Page 10 - BANKING FINANCE APRIL 2024

RBI CORNER

lent transactions, it is critical to PPIs are instruments that facilitate a senior bank executive aware of the
strengthen monitoring systems and use purchases of goods and services, finan- matter.
technology to detect potential frauds cial services, remittance facilities, The secondary identifiers will allow
before they materialise. "Maintaining among others, against the value stored tracing multiple accounts of an indi-
a focus on root cause analysis of con- in them.
vidual if they are not linked and are
sumer grievances can result in prevent- In the latest amendment, the RBI said opened with different KYC documents.
ing such complaints from coming up
PPIs for the "Mass Transit System"
repeatedly," he said.
(MTS) would contain the "Automated RBI clears 'interoperable'
Cyber security challenges can expose Fare Collection" application related to
consumers to identity theft, fraud, and transit services, toll collection, and net banking payments
unauthorised access to personal informa- parking. RBI governor Shaktikanta Das said the
tion, which can affect consumer trust. central bank has approved a platform
The outstanding amount will not ex-
"Financial institutions must dedicate ceed Rs 3,000, the regulator said. that will facilitate online merchants to
substantial efforts to protect customer While these instruments can be re- receive payments from any bank via
information and ensure that vulner- loaded, withdrawing cash, refund, or internet banking, without signing up
abilities exposing customers to risk are fund transfer will not be permitted in for every bank.
promptly identified and addressed," PPIs. Bharat Bill Payment System, an arm of
the governor said. He further added the National Payments Corporation of
that the litmus test of the working of Banks keen to know cus- India, will implement a new system of
any institution or entity is the efficacy interoperable net banking payments.
of its grievance redressal mechanism. tomers better, address This feature will make it easier for
verification layers smaller businesses to do e-commerce,
RBI allows banks, non- Banks are working on updates to as even small payment aggregators
bank of issue PPIs for pub- strengthen their KYC (Know Your Cus- can provide this service without on-

lic transport tomer) standards by adding extra veri- boarding banks individually. The lower
fication layers to identify accounts and effort for payment aggregators is ex-
RBI has allowed banks and non-banks account holders. Under the plan being pected to result in lower payment
to issue prepaid payment instruments discussed with the Reserve Bank of charges for merchants.
(PPIs) for public transit services such as India and the government, lenders Das said that internet banking is one
metro, buses, rail, waterways, tolls, would update all existing accounts, of the oldest modes of online merchant
and parking.
especially those with a single phone payment transactions and is a pre-
The regulator amended the guidelines number linked to multiple or joint ac- ferred channel for payments like in-
for PPIs for mass transit systems (MTS). counts. Banks would also seek more come tax, insurance premiums, mutual
It said such PPIs could be issued with- verification from individuals having fund payments, and e-commerce.
out a "know your customer" (KYC) veri- multiple accounts opened with differ- At present, such transactions processed
fication of the holder. ent documents. through payment aggregators are not
"Public transport systems across the This comes even as the government has interoperable. A bank must integrate
country cater to a multitude of com- set up a committee led by finance sec- separately with each PA of different
muters on a daily basis. To provide con- retary TV Somanathan to standardise online merchants and there must be an
venience, speed, affordability, and and ensure KYC norms are arrangement between the customer's
safety of digital modes of payment to interoperable across the financial sec- bank and the merchant's PA.
commuters for transit services, it has tor.
been decided to permit authorised With RBI's new rule, you
bank and non-bank PPI issuers to issue "We are looking at multi-level second-
PPIs for making payments across vari- ary identifiers such as PAN, can choose card network
ous public transport systems," the cen- Aadhaar, and unique mobile number In a move aimed at boosting competi-
tral bank said. (UMN) for joint accounts as well," said tion, RBI has ordered card issuers to

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