Raghuram Rajan, in his first interaction as the new governor for the Reserve Bank of India (RBI), mentioned that RBI plans to implement a national giro-based 'Indian bill payment system' that will enable households to use bank accounts to pay their school fees, utility bills, medical bills, as well as make person-to-person (P2P) transfers electronically. "We want to make payments anywhere anytime a reality," said Rajan.
He also mentioned that while only banks are currently allowed to deploy Point-of-Sale (POS) terminals (and these are largely set up by only a few banks in urban areas), RBI will facilitate the setting up of 'white' POS devices and mini ATMs by non-bank entities as well. The initiative will enable to cover the entire country and improve access to financial services in rural and remote areas.
In addition, currently holders of pre-paid instruments issued by non-bank entities are not allowed to withdraw cash from the outstanding balances in their pre-paid cards or electronic wallets. Given the vast potential of such instruments in meeting payments and remittance needs in remote areas, RBI intends to conduct a pilot enabling cash payments using such instruments and Aadhaar-based identification.
"Finally, there is substantial potential for mobile based payments. We will set up a Technical Committee to examine the feasibility of using encrypted SMS-based funds transfer using an application that can run on any type of handset. We will also work to get banks and mobile companies to cooperate in rolling out mobile payments, since they can be a game changer both in the financial sector as well as to mobile companies," said Rajan.
For small and medium firms, RBI intends to facilitate Electronic Bill Factoring Exchanges (EBFE), whereby MSME bills against large companies can be accepted electronically and auctioned so that MSMEs are paid promptly. "This was a proposal in the report of my Committee on Financial Sector reforms in 2008, and I intend to see it carried out," he added.