Page 10 - Banking Finance February 2021

RBI CORNER

regulated entity such as a non-bank and also as a representative of the (P2M) transactions. The card can be
financier linked to it. The working people, he would act as a bridge used as a travel pass and e-wallet to
group has been advised to submit its between the co-operative banks in purchase bus tickets as well as pay
report within three months. Maharashtra and the Finance Ministry, select merchants.
RBI, NABARD and the state
The covid-19 pandemic has pushed
government. Gadkari had said co-
people to the brink, forcing them to RBI's subsidy to boost
operative banks must compete with
opt for quick loans at the click of a digital payments
private banks to make an impression
button from lending apps. However,
on lawmakers in Delhi. Gadkari added The Reserve Bank of India has
when borrowers were unable to repay announced a fund that will subsidise
these loans, along with an usurious while privatisation of co-operative deployment of card-acceptance
interest rate, these companies banks has been discussed since 1996, devices and QR codes in tier-3 to tier-
resorted to coercive recovery tactics. neither the central government nor
the RBI has ever forcefully imposed it 6 towns and in the northeast. The
"While the penetration of digital Payments Infrastructure Development
on the banks. Parliament passed
methods in the financial sector is a amendments to the Banking Fund (PIDF), which currently stands
welcome development, the benefits Regulation Act in September 2020, at Rs 345 crore, will go up further
and certain downside risks are often bringing co-operative banks under the with contributions from banks yet to
interwoven in such endeavours," the RBI's supervision. come in.
central bank said. The RBI has contributed Rs 250 crore
RBI nod for testing offline to the fund, payment networks will
RBI allows UCBs to refund pump in Rs 100 crore and banks will
e-payments
share capital to members give Rs 1 for every debit card and Rs 3
RBI under its sandbox pilot project has
The RBI has decided to allow urban co- allowed a contactless, prepaid card for every credit card they have issued.
operative banks (UCBs) to refund the that can be used without any The PIDF has a validity of three years
value of the share capital to their connectivity and three other and will target to increase the number
members. technologies that enable offline UPI of card swipe (point of sales, or PoS)
machines by 10 lakh and the number
"It has been decided in the interim to payments. of shops accepting QR code-based
permit UCBs which maintain CRAR of A regulatory sandbox refers to testing payments by 20 lakh.
9 per cent or above to refund the value of new products or services by
of share capital to their members or customers within a controlled Priority will be given to merchants
providing essential services like
nominees or heirs of deceased environment. Regulators may relax transport, hospitality, government
members on demand," the RBI said in some prescription to enable innovation. payments, fuel pumps, PDS shops,
a circular to UCBs. The Banking Last year, the RBI had released a healthcare and kirana stores. The RBI
Regulation Act prohibits withdrawal or framework for its regulatory sandbox will subsidise 30% to 50% of the cost
reduction in share capital by UCBs and said it was aimed at testing of a card swipe machine and between
unless the RBI specifies the extent up product viability. The central bank had 50% and 75% of the cost of acquiring
to which and the conditions subject to specifically invited technology a merchant for QR code acceptance.
which such withdrawal or reduction developers for solutions using offline
may take place, RBI said. and feature phone-based payment In addition to the one-time charges,

Union Road Transport & Highways and services. the card networks (Visa, Mastercard
and RuPay) will pay 1 paisa for every
MSME Minister Nitin Gadkari had said Four companies were allowed to test transaction, while card-issuing banks
there will be no forced privatisation of their products- Tap Smart Data will pay 1 paisa for debit card and 2
co-operative banks in order to bolster Information Services (CityCash). The paise for every credit card transaction.
the co-operative sector. company has developed a near-field This will ensure that the burden of
Addressing the Loksatta Urban Co- communication (NFC) -based prepaid contributing to the fund will fall equally
operative Banking e-conclave, Gadkari card and point of sale (PoS) device to on banks that have issued a large
said as a representative of the Centre facilitate offline person-to-merchant number of cards and those that have
maximum card usage. T
10 | 2021 | FEBRUARY | BANKING FINANCE