a pascricha rbi

8/4/2019 A Pascricha RBI

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www.rbi.org.in

RESERVE BANK OF INDIA


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Developments in Payment and

Settlement Systems

Introduction of MICR

Electronic Funds Transfer Retail EFT

Electronic Clearing Services (ECS)

Credit

Debit Real Time Gross Settlement (RTGS) System

Cheque Truncation System


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RBI Payment System Vision

Mission Statement

Safety-Security-Soundness-Efficiency

Card system represent change from cashbased system to a safer, more efficient andconvenient system


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Cards and Indian PS-2004-05

Vol (crores) Val (Rs crores)

Paper-112.46 110,47,052

EB - 42.02 109,57,341

Tot - 157.48 220,04,393

Cds - 36.20 77,120Note EB includes card


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Card Systems

Debit Cards (31.1 million)

Credit Cards (12.2 million)

SMART Cards (Few) Total Volume and Value

Period Volume (crores) Value (crore- Rs)

2002-03 14.57 26951

2003-04 18.55 358702004-05 36.20 77120


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Growth in card payments

Convenience of ATMs and POS terminals -debit cards

Higher disposable incomes Retail boom both in goods and services

Higher merchant acceptability

Growth in technology

new card products


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Issuance of Cards

Banks issue cards in affiliation to Visa,Mastercard etc

44 banks issued cards as on July 2005 37 banks issued Debit Cards

23 banks issued Credit Cards

1 banks issued SMART Cards Co-branded Cards

Cards issued by non-banks


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Legal Base

Relationship between card companiesand card issuing banks

Procedures Guidelines

Terms and Conditions

Relationship between card issuing banks

and cardholders Terms and conditions of card issue and

usage


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Card issuing banks have own policies ondisclosure, transparency, customer

grievances redressal Methods of working vary foreign & new

private banks more likely to outsource work- -marketing of card products and recovery/

collection Marketing techniques -foreign/ new private

banks - more aggressive


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Regulatory Mechanism

CREDIT CARDS

Banks with Networth of Rs.1000 million and above

Banks can issue by credit cards by themselves or in tie-upwith another bank

No prior approval of the Central Bank is required The banks issuing need the approval of their Board

RBI has laid down broad guidelines Customer selection Sharing of information

Fraud Control Transparency in fees Account processing Recovery of dues


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DEBIT CARDS

Banks can issue on-line debit cards/ smart

cards without prior RBI approval - Boardapproval adequate. Post issue reporting toRBI.

Off-line debit cards issue requires prior

approval of RBI.


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Issues for Regulator

Commercial banks are subject to stringentregulation and supervision by the RBI

Complaints against card issuing banks

Unsolicited phone calls-marketing cards Lack of transparency in terms &conditions

Unsolicited cards/ unauthorised activation

Wrong billing /delay in credit of payments

Harassment / coercion by recovery / collectionagents

Divulging customer information/ misuse of info


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Working Group

Members from major card-issuing banks,Indian Banks Association, and also

consulted consumer organisation Working Group submitted report in March

2005.

TRANSPARENCY AND DISCLOSURE

CUSTOMER RIGHTS PROTECTION

CODE OF CONDUCT


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RBI draft guidelines for cards

Issued on 28th June 2005

Incorporates WG recommendations

Addl guidelines-

Bks to have well documented guidelines &fair practicescode

(a) Cards for persons with independent financial means (add-ons exempted)

(b) Maximum credit limit(c) Sufficient time for bill payment(d) Wrong billing complaint-bks to provide explanation and

doc evidence

(e) Complaints redressal machinery


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Frauds

Frauds in India mainly emanate from

Account use

Counterfeiting

Stolen / lost cards

Multiple imprints

Fraud application

Interception of cards sent by post / courier,

cross-border use Card frauds as a percentage of transactions

varies approx. 0.1% to 0.3% in India


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Frauds

..contd

Banks in case of misuse of stolen / lost cardslimit the cardholders liability to amount spent tillthe card issuing bank is informed about the theft /

loss Many countries limit the cardholders liability to a

particular sum incase of theft / loss

Merchants rarely check the signatures ofcardholders

Frauds could be substantially reduced by givingcardholders secret PIN to be punched beforeevery transaction

Use of smart cards


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It is RBIs endeavour to see that healthy

growth of the card payment industry in the

country while at the same time ensuringthat payment risks are suitably mitigated,customer interests protected and higheststandards of customer service maintained


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Thank you

a pascricha rbi

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