Showing posts with label Economy News. Show all posts
Showing posts with label Economy News. Show all posts

Sunday, October 19, 2014

RuPay cards to boost e-commerce, says SBI

RuPay e-Commerce has roped in big online merchants such as IRCTC, Life Insurance Corporation (LIC), Flipkart and Snapdeal to facilitate online payments. 

RuPay cards’ acceptance has grown to over 15,000 online merchants with having a customer base of 30 million RuPay cards that are acceptable at all ATMs and 9.8 lakh PoS (point of sale) and over 15000 online merchants in the country, said RuPay in a statement. 

With this arrangement, RuPay card holders can book train tickets on irctc.co.in, make online payments for LIC premium, shop on Flipkart.com, Snapdeal.com, Homeshop18.com and book movie tickets on Bookmyshow.com. Also, the country’s largest bank- State Bank of India (SBI) has started accepting RuPay cards on its payment gateway. RuPay e-Commerce service was launched in June 2013 with an additional anti-phishing feature for security checks, the statement 

“Team-SBI is quite upbeat about the development. State Bank Payment Gateway (PG) facilitates every month, around 1.3 crore Card-Not-Present (CNP) transactions. Addition of RuPay platform will give a further boost to e-commerce transactions. Flipkart is one of our active merchants. Acceptance of RuPay Card for online transactions by Flipkart will add to the transaction flow from their site to our NetBanking and PG”, said B Sriram, Managing Director at SBI. 

Sachin Bansal, Co-founder and CEO, Flipkart, said “Payments is a core area of focus for Flipkart. We are constantly looking for ways to expand and improve the payments experience on our site and this initiative with RuPay is an important step in that direction. We look forward to working with SBI and NPCI on more such initiatives that will contribute towards enhancing the payments ecosystem for our customers”. 

RuPay scheme aims at addressing the needs of Indian consumer, merchants and banks with benefits attached to it including - lower cost, customized product offering, protection of information related to Indian consumers, electronic product options as relevant to untapped/unexplored consumer segments and Inter-operability between payment channels and products. 

A P Hota, MD and CEO, NPCI said, “Acceptance on large merchants like IRCTC, LIC, Flipkart, Homeshop18, Snapdeal and BookMyShow among others marks an important milestone for RuPay ecommerce. Today, 30 million RuPay cards have already been issued in the country. RuPay cards today are enabled at all ATMs across the country, 9.8 Lakhs POS terminals and over 15000 online merchants. It is our vision to touch every Indian with at least one payment mode of NPCI by 2020”
NPCI offers e-commerce solution PaySecure, through which a RuPay cardholder uses ATM PIN to make an online transaction which is easy and quick.

Monday, September 22, 2014

Nabard to highlight co-op role in RuPay implementation

The initiative of South Canara District Central Cooperative (SCDCC) Bank Ltd to make primary agricultural cooperative societies (PACS) as part of the payment system under the RuPay Kisan credit card will be taken as a model by Nabard.

GR Chintala, Chief General Manager of Nabard, Bangalore, told Business Line here on Saturday that the Nabard will issue a circular in this regard in another one-and-half months. 

The initiatives of Raigad and Rampur district central cooperative banks in Maharashtra and Uttar Pradesh, respectively, will also be showcased as models. Highlighting the SCDCC Bank model, he said both the tiers of cooperative banking have retained their identity while implementing RuPay cards. 

Here PACS, under SCDCC Bank’s jurisdiction, directly give loans to farmers. For the implementation of RuPay card, these societies open accounts in the books of SCDCC Bank.
Though the accounts are maintained at SCDCC Bank, the funds are routed in such a way that the farmer need not approach the SCDCC Bank branch. He said that the farmer will continue to transact at the micro ATMs at PACS level. 

In Raigad, farmers are the members of PACS but they have their loan accounts at the branches of DCCB (district central cooperative bank). All the accounts are transacted through the DCCB in Raigad. 

The Raigad model will be suited for those districts where the loans to farmers are extended directly through DCCB branches. 

Those districts that follow the practice of extending loans to farmers through PACS can study the SCDCC Bank model. 

He said that 167 PACS come under SCDCC Bank. It has jurisdiction over the revenue districts of Dakshina Kannada and Udupi. The boards of 163 PACS have given their nod for being a part of the implementation of RuPay Kisan credit cards to farmers.

Friday, August 8, 2014

Will PM Narendra Modi's financial inclusion plan use Aadhaar for authentication?

In less than two weeks, PM Narendra Modi is expected to announce a new Financial Inclusion drive.
However, even as the anointed day - the 15th of August - draws near, key aspects of this drive are still unclear.

 

The programme, called Sampoorn Vittiyea Samaveshan (SVS), seeks to add 20 crore new bank accounts. These will be linked to Aadhaar. They will probably provide an overdraft facility. And they will be used for cash transfers.

Go deeper into the details, however, and you encounter a set of unresolved questions. Prime among them, the role of Aadhaar.

While researching this story, ET reviewed two drafts produced by the Department of Financial Services - one in June, and the second in July. The draft dated 8 July, 2014, says: "This account would be linked with the Aadhaar number of the account holder and would become the single point for receipt of Direct Benefit Transfers (DBT) from Government/Local Bodies."

According to a source close to the UIDAI, who spoke to ET on the condition of anonymity, this phrasing suggests that while Aadhaar numbers might be seeded into bank accounts, it might not be used for authentication.

In other words, once the cash flows into the Aadhaar-linked bank account, last-mile authentication when the money is being withdrawn will be done using the authentication systems of either the relevant bank or the last-mile service provider - like a Banking Correspondent (BC) company.
Not using Aadhaar for last mile authentication has significant fallouts for the UIDAI. Which, among other things, has the Aadhaar-enabled Payment System as one of its key components, and sees authentication services as one of its principal functions and revenue streams.

Till now, the UIDAI has argued that Aadhaar-based authentication is needed to show that the DBT (Direct Benefit Transfer) has indeed reached the targeted beneficiary.

However, from the field, this claim has been marred by persistent reports that online biometric authentication is not working for manual labourers and the old. Agrees Sanjay Kuberkar, The founder of Adrenaline Financial Inclusion Advisors, "The biometrics do not always work."

Another reason the UIDAI wants Aadhaar-enabled authentication is because that will further inter-operatability. A person can use her biometrics to access her account through any BC, any bank.
Says the source close to the UIDAI, "If banks or last-mile providers use their own proprietary (biometric) authentication technologies, then there will be no inter-operatability." In other words, a person with an account in United Bank may not be able to use a BC working with State Bank of India to access his account.

This is where the debate gets complex. Aadhaar has defined standards for Micro ATMs and Biometric Capture. Banks and BCs adhering to those standards, with BCs who have plugged into the bank's core banking servers, can send authentication queries all the way to the UIDAI's central ID repository. In this design, a beneficiary can access her account through any service provider if they are Aadhaar-compliant.

But, banks too have been creating their own biometric databases. And the question is whether authentication requests where one bank sends one biometric authentication query to another bank can be as interoperable as the Aadhaar ones.

Under former DFS Secretary DK Mittal, the department ran such pilots in Haryana. These too were online biometric authentications but the biometrics were stored with the banks. But those, says the UIDAI source, failed.

However, another way to ensure interoperatability is to use PIN numbers instead of biometrics. It is here that a proposal in the SVS documents is interesting. It proposes that all account holders be provided with a RuPay card. Says Kuberkar, "The card works at any ATM, and does not require biometric authentication."

Counters the UIDAI source, "Biometrics are safer than PIN numbers.

In contrast, PIN numbers can be used also by those who have trouble with biometrics.
There is another reason why some banks want to retain authentication with them. Aadhaar was planning to start charging for authentication. A decision which has now been deferred to December.
Says Kuberkar: "Cost of Aadhaar authentication is an issue, even if the cost is kept at just 25 paise per authentication. There is at least one client bank of mine who is considering to use their own biometric authentication method instead of Aadhaar because of the cost implications."

What does this seeding/authentication debate mean for reducing leakages? According to MS Sriram, visiting faculty at IIM Bangalore's Centre for Public Policy, it is a good idea to use the Aadhaar number only for seeding. "Linking bank accounts with the Aadhaar number will help the government eliminate ghosts and duplicates from beneficiary lists."

Such a move, he says, also addresses the concerns around biometrics not working and privacy. "Using Aadhaar only for seeding also takes care of some privacy-related questions. A trail of a person's movements will not be available any longer at the central server."

About ten days ago, the Department of Financial Services (DFS) was expected to present an updated iteration of SVS to the Prime Minister. This was shortly after he reposed his faith in the UIDAI project. It is yet unclear what transpired in that meeting. The documents in the public domain pre-date that meeting. Emails to DFS officials seeking an appointment went unanswered.

However, based on conversations with UIDAI officials and Banking Correspondent (BC) companies, it seems there is little clarity on this question on how Aadhaar will be used.

Monday, July 7, 2014

Govt Asks Banks To Issue Rupay Cards, Mastercard-Visa Feeling The Heat

In the month of May, President Pranab Mukherjee inaugurated RuPay, which is India’s first national payment gateway. Created by National Payments Corporation of India, RuPay has several advantages compared to private payment gateways such as low processing fees, data security and more.

While reporting this exciting news, to be very honest, we were quite skeptical regarding it’s adaptability and wide scale usage. Considering that it is a government owned and supported payment gateway, we assumed that it will take some time to spread and adapt.
But we were very wrong!

In a latest development, government is actively encouraging the usage of RuPay across everywhere, as they want it’s adoption to grow quickly. Such is the intensity of it’s promotion that for the first time in their 30 years of existence, global payment gateway biggies such as MasterCard and Visa are facing the heat.

As per reports coming in, Gurdial Singh Sandhu, secretary at the finance ministry’s department of financial services has asked all nationalized banks to issue debit cards which are RuPay enabled!

Rupay Mastercard visa

Normally, only one debit card is issued per account, but this time, bank officials have been categorically asked to tweak their rules, and issue one more RuPay enabled debit card which can use this new payment gateway.

Not only this, merchant establishments and traders have been specifically requested and encouraged to install sale terminals especially for RuPay enabled debit cards so that a wide scale adaption of India’s new payment gateway is made possible.

Industry experts are fearing that such official diktat from the government to nationalized banks can defer some customers to private banks as they are still using MasterCard or Visa payment gateways.
But AP Hota, MD & CEO of National Payments Corporation of India has rubbished such
apprehensions as he said, “Such fears are unfounded. RuPay is a fully functional card payment system. We are also launching Platinum cards for HNI customers.”

Nationalized banks have now been given 6 months to issue a new RuPay enabled debit card to all it’s existing customers, inform and educate all bank employees in thousands of branches all over India and send an updated report to the government regarding the adaptation and usage.

Just for information, around 2 crore RuPay enabled debit cards have been issued so far.
Last year, Indians spend Rs 80,000 crore using debit cards, and its usage is increasing at an impressive rate of 35% every year. It seems that Indian Government has donned the cap of a startup this time, and is doing everything possible to increase RuPay’s usage. If the same momentum is maintained for another year or so, RuPay can easily capture more than 80% of the market in India, and this is a bad news for private payment gateways.

What is your opinion on the increased effort of Indian government to spread the usage of RuPay? Will it backfire or will it work?

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 downgrade...it 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."