Saturday, September 28, 2013

Akola district central coop bank to distribute Rupay cards

The Akola district central cooperative bank is set to launch Rupay cards - a debit card for farmers, in the district.

Farmers can use their credit amount to buy seeds, fertilisers and pesticides among other things.
The Akola district central cooperative bank is going to be the second bank in the state to have such card enabled service for its farmers.

The Nabard and National Payment Corporation of India have jointly launched the Rupay card, a platform which provides payment facilities using cards. Currently, such platform is provided by two debit card companies and those are US based.

Akola DCC bank has 107 branches in Akola and Washim districts, as the latter was carved out as a separate district some years back. There are two lakh farmers having an account with the bank, who would get the Rupay card from the bank in the coming week.

The officials stated that such card will not only enable farmers to use their loan amount efficiently but also keep a track of money. The manual withdrawal procedure of money from bank account is getting costlier as the expenses on manpower and infrastructure are increasing. In such a case, electronic transactions are very economical.

The bank is also setting up an automated tailor machine in every branch for farmers' benefit. The Nabard has also funded some companies for producing debit card reading machines which can be given to the distributors of fertilisers, seeds and pesticides. It will keep track of every transaction and if farmers are overcharged, it can be found through electronic bills, the officials said.

Wednesday, September 18, 2013

Morpho becomes first RuPay-certified vendor for chip card manufacturing in India

Morpho (Safran) today announced that its Indian subsidiary Syscom has been certified as the first and to date only payment card manufacturer in India for the manufacturing and personalization of chip cards for RuPay, the Indian payment card network by National Payments Corporation of India (NPCI).
The RuPay chip card is based on the D-Payment Application Specification (D-PAS) platform, which is the EMV* technology of Discover Financial Services (DFS). The RuPay chip cards will thus be accepted at all Discover Point of Sale terminals and ATMs globally in addition to the vast network of RuPay-enabled ATMs and Point of Sale terminals in India.

"This certification recognizes Syscom's commitment to maintain technology and quality leadership over all other card manufacturers in the country to meet banks' requirement for payment cards," said Sanjeev Shriya, SVP Sales India at Morpho, e-Documents Division and Managing Director, Syscom. "The chip cards are based on international specifications that provide protection to banks and customers against card skimming and counterfeiting frauds. We are now fully equipped to meet the stringent security and certification requirement of the banks."

* EMV (Europay, MasterCard and VISA) is becoming the global standard in the migration from magnetic stripe cards to chip-based cards. EMV is an interoperability standard developed by the three financial institutions to ensure that all Europay, MasterCard, and VISA-branded smart cards and all smart card-reading POS terminals and ATMs work together to deliver the highest level of security.

Tuesday, September 17, 2013

There's something for everyone in latest global payment cards data

The publication of RBR's global payment cards research provides, among other things, an annual opportunity to analyze how the different card schemes are matching up.
Last year's research highlighted the meteoric rise of UnionPay, and in many ways this remains the outstanding feature again this year, with the Chinese scheme growing its share of cards in issue to 34.5 percent — well ahead of its main competitors.

To some extent all the main schemes will be pleased with the new figures, however. Visa's V Pay, while still something of a niche European scheme, grew its card base by more than 50 percent, for example. And with an overall increase of more than 8 percent, MasterCard brands saw slightly higher growth in card numbers than their Visa counterparts.

The other main schemes — American Express, Diners Club, Discover and JCB — also grew their cards in issue, but it was the 12 percent growth in domestic scheme card numbers that caught the eye here. This only just kept pace with the global growth driven by UnionPay but was nevertheless ahead of most other schemes.

Growth of domestic schemes in less developed markets is likely to be a feature of the global cards scene for the next few years, with Brazil's ELO, India's RuPay and expanding schemes in other large markets such as Mexico and Nigeria.

There is no right way of comparing schemes — while UnionPay now dominates in terms of the number of cards, it must be remembered that most of these are in one country and that UnionPay's share of the number and value of transactions still lags behind the other main schemes.

Interestingly, while UnionPay makes up a more modest 4.4 percent of transactions, this rises to 20.5 percent of the value of global card payments. The message here is that it is only a matter of time before there is an explosion in the number of global card transactions when Chinese people start using cards for more everyday purchases.

Wednesday, September 4, 2013

New RBI Governor Raghuram Rajan unveils big initial package, promises more


New RBI Governor Raghuram Rajan on Wednesday came out with a slew of measures, including more trade settlement in rupees to rescue the battered financial markets and hinted at a shift in focus from inflation control, doggedly pursued by his predecessor, to boosting growth.

Shortly after he took over as the 23rd Governor of the central bank, Rajan, 50, addressed the media with a prepared statement in which he laid out a detailed road map for his innings in the short term, which he called a "big initial package."

He also rescheduled by a few days the date for his much- anticipated first monetary policy statement to September 20. The new Governor set up a number of committees for revising and strengthening monetary policy framework, financial stability, financial inclusion, NPAs and an outside panel of experts headed by former Governor Bimal Jalan to screen applications for new bank licenses. Rajan said the new bank licences will be issued around January next year.

Apparently reflecting a shift in the approach from his predecessor D Subbarao, who had serious differences with the government of late, Rajan said the primary role of the bank is monetary stability to sustain confidence in the value of the rupee.

"Ultimately, this means low and stable expectations of inflation, whether that inflation stems from domestic sources or from changes in the value of the currency, from supply constraints or demand pressures.
"...but we have two other important mandates; inclusive growth and development, as well as financial stability," he said.

Asked about Subbarao's focus on targeting inflation, Rajan said he would reserve his comments till September 20. Rajan said the bunch of reforms has been unveiled today to enhance growth.
"I think there are so many low-hanging fruits in the economy that if we only pluck them we can accelerate growth substantially." The former IMF chief economist and economic advisor to the Finance Ministry said there were some positive developments in the economy which will help to boost growth.

The measures disclosed to support the rupee include liberalisation of the financial market by enhancing the limits for exporters to re-book cancelled forward exchange contracts and opening a special concessional window for swapping foreign currency non-resident (FCNR) deposits and dollar funds. "My sense is that we certainly don't need false optimism. But I think there is good reason to believe that in the medium run, the future of the country is strong," he said.

Asked about Standard and Poor's downgrade threat, he said the international rating agency "nearly reiterated what has been its long standing claim about there being one-third possibility of a rating is not something new. So I won't read too much into the statement."

The measures announced by Rajan include enhancing the re-booking limit on cancelled forward exchange contracts for exporters to 50 per cent, extending a similar facility to importers and introducing cash settlement in 10-year interest rate future contracts to develop the money and G-sec markets.
Rajan indicated the RBI will take steps to reduce the Statutory Liquidity Ratio (SLR) and introduce greater regulatory and supervisory control over the domestic operations of foreign banks. He promised to give freedom to banks to open branches without prior RBI permission.

The new RBI chief also said he will steadily liberalise the markets and lift restrictions on investment and position-taking, together with Sebi, and will examine introduction of interest rate futures on overnight interest rates.

While the RBI has enhanced the re-booking limit on cancelled forward currency contracts to 50 per cent for exporters, importers will be allowed a 25 per cent limit.The central bank will push for more trade settlements in rupees and open up the financial markets for those who receive rupees to invest it back in.

Rajan said the RBI will raise the overseas borrowing limit of 50 percent of unimpaired Tier I capital to 100 per cent for banks and will introduce cash-settled 10-year interest rate future contracts.
The central bank will also examine introduction of interest rate futures on overnight interest rates; steadily but surely liberalise markets, restrictions on investments and position-taking; and issue inflation-indexed savings certificates tied to CPI to retail investors by end November.

He stressed on the need to reduce the requirement for banks to invest in government securities in a calibrated way and will push foreign banks to set up wholly owned subsidiaries.
Rajan proposes to collect credit data, examine large common exposures among banks and encourage banks to clean up their balance sheets.

Referring to the announcements, he said, "This is a part of my short-term time-table for the Reserve Bank. It involves considerable change, and change is risky. But as India develops, not changing is even riskier. We have to keep what is good about our system, of which there is a tremendous amount, even while acting differently where warranted."

He also announced a committee headed by RBI Deputy Governor Urjit Patel to strengthen monetary policy framework. The panel will submit its report in three months.

Rajan said that a committee under former Governor Bimal Jalan would screen bank license applicants after an initial compilation of applications by the RBI staff.

He said new bank licences will be announced "within, or soon after, the term of Deputy Governor Anand Sinha, who has been shepherding the process. His term expires in January 2014."
Financial sector expert Nachiket Mor will head a panel to suggest steps to promote financial inclusion. Another committee, to be headed by Deputy Governor K C Chakrabarty, will take a close look at rising NPAs and suggest steps to improve the recovery of bad debts.

"While the resumption of stalled projects and stronger growth will alleviate some of the banking system difficulties, we will encourage banks to clean up their balance sheets and commit to a capital-raising program where necessary. The bad loan problem is not alarming yet, but it will only fester and grow if left unaddressed," Rajan said.

Stressing that India is a fundamentally sound economy with a bright future, the new RBI chief said, "Our task today is to build a bridge to the future, over the stormy waves produced by global financial markets. I have every confidence we will succeed in doing that."

Tuesday, September 3, 2013

Reaching out to farmers, the electronic way

India’s first card payment network, RuPay, similar to Visa and MasterCard, is changing the way farmers are banking 

RuPay, India’s first card payment network similar to Visa and MasterCard, is changing how farmers are banking and handling their money. 

Take the case of Mahesh Kumar, 38, a farmer on the outskirts of Mumbai. He used to withdraw the entire Rs.1.5 lakh of annual farm credit he was entitled to under the Kisan credit card scheme in a single instance, and end up paying huge sums in interest.

Last year, he began using a RuPay Kisan card instead to withdraw smaller sums of his entitlement from automated teller machines as well as to make payments at retail stores. “It has made life very easy. Now, I can withdraw small amounts of money any time and save on interest costs,” he said.

Crop loans of up to Rs.3 lakh are disbursed at an annual interest rate of 7%, according to the ministry of agriculture’s website. The government provides interest subvention of 3% per annum on prompt repayment, effectively making the crop loans available at 4%.

The Kisan credit card was launched in 1998-99 by then finance minister Yashwant Sinha to help farmers make smarter decisions on how to use cash for cultivation rather than depend on suppliers who were funded by banks.

RuPay was conceived to offer a domestic system that will allow all Indian banks and financial institutions to participate in electronic payments. Through RuPay Kisan cards, farmers are now able to make electronic payments. For a bank, the RuPay cards mean lower transaction costs than MasterCard- or Visa-branded cards.

RuPay was launched in March 2012 by the National Payment Corp. of India (NPCI), and currently cards affiliated to it are issued by 20 state-run banks, six private banks and 84 cooperative and gramin banks that cater to people in small towns and villages.

“We now have 6 million cards in circulation, out of which 2.7 million are Kisan cards, 2.5 million are with cooperative banks and the remaining are with mainstream banks,” said A.P. Hota, chief executive and managing director of NPCI. He hopes to issue 150 million cards in two-three years.

On 6 August, Dombivali Nagari Sahakari Bank Ltd became the first scheduled urban cooperative bank to introduce RuPay debit cards. Milind Varerkar, general manager, said it was “the first time we issued debit cards and it is through the RuPay network, as the Visa and MasterCard software loading proves to be very expensive”.

“From a bank’s perspective, RuPay network is cheaper,” said C. Sumoth, chief manager (priority sector advances department), Federal Bank Ltd. “It will help a bank save at least 25-30% on switching and cardholding cost compared with using a Visa or a MasterCard platform.” Federal Bank has issued 10,000 RuPay-branded debit cards since it launched these in April.

“Competition is always welcome,” said Visa Inc.’s group country manager for India and South Asia Uttam Nayak. “We undeniably accept that they (RuPay) have support of the government,nationalized banks and shareholder banks, but the market opportunity is huge.”

Calls to Ari Sarker, division president, South Asia, MasterCard Worldwide, went unanswered.
In June, NPCI also launched PaySecure for RuPay cards, an e-commerce system similar to PayPal that allows secure online payments. Until now, these cards worked only at ATMs and point-of-sale terminals at retail outlets.

Shekhar Ganapathy, general manager for South Asia at ACI Worldwide Inc., which provides software for banks to help recognize transactions made through RuPay cards, believes the network has a good chance of success if its reach improves.

According to the Reserve Bank of India, there are around 120,000 ATMs and about 1 million point-of-sale (PoS) terminals in the country. While customers can use RuPay cards at all ATMs, most PoS terminals are yet to be configured to accept it. “As of now, only 25-30% of the PoS machines in the country accept RuPay card. Hence, there are issues when it comes to swiping the cards at other terminals,” said Sumoth of Federal Bank.

The penetration of RuPay cards is slow, admitted Hota. “Out of the nine lakh (900,000) PoS terminals, RuPay works on 2.7 lakh terminals,” he said, attributing the delay in acceptance to software upgradation that is being done manually. “To get private sector banks and mainstream banks to convert to RuPay cards full-time will be our biggest challenge,” he said.

RuPay will soon be available as an international card in collaboration with DFS Services Llc, a US payment network. “RuPay, by default, is a domestic card, but an international variant will be available soon,” Hota said.

RuPay is a step in the right direction and a starting point that can be applicable to the rest of the market,” said Bharat Poddar, partner and director, Boston Consulting Group. “And with RuPay set to launch international cards, it can help solve the problem that inhibits its acceptability in high-end markets.”