Page 107 - DMGT303_BANKING_AND_INSURANCE

Banking and Insurance

Notes card payments (increasing card security), ATM payments (increasing accessibility to the
public, bringing transparency and reasonableness in charges), rationalising charges for
electronic payments (NEFT / RTGS) and collection of outstation cheques, mobile payments
(issuance of ‘Mobile Banking transactions in India - Operative Guidelines for Banks’),
prepaid payment instruments (guidelines on ‘Issuance and Operation of Pre-paid Payment
Instruments in India (Reserve Bank) Directions, 2009’), etc.
2.4 Competition, encouraging alternate methods of accomplishing the payment requirement
and facilitating new initiatives of payment system providers to bring in more efficiency
in the existing/new payment systems remain the thrust areas.

III. Payments System Oversight

3.1 The guiding principles while pursuing the oversight goal will continue to be objectivity,
simplicity and transparency. Streamlining operating instructions, prescribing uniform
practices, laying down minimum benchmarks, insisting on adequate redundancies and
requiring effective business continuity plans will be vigorously pursued. Focus will be on
monitoring implementation of guidelines both in letter and spirit.
3.2 The Payment and Settlement Systems Act, 2007 (the Act) (effective from August 12, 2008)
prohibits any entity from commencing or continuing to operate a payment system without
the approval of the Bank. The Bank may accord approval to the payment system, based on
the need for the proposed activity, the services proposed to be undertaken / offered and
the efficiency it will bring to functioning of the payments systems in the country. The
Bank, while authorising payment systems, would advise the criteria and prescribe the
terms and conditions under which the said systems shall operate.

3.3 It is imperative that payment systems are operated in a safe and efficient manner as well
as in the best interests of the public. The Bank shall endeavour to –

Enhance the security, integrity and resilience of the payment system infrastructure
in the country by ushering in new initiatives or necessitating standards through a
consultative process and balancing with the suggestions of various stakeholders.
The approach will be need-based and appropriately calibrated to reflect rational
expectations.
Comply with the general principles enunciated in the ‘Report on Central Bank
Oversight of Payment and Settlement Systems’ published by the Committee on
Payment and Settlement Systems duly taking into account our practices and
requirements. The general principles of oversight are (i) transparency, (ii)
international standards, (iii) effective powers and capacity, (iv) consistency, and (v)
co-operation with other authorities. The Bank would accordingly make public the
requirements and the criteria for the various payment systems.

Adopt the recommendations and principles enunciated by international institutions
like the BIS, FATF, etc., while developing or approving systems, issuing operational
guidelines or mandating requirements in new or existing payment systems. For the
purposes of wider dissemination and transparency, the Bank would be placing on
its website the names of entities to whom authorisation to operate payment systems
has been approved and the conditions of authorisation subject to which only such
entities can operate.

Put in place appropriate off-site monitoring/surveillance and on-site audits/
inspections/scrutinies to ensure compliance with the laid down prescriptions.

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