Saturday 22nd June 2024

RBI Allowed PPSL To Continue Its Online Payment Aggregation Amid Approval Process

One97 Communications, the parent company of PPSL, reported in a regulatory filing on March 26 that the Reserve Bank of India has allowed Paytm Payment Services Ltd (PPSL) an extended time for resubmission of its application form for a payment aggregator (PA) licence.

According to the exchange filing, the central bank has also permitted PPSL to continue operating as a payment aggregator while it awaits government permission on previous investments received from One97 Communications.

One97 Communications advised the stock exchanges that according to RBI’s letter, PPSL will have 15 days after receiving GoI (Government of India) approval to file the application seeking authorization for PPSL to function as an online PA. But if the GoI made any unfavourable decisions, they must be immediately reported to the RBI.

It also stated that PPSL could continue operation with its online payment aggregation service for existing partners during this period without adding any new merchants.

Moreover, the company claimed that any latest improvements or changes would have “no material impact” on the business and revenues of PPSL by adding the cause that the RBI notification is only applicable to “onboarding of new online merchants” and hence the company can continue to provide payment services to all the existing online merchants as usual.

One97 Communications further clarified that for offline businesses, it could continue to onboard new merchants and provide them with payment services such as all-in-one QR, soundbox, card readers, etc.

Remarkably, as per the RBI’s new set of guidelines released in March 2020, the regulator mandated that all PAs must be authorised by it. In order to do this, the regulator advised all non-bank businesses that provide PA services to submit applications for seeking authorization by June 30, 2021, under the Payment and Settlement Systems Act, 2007 (PSS Act). Later, this deadline was extended to September 30, 2021.

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Not Getting Rs. 2000 Notes From ATM? Check What FM Nirmala Sitharaman Says

Parliament was informed on Monday that no instructions had been granted to banks regarding the filling or non-filling of Rs 2000 notes in ATMs, as lenders make their own decisions regarding the loading of cash vending machines.

According to RBI Annual Reports, the total value of Rs 500 and Rs 2000 denomination banknotes in circulation as of end-March 2017 and as of end-March 2022 was Rs 9.512 lakh crore and Rs 27.057 lakh crore, respectively, Finance Minister Nirmala Sitharaman declared in a written reply in Lok Sabha.

Banks have not been given instructions to stop filling Rs 2000 notes in ATMs. She explained that Banks determine the amount and denominational requirements for ATMs based on past usage, consumer demand, seasonal trends, and so on.”

In response to another question, the finance minister stated that the total amount of central government debt/liabilities are estimated to be around Rs 155.8 lakh crore (57.3% of GDP) as of March 31, 2023.

She stated that out of this, external debt is projected to be about Rs. 7.03 lakh crore at current exchange rates (2.6 percent of GDP).

She said, “Share of external debt is only about 4.5 percent of total debt/liabilities of the central government and less than 3 percent of GDP. External debt is mostly financed by multilateral and bilateral agencies at concessional rates. Therefore, the risk profile stands out as safe and prudent.”

Moreover, she stated that the RBI, in consultation with the government, recently announced a number of measures to diversify and broaden the sources of forex funding in order to reduce exchange rate volatility and global spillovers.

Fresh FCNR(B) and NRE deposits were excluded from the current interest rate regulation (i.e., interest rates shall not be greater than those offered by the banks on equivalent domestic rupee term deposits) until October 31, 2022, as per the statement.

According to her, the all-in-cost ceiling was increased by 100 basis points in some circumstances up to December 31, 2022, and the external commercial borrowing (ECB) limit under the automatic route has been raised to USD 1.5 billion.

She said that in order to promote the expansion of Indian exports and the growing interest of the international trading community in the Indian rupee, RBI has implemented a new arrangement for exports and imports to be invoiced, paid, and settled in the rupee on July 11, 2022.

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RBI’s Shaktikanta Das Won Governor Of The Year Award 2023

RBI’s Governor Shaktikanta Das received the Governor of the Year award on March 15 at the Central Banking Awards 2023.

His brilliant leadership during tough circumstances, such as the collapse of a significant non-bank organization, the first and second COVID-19 pandemic waves, and the inflationary effects of Russia’s invasion of Ukraine, has earned him recognition.

Under Das’ direction, the RBI carried out important changes, introduced innovative payment systems, and gave growth-supportive measures throughout the pandemic.

Das received praise for skillfully guiding the central bank away from both dire economic consequences and strong political pressure. He demanded that “sunset clauses” be used for the majority of the RBI’s Covid-19 interventions, provided targeted liquidity to important sectors, foreign exchange, and more lenient terms for state governments’ overdraft facilities.

For the second time, a chief of the Indian central bank has received the honour after Raghuram Rajan received it in 2015.

The National Bank of Ukraine also received the central bank of the year honour. Das deserves to receive the prestigious Governor of the Year honour for his leadership in a time of crisis and his efforts to India’s economic reforms.

Under Das, digital payments in the form of UPI flourished in India, making it the country with the biggest real-time payments market today. In 2021, India had close to 50 billion real-time transactions. According to the IMF, UPI has experienced 160% annual growth rates on average since its release in 2016.

Since private cryptocurrencies gained popularity in India, Das has actively opposed them, openly labelling them as a danger to the nation’s financial stability. The RBI recently launched the Digital Rupee, the Central Bank Digital Currency (CBDC) of India, which is a digital token that serves as legal currency and is regarded as fiat money.

Das was also the pioneer behind the implementation of the Goods and Services Tax (GST). Shortly after the Modi government took power, he played a crucial role in pushing GST.

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RBI Permitted Banks Of 18 Countries To Trade In INR

With more nations attempting to reduce the use of dollars in international trade, the Indian rupee is getting closer to becoming a recognised currency. The opening of 60 special rupee vostro accounts in 18 nations, including Russia and Sri Lanka, has been authorised by India’s central bank, the RBI, in order to facilitate the smooth operation of international trade in INR.

According to records, India’s Reserve Bank of India (RBI) had given permission to “domestic and foreign Authorised Dealer (AD) banks in 60 cases for opening SRVAs of banks from 18 nations” for the purpose of settling payments in Indian rupees, as per Bhagwat Karad, India’s Minister of State for Finance.

The minister added that, out of the 18 nations, Russia has been vocal in promoting local currency transactions as part of the larger “de-dollarization” movement. Yet, he continued, India has been promoting the idea of trade in local currency basically to increase exports.

The following 18 nations have been permitted to trade Indian rupees:

1  – Russia

2  – Singapore

3  – Sri Lanka

4  – Botswana

5  – Fiji

6  – Germany

7  – Guyana

8  – Israel

9  – Kenya

10 – Malaysia

11 – Mauritius

12 – Myanmar

13 – New Zealand

14 – Oman

15 – Seychelles

16 – Tanzania

17 – Uganda

18 – United Kingdom.

The figures clearly show a considerable advancement in the development of a system to settle international trading in Indian rupees.

What is SRVA, or Special Rupee Vostro Account?

The SRVA process was initiated in July last year when the RBI published comprehensive guidelines for cross-border commercial transactions in Indian rupees (INR).

The decision has been made to implement a new system for exports and imports that will allow for INR invoicing, payment, and settlement.

Authorized banks in India must open and maintain SRVAs of the banks in the partner trading country in order to settle trade based on new mechanisms.

These accounts maintain the foreign entity’s holding in the Indian bank in INR. The money is credited to this vostro account when an Indian importer pays a foreign trader in rupees.

Likewise, money from this vostro account will be taken out and credited to the regular account of an Indian exporter when they are required to pay for products and services in rupees.

Holders of SRVAs are permitted to invest their excess funds in Indian government securities. The RBI is offering this opportunity to help spread awareness about the new system.

The Indian central bank had stated that “Indian importers conducting imports through this mechanism shall make payment in INR (Indian Rupee), which shall be credited into the special vostro account of the correspondent bank of the partner country, against the invoices for the supply of goods or services from the overseas seller/supplier.”

After the West and European nations implemented sanctions following the commencement of the “special military operation” by Vladimir Putin against Ukraine on February 24, 2022, India has been attempting to encourage the usage of the INR for trade settlement with other countries.

Major Russian banks Sberbank, VTB Bank, and Gazprombank were among the first to receive RBI permission for SRVAs.

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Daily UPI Transactions Across The Country Exceeded 36 Crore In One Year

The RBI Governor Shaktikanta Das on Monday announced that daily UPI (unified payment interface) transactions across the country surpassed 36 crores in one year, a 50 percent jump from 24 crores in February 2022.

In terms of value, these transactions are worth ₹6.27 lakh crore, which is registering a growth of 17 percent from ₹5.36 lakh crore in February 2022. At the RBI headquarters, While launching Digital Payments Awareness Week, the governor discloses this data to the reporters. He also said that the total digital payment transactions crossed over Rs 1,000 crore each month during the last three months.

He also said that the success story of India’s payment systems tempts several other countries to adopt them. They have shown their interest in replicating this system. It’s a matter of pride. Since December 2022, India’s payment systems have a record of over 1000 crore transactions per month. This shows its acceptance by consumers due to its robustness to payment systems. According to the recent report of a pan-India digital payments survey, out of 90,000 respondents, 42 percent of respondents are using digital payments.

In volume terms, in January 2023, the number of UPI transactions crossed 800 crores, while NEFT (National Electronic Funds Transfer) saw a daily volume of 3.18 crore transactions on 28 February.

Since the launch of UPI in 2016, it has appeared as the most popular and preferred payment mode, leading person-to-person and person-to-merchant transactions accounting for 75 percent of total digital payments.

On the tokenization exercise, he said that RBI had tokenized over 48 crore cards, which managed over 86 crore transactions, which makes it the world’s largest tokenization exercise. The tokenized transactions have grown from 35 percent initially to 62 percent.

The acceptance of digital payments infrastructure has increased from 170 million touch points to 260 million touch points, which shows a growth of 53 percent.

The governor also launched the ‘Har Payment Digital’ mission which aims to strengthen the RBI’s commitment to deepening digital payments in the country.

While UPI has allowed the digital payments facility to retail outlets, kiranas, street vendors, small or large business people, etc., Bharat Bill Payment System (BBPS) has ensured the shift of bill payments from cash/cheque to digital mode and National Electronic Toll Collection (NETC) ) system has focused on shifting the toll payment to digital mode.

The governor further said that the RBI has decided to adopt 75 villages to mark 75 years of independence. Under this program, Payment System Operators (PSOs) will choose 75 villages and convert them into digital payment-enabled villages.

The RBI Deputy Governor Rabi Shankar said that the financial formalization of the economy is essential as money is at the core of any economy. He added that RBI’s Digital Vision 2025 is to make digital payments available everywhere and every time so that everyone can make digital payments. In the last five years, digital payments have grown 15 percent annually, he said.

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Banks May Remained Shut On Every Saturday

In India, every first and third Saturdays in the bank are open for Indians who are still visiting on the weekend in the digital age. But now the weekend visits to the local branch may not be possible due to the bank holiday on all Saturdays. Employees may work for five days a week. It is a long pending demand of the bank employees.

The Indian Banks’ Association (IBA), in discussion with the United Forum of Bank Employees, has agreed to declare all Saturdays as a holiday, but the employees will have to work more hours per day.

But to implement this new rule, the Indian government, along with the Reserve Bank of India, will also have to accept this five-day week in exchange for longer hours before deciding on a new timing. The deal regarding working days was negotiated separately from wages when a senior union official was absent.

According to reports, 40 minutes will be added to bank employees’ per day working hours in lieu of two additional days off. The decision was taken after LIC’s acceptance of a five-day working week, and stock market plans to align trading with western economies. Bankers acknowledge that even though ATMs and e-banking provide primary services to customers, many people still visit their local branches.

Moreover, cash deposit machines and passbook printing devices have also been set up along with ATMs so people can take advantage of it as a self-service.

After accepting this demand, employees must work daily from 9:45 am to 5:30 pm.

Even though the banks will remain closed in the coming days, people will not face any hassle related to bank operations such as ATMs, cash deposits, online banking, and mobile banking services.

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Gates Visited India To Hold a Discussion With RBI Governor

Microsoft’s co-founder Bill Gates visited the Reserve Bank of India (RBI) office in Mumbai on Tuesday and met Governor Shaktikanta Das. The Central Bank tweeted that Gates visited the RBI office and held extensive discussions with Das.

Gates comes to India to explore business opportunities in various sectors, such as education, health, and other fields in India. Last week in his blog, “Gates notes,” he said that India shows the light of hope for the future and proved it could solve major issues at once, even when the world is facing several crises.

In his note, he wrote that he is coming to India next week. Although he had spent a lot of time here over the years—doing various things from checking out toilets to visiting villages. He had visited the home of one of the poorest, most underserved castes in India also.

Moreover, he expressed his interest in conducting trade and other activities in India.

Gates on Monday tweeted that, similar to every other country on the earth, India also has limited resources. But it has shown others how the world can still progress despite that constraint.”

Through his blog, he also praised India’s health initiatives and wrote that India gives him hope for the future. It is about to become the most populous country in the world, which means one can not solve most problems there without solving them at scale. Still, India has proven it can tackle any challenges. The country has successfully eradicated polio, lowered HIV transmission, reduced poverty, reduced infant mortality and increased access to sanitation and financial services.

In addition to his health initiative, he also wants to focus on changing the climate and urges governments and businesses to take rapid action to reduce the effects of climate change. In India, he wants to discuss ways in which the country can accelerate its infection to clean energy and reduce its carbon footprint.

The Gates Foundation has joined hands with the public sector and CGIAR institutions in India to support the work of researchers who are at the Indian Agricultural Research Institute (IARI).

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After Singapore, UPI May Extend To Other Nations

Following Singapore, the Reserve Bank of India (RBI) is in talks with several nations, including United Arab Emirates(UAE), Indonesia, and Mauritius, to establish a direct digital payment link of India’s Unified Payments Interface (UPI) with these countries. This will allow the citizens of those countries to make cheaper and quicker fund transfers using mobile phones.

According to a senior RBI officer, some Latin American nations have shown their interest.

The central bank is publicizing UPI and the Central Bank Digital Currency (CBDC), also known as the digital rupee, to the attendees at the event and also permits foreigners to use UPI.

The regulator and the government are willing to expand UPI payment links to facilitate fund transfers, eliminating the high costs charged by banks and reducing the processing time. This decision is thought to be beneficial, especially for the Indian diaspora.

Additionally, the RBI said that the usage of UPI for non-resident Indians (NRI) would also become operational in the coming month, enabling them to use the tool through international phone numbers.

Due to technical issues, the tool could not be used though being enabled.

When asked about the central bank’s digital currency, the RBI stated that they are trying continuously to ramp up the pilot to cover as many as possible in a closed user group.

The RBI is now looking to extend to more areas and includes more banks on the retail side, where pilots are already going on in a number of cities.

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India Singapore Link Digital Payment Systems For Cross-Border Remittances

India and Singapore on Tuesday launched the linkage between Unified Payment Interface (UPI) and Singapore’s PayNow to enable cost-efficient, fast, and safe transfer of cross-border remittances. PM Narendra Modi and Singapore PM Lee Hsien Loong virtually witnessed the launch of cross-border connectivity. According to official information, the link was launched during the virtual ceremony by Reserve Bank of India (RBI) governor Shaktikanta Das and Ravi Menon, managing director of the Monetary Authority of Singapore (MAS), by symbolically transferring funds to each other from the mobile phones.

For India, the connection between UPI and PayNow is the first cross-border person-to-person (P2P) payment link and the second for Singapore.

PM Narendra Modi said that the connection between UPI and PayNow is a gift to the citizens of both countries with a cheaper and real-time facility for remittances. This facility will benefit our overseas brothers and sisters, students, professionals, and their families. With this linkage, a new chapter opens in cross-border fintech connectivity.

Now, citizens can send and receive funds between bank accounts or e-wallets in real time by using their UPI ID, mobile phone number, or virtual payment address (VPA).

The banks participating from the Indian side are ICICI Bank, Axis Bank, DBS India, Indian Bank, State Bank of India, and Indian Overseas Bank. From the Singapore side, the participants are Liquid Group and DBS.

Through the new link, Indians can transfer upto a maximum of  Rs. 60,000 a day, and Singapore’s DBS allows its selected customers to transfer up to 200 per transaction. By the 31st of March, DBS allows all its customers to transfer upto SGD1000.

Deputy Governor of RBI, T Rabi Shankar, said that linking the payment networks across borders was a part of the G20 agenda to minimize the costs of cross-border remittances. He also added that currently, transfers happen through banks but attract a certain cost and time as India is a country with capital controls.

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