Page 9 - BANKING FINANCE MARCH 2024

RBI CORNER

(AePS) service providers and called for ances and material supervisory con- Mumbai, he called upon banks to think
introduction of additional fraud risk cerns". of customer convenience and provide
management measures which will The RBI decision essentially bars services accordingly.
strengthen the security of the system Paytm Payments Bank from offering all
while enhancing its robustness. its core services - including accounts
Provide loan agreement
According to RBI, in 2023, more than and wallets - from March, effectively
37 crore users undertook AePS trans- crippling the company's business. info to borrowers: RBI
actions, highlighting the importance Given the significant customer base of Reserve Bank of India (RBI) has asked
played by the segment in financial in- Paytm - once the poster boy of India's banks and NBFCs to provide all borrow-
clusion. fintech revolution - this could impact a ers from retail and micro and small

"To enhance the security of AePS trans- large number of customers. enterprises (MSMEs) a key fact state-
actions, it is proposed to streamline Neither Paytm Payments Bank nor its ment (KFS) containing all the informa-
the onboard process, including manda- tion about the loan agreement, includ-
parent company, One97 Communica-
tory due diligence, for AePS touchpoint ing all-in-costs of the loan, in simple
tions, commented on the RBI action.
operators, to be followed by banks. and easy-to-understand format.
Additional fraud risk management re- "No further deposits or credit transac- In its post policy statement, the cen-
quirements will also be considered," tions or top-ups should be allowed in
RBI said in a statement. any customer accounts, prepaid instru- tral bank said that the new measure
will foster greater transparency and
ments, wallets, FASTags, NCMC cards,
The banking regulator said that the disclosure by the regulated entities
instructions regarding AePS will be is- etc. after February 29, 2024, other (REs) in pricing of loans and other
sued shortly. Both these measures are than any interest, cashbacks, or re-
expected to help in controlling the funds which may be credited anytime," charges levied on the customers.
frauds in the system. the RBI said. Currently, KFS is specifically mandated
in respect of loans by banks to indi-
"The new framework for digital pay-
ment authentication together with Be mindful of legal, cyber vidual borrowers, digital lending by
more stringent due diligence require- risks from AI: RBI official to banks and NBFCs, and microfinance
ments for Aadhar Enabled Payment loans.
Systems will help curtail fraud risk," banks KP Singh, chairman of microfinance

said Zarin Daruwala, Cluster CEO, In- The banking sector and players in the company Satin Creditcare Network,
dia and South Asia markets space should be mindful of legal and said microfinance companies, which
(Bangladesh, Nepal and Sri Lanka), cyber risks, and skill gaps emanating have been following KFS to customers
Standard Chartered Bank. from Artificial Intelligence (AI), RBI since 2022, have significantly enhanced
Deputy Governor T Rabi Sankar has transparency and contributed to
RBI curbs on Paytm: Can't said. broader financial inclusion efforts.

take deposits, offer other "With the adoption of AI and GenAI, "Now, with the recent regulatory move
services after February 29 laws are to be redefined. Industry by the RBI extending similar require-
needs to note that Digital Personal ments to banks and NBFCs, the acces-
The Reserve Bank of India (RBI) barred
Data Protection (DPDP) Act rules are sibility of key fact statements will en-
Paytm Payments Bank from accepting
going to come soon, and banks may be
deposits or top-ups in any of its key able borrowers to fully understand the
in violation of some of it so it's impor-
products - customer accounts, prepaid terms and conditions and make effec-
tant to start preparing for it," he said.
instruments, wallets, FASTags and Na- tive comparisons between different
tional Common Mobility Card (NCMC) Addressing the 19th Annual Banking loan products. While this will enable
among others - after February 29 in Technology Conference organised by borrowers to be more prudent while
the wake of "persistent non-compli- the Indian Banks' Association (IBA) in taking loans, it will enable lenders to

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