The Reserve Bank of India (RBI) in its bi-monthly monetary policy statement, has shared its plans for developmental and regulatory policy measures in the realm of fintech, payments, and export and import. Here are some of the changes the RBI plans to implement in the coming months:
Set up a Digital Payments Intelligence Platform:
The RBI intends to mitigate payment fraud risks by setting up a “Digital Payments Intelligence Platform” that “will harness advanced technologies”, they said. The RBI has also constituted a committee headed by the Chairman, A.P. Hota, former MD & CEO, of NPCI, which will be tasked with examining the various aspects of setting up a digital public infrastructure for the Digital Payments Intelligence Platform.
A report by ET, with sources in the know, stated that the committee will also be tasked with defining :
- the amount of data entities like banks and fintech will need to provide
- the modalities for identifying transactions as fraudulent ones
- cost requirements and ways through which the platform can become financially sustainable
Further, the sources stated that fraud transactions will be reported to the Central Payments Fraud Information Repository (CPFIR). The committee will also have to recommend guardrails to ensure customer data remains safe throughout the process.
The report also mentioned potential members of the panel- including representatives of NPCI, State Bank of India, HDFC Bank, and ICICI Bank and payments industry leaders like Vipin Surelia, Head of Risk at Visa, Arif Khan, Chief Innovation Officer at Razorpay, Jitendra Gupta, Founder of Jupiter, and Pranay Jhaveri, Managing Director of Euronet.
The Committee is expected to give its recommendations within two months, said the RBI
According to the RBI’s annual report, fraud has occurred predominantly in the category of digital payments (card/internet). 2023-24 saw 29,082 frauds in card transactions, valued at ₹ 1,457 crore a major increase from 2022-23 which saw 6,699 instances of fraud amounting to ₹277 crores. The report stated that the RBI was looking at measures to combat fraud like moving away from the SMS-based one-time password (OTP) and instead adopting alternate risk-based authentication mechanisms that will leverage behavioural biometrics, location/ historical payments, digital tokens, and other in-app ways. Further, the RBI is also looking to implement the ‘payee name look-up facility’ in compliance with the newly enacted Digital Personal Data Protection Act, 2023 to combat fraudulent transactions.
Auto-replenishment for Fastag, National Common Mobility Card (NCMC), UPI Lite wallet, under the e-mandate framework for recurring payments
RBI’sregulations on recurring transactions, which went into effect on October 1, 2021, require customers to set up something called an e-mandate for recurring transactions such as subscriptions, monthly bill payments, etc. via credit and debit cards. These payments recur with fixed periodicity such as daily, weekly, monthly, etc.
The RBI has proposed including payments, such as replenishment of balances in Fastag, NCMC, UPI Lite wallet, etc. into the e-mandate framework, as they are also recurring in nature. However, the key difference for these payments will be, that the replenishments are not time specific. Thus, the automatic replenishment will be triggered when the balance in Fastag or NCMC falls below a threshold amount set by the customer, they said. Under, the current e-mandate framework, a pre-debit notification is sent to a customer at least a 24-hours before the actual debit from the customer’s account. However, the RBI has proposed exempting this requirement for automatic replenishment of balances in Fastag, NCMC, UPI Lite wallet etc.
Guidelines for these proposals will be issued shortly.
Easing export and import regulations under the Foreign Exchange Management Act (FEMA), 1999
The RBI has decided to rationalize existing guidelines on the export and import of goods and services. The RBI said that keeping in view the progressive liberalization under FEMA 1999 and the changing dynamics of cross-border trade transactions globally it will be releasing new guidelines to promote ease of doing business for all the stakeholders. The new guidelines aim to improve operational flexibility for Authorized Dealer banks. The draft regulations and directions will be released by June 2024, after which they will be open to feedback from stakeholders.
Also Read:
- Fraudsters Borrow Loan On MobiKwik By Impersonating Someone Else
- Finance Ministry hosts workshop with Law Enforcement Agencies (LEAs), Start-ups and Fintech companies to address digital financial fraud
- More Questions than Answers: Finance Ministry FAQs on FEMA Amendment Rules, 2023
- RBI increases UPI and recurring transaction limits for certain categories
