to review progress made under the scheme. Advising banks to improve implementation of the project, he said NABARD would provide assistance of Rs 5 crore to cooperative banks in setting up over 100 ATMs in rural areas and utilising PACS as their Deposit Mobilising Agents.

NABARD support for technology adoption in cooperative banks and RRBs would benefit not only farmers, but also rural populace in general, who have opened accounts under Pradhan Mantri (PMJDY).

Besides, NABARD has supported cooperative banks and RRBs to set up 189 financial literacy centres in rural areas of UP with grant of over Rs 8 crore for disseminating information and creating awareness on various financial products and services.

Saturday, January 24, 2015

Next phase of Jan-Dhan to offer a range of insurance, pension services


Next phase of Jan-Dhan to offer a range of insurance, pension services
PM Narendra Modi said the banks should redouble efforts in financial literacy and seeding of Aadhar numbers with bank accounts needs to improve.
 Prime Minister Narendra Modi on Saturday outlined the next phase of the Jan-Dhan Yojana to include credit, insurance and pension as he complimented bankers for near 100% coverage of households under the massive financial inclusion drive.

The Pradhan Mantri Jan-Dhan Yojana is a key policy plank of the Modi administration's vow to eradicate what it calls "financial untouchability". Each bank account comes with an accident insurance cover, a RuPay debit card and a life insurance policy of Rs 1 lakh. Account holders will also be provided an overdraft facility of Rs 5,000 later. 
 "Well begun is half done. The Pradhan Mantri Jan-Dhan Yojana provides a platform for changing the economic condition of our people," Modi told bankers in his email.

"We need to build on this success and leverage these accounts to provide our citizens a wide range of credit, insurance and pension services. We also need to maintain high standards of customer service. This is the next phase of Pradhan Mantri Jan-Dhan Yojana," the PM said.
 
He said the target set for opening bank accounts for all households has been surpassed well ahead of the target date of January 26, 2015. "By opening 11.5 crore new accounts in a very short span, we have achieved a coverage of 99.74% of all households in the country. I congratulate you for your extraordinary efforts," the PM said in his email.

He said doubts were expressed when the drive was launched but the bankers had proved skeptics wrong by achieving "what appeared to be impossible".

"This feat alone should motivate you, as well as others to work to make our dreams a reality," the PM said.
 
Modi said the banks should redouble efforts in financial literacy and seeding of Aadhar numbers with bank accounts needs to improve. "Bank Mitras need to be enabled to carry out RuPay card and Aadhaar enabled transactions in villages itself," the PM said.

"I want you to work to ensure that each account holder enrolls for Aadhaar and seeds it in the bank account. This needs to be done for all accounts. I am sure you will do this seeding with the same zeal you showed in driving bank account opening," he said,

He said most development activities were hindered by the single disability of not having bank accounts but now that it been overcome, "benefits have already started flowing to people through some of the "direct benefit transfer" schemes. This not only ensures that benefits reach people directly, but also utilizes your accounts well," he said.
 
"This is your great contribution to nation-building. We will ensure that many more schemes utilize the DBT platform," he said.