Payment & Settlement Systems in India: Vision-2021: Banking Presentation

Banking Presentation
Payment & Settlement Systems in

India:
Vision- 2021
Flow of Presentation
• Introduction
• Review of Achievements of the Vision – 2018
• Payment Systems Vision 2021
• Expected Outcomes of Vision 2021
• Specific Initiatives
• Eco- System & Infrastructure
• Regulations & Risk Focused Supervision
INTRODUCTION
PAYMENT AND SETTLEMENT SYSTEMS IN

INDIA
The Reserve Bank of India (RBI), under powers from the Payment
and Settlement Systems Act, 2007 has endeavoured to ensure that
India has ‘state-of-the-art’ payment and settlement systems that are
not just safe and secure, but are also efficient, fast and affordable.
New and innovative systems has developed ,people now shifting

from paper to electronic mode of payment.
The Payment Systems Vision 2021 recognises the need for

continued emphasis on innovation, cyber security, financial
inclusion, customer protection and competition.
REVIEW OF ACHIEVEMENTS OF THE
VISION – 2018
The Vision 2018 has facilitated
(a)Continued decrease in the share of paper-based clearing instruments.
(b)Consistent growth in individual segments of retail electronic payment
systems such as the NEFT, IMPS and card transactions.
(c)Increase in registered customer base for mobile banking.
(d)Launch of new products like Unified Payments Interface (UPI) and
Bharat QR (BQR).
(e) Significant growth in acceptance infrastructure.
(f) Accelerated use of Aadhaar in payment systems.

PAYMENT SYSTEMS VISION
2021
The Vision aims towards
Enhancing the experience of Customers;
Empowering payment System Operators and Service

Providers;
Enabling the Eco-system and Infrastructure;
Putting in place a Forward-looking Regulation
Supported by a Risk- focussed Supervision

To achieve the above, the Vision envisages four goal-
posts (4 Cs)
Competition
Cost
Convenience
Confidence
EXPECTED OUTCOMES OF VISION
2021
 Vision 2021 focuses on further enhancements / improvements in
all facets of payment systems
 The four goal-posts of Vision 2021
36 specific action points
Within 36-month timeframe
12 specific outcomes
 Decrease in share of paper based clearing with shift to digitalized

transaction. It is expected that volume of cheque based
transaction would be less then 2% of retail electronic transaction
by 2021
 Growth in individual retail e-payment system will lead to
increase in average annualized growth of 100% for UPI/IMPS
& 40% for NEFT.
 Use of Debit card at POS transaction is expected to be at least 44% of total debit
card transactions at (POS+ATM)
 It is expected to have 5 Million active POS by the end of 2021 as well as

substantial increase in digital POS.
 Enhanced availability of POS infrastructure is expected to reduce demand for

cash.
 Enhanced usage of e-payment is expected to reduce marginal cost given the

additional volume.
 FTS counts for payment system is expected to be less then 10 bps for most of the
payment system.
 Enhanced healthy competition in payment space & establishment of PSO’s during

vision period.
SPECIFIC INITIATIVES
Customer
Affordable, Accessible and Inclusive services
 Harmonizing turn around time for resolution of customer complaints,

including for card transactions.
Setting up a 24*7 helpline: Industry level Self-Regulatory Organization (SRO)

proposed 24*7 helpline.
Creating awareness: For customer awareness a industry level initiative needs to be

taken for building through generic advertisement and systematic planned customer
orientation
Conducting customer awareness surveys

Review of corridors and charges for inbound cross border remittances-
Remittances play a crucial role for developing economies and have significant
welfare implications
SYSTEM OPERATORS & SERVICE PROVIDERS
Self -regulatory organization –Industry self governance is important feature in

modern economy which is useful for industry wide smooth operation and
development.
Creating an environment to encourage and facilitate innovation through

collaborative competition
Feature phone-based payment services
Off-line payment solution
National settlement service

ECO- SYSTEM & INFRASTRUCTURE
Availability of Retail Payment Systems
Round-the clock availability (RTGS)
More features to NEFT (faster payment)
Global Outreach of Payment services

Interest in digital payment products across globe
Products: UPI, CTS, NEFT
Widen Scope, Use & Reach of Domestic cards

Collaborative efforts by banks and government to widen
& deepen the scope/usage of RuPay cards
Acceptance Infrastructure – Address Supply Side Issues

Less PoS more Debit/Credit cards
It is estimated that in next 3 years the acceptance for digital payments would
increase by 6 times
Geo-tagging of Payment System Touch Points

REGULATION
• Contactless payments and tokenization - Contactless payments decreases the
time taken for payment checkout. Tokenization technologies often form the
basis of facilitating seamless e-commerce experiences fueled by mobile and
other connected devices.
• Security aspects of mobile payments - The guidelines for mobile banking

issued by the Reserve Bank indicate the technological and security standards
which the banks may comply with while providing mobile banking services to
their customers.
• Standing instructions – RBI has been receiving requests for allowing e-

mandate / standing instructions-based automation of periodically recurring. RBI
will consider implementation of e-mandates / standing instructions for retail
payment systems, subject to customer protection.
• System capacity - The current approach to authorization for payment systems

is liberal with no prescriptions and assessment responsibilities on the payment
service providers in terms of performance metrics like uptime, technical
declines, capacity etc.
RISK-FOCUSED SUPERVISION
• Third party risk management and system-wide security - The need for a
separate regulatory framework for outsourcing arrangements by non-bank
payment service providers would be examined given the current trend of
outsourcing arrangements and the need for security control and clarity of roles
and responsibilities of the regulated entities.
• Framework for collecting data on frauds in payment systems - To further

strengthen the confidence in the payment systems and minimize instances of
frauds, there is a need to monitor the types of frauds that may be taking place
in various payment systems.
• Benchmarking India's payment systems - An efficient payment system

reduces the cost of exchanging goods and services and is indispensable to the
functioning of the intra-bank, money and capital markets.
THANK YOU

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Banking Presentation

Payment & Settlement Systems in

PAYMENT AND SETTLEMENT SYSTEMS IN

New and innovative systems has developed ,people now shifting

The Payment Systems Vision 2021 recognises the need for

The Vision 2018 has facilitated

(a)Continued decrease in the share of paper-based clearing instruments.

(b)Consistent growth in individual segments of retail electronic payment

systems such as the NEFT, IMPS and card transactions.

(c)Increase in registered customer base for mobile banking.

(d)Launch of new products like Unified Payments Interface (UPI) and

(f) Accelerated use of Aadhaar in payment systems.

The Vision aims towards

Enhancing the experience of Customers;

Empowering payment System Operators and Service

Enabling the Eco-system and Infrastructure;

Putting in place a Forward-looking Regulation

Supported by a Risk- focussed Supervision

 Decrease in share of paper based clearing with shift to digitalized

 It is expected to have 5 Million active POS by the end of 2021 as well as

 Enhanced availability of POS infrastructure is expected to reduce demand for

 Enhanced usage of e-payment is expected to reduce marginal cost given the

 Enhanced healthy competition in payment space & establishment of PSO’s during

Affordable, Accessible and Inclusive services

 Harmonizing turn around time for resolution of customer complaints,

Setting up a 24*7 helpline: Industry level Self-Regulatory Organization (SRO)

Creating awareness: For customer awareness a industry level initiative needs to be

Conducting customer awareness surveys

SYSTEM OPERATORS & SERVICE PROVIDERS

Self -regulatory organization –Industry self governance is important feature in

Creating an environment to encourage and facilitate innovation through

Feature phone-based payment services

Off-line payment solution

National settlement service

Global Outreach of Payment services

Widen Scope, Use & Reach of Domestic cards

Acceptance Infrastructure – Address Supply Side Issues

Geo-tagging of Payment System Touch Points

• Security aspects of mobile payments - The guidelines for mobile banking

• Standing instructions – RBI has been receiving requests for allowing e-

• System capacity - The current approach to authorization for payment systems

• Framework for collecting data on frauds in payment systems - To further

• Benchmarking India's payment systems - An efficient payment system

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