Switch to Digi-money Will Mean More Trans­parency

The Economic Times - - Money & Banking - S RA­MANN R K MISRA

G2P and ac­cess to the ‘un­banked’ 60% of pop­u­la­tion. Digi-money (e-ru­pee) is avail­able elec­tron­i­cally to hold­ers and trans­ferred di­rectly be­tween con­sumers or mer­chants. Money can only be ex­changed and not bought. The Sale of Goods Act, 1930 ex­cludes money from the def­i­ni­tion of “goods”. E-ru­pee will not be ‘goods’, but money and may be de­clared as le­gal ten­der. Its is­sue would be ‘by ex­change with cash’, tightly reg­u­lated by RBI and ac­counted as M1. Ex­ist­ing pre-paid in­stru­ments (PPI) or mo­bile wal­lets are goods pur­chased in cash at­tract­ing sales tax, that serve as a mere store of value. Trans­parency in G2P faces two chal­lenges: in­ter­ac­tion be­tween govern­ment of­fi­cials and ben­e­fi­cia­ries leading to de­mand for bribes sans real-time checks on ac­tual pay­ments made; sec­ondly, pay­ments to un­ver­i­fied per­sons, who bear the same name as ap­pear­ing in the list of ben­e­fi­cia­ries, and with­out bank ac­counts (but with mo­bile num­bers). To com­bat cor­rup­tion, it must be- come manda­tory to mi­grate all G2P to an ag­nos­tic MNO-plat­form with ev­ery trans­ac­tion (us­ing SMS) stored in a cen­tral data­base, and an elec­tronic au­dit trail fa­cil­i­tat­ing end-of-day ac­count­ing and mon­i­tor­ing in real-time. The ad­van­tage is that of­fi­cials will be forced to trans­fer the ex­act amount to ben­e­fi­cia­ries other­wise they stand ex­posed for non-per­for­mance of duty. A sur­veil­lance sys­tem could de­tect frauds of co­er­cion -- e-money trans­fers from sev­eral ben­e­fi­cia­ries to one num­ber -- and other s us p i c i o us move­ments. The out­come is that pur­chases of daily goods or even sav­ing un­der the NPS-S scheme (2 mil­lion per­sons en­rolled) will be done in e-money. Till emoney is in circulation it will M1 and not be treated as de­posits. MNOs will have to ag­gre­gate e-money held by their agents or their cus­tomers on a daily ba­sis and re­port the same to RBI. The sec­ond step is to re­move face-to­face pay­ments. Im­me­di­ately, ei­ther Aad­har that matches bio­met­rics of ben­e­fi­cia­ries or an in­ter-op­er­a­ble KYC mod­ule (as used in the cap­i­tal mar­kets) of mo­bile oper­a­tors for check­ing the own­er­ship of mo­bile num­bers, could be used. The cur­rent leak­age in G2P could be cur­tailed to a very large ex­tent. Over time cap­ture of mo­bile num­bers against each Aad­har num­ber in a NPCI data­base will re­alise the ul­ti­mate goal of re­mote trans­fer of ben­e­fits. Of course, prepa­ra­tion of muster rolls could still be open to fraud. Per­sons hold­ing e-money may be per­mit­ted to cash-out at agency out­lets of MNOs, for a com­mis­sion. Com­pe­ti­tion de­mands this fa­cil­ity be ag­nos­tic to MNO; sim­i­lar to the money chang­ing in­dus­try for ex­change of for­eign cur­rency. Bulk hold­ers of e-money, e.g shop­keep­ers, sup­pli­ers or ag­gre­ga­tors un­der NPS-S, may ex­change e-money into de­posit ac­counts, to earn in­ter­est. Any extinction of e-money will be recorded on the cen­tral MNO- switch. Since ini­tially, sup­ply of e-money is only from govern­ment trans­fers, a de­fined pool of e-money makes rec­on­cil­i­a­tion and ac­count­ing of e-money in­stan­ta­neous.

Com­pe­ti­tion be­tween e-money pay­ment sys­tem and in­ter­net based trans­ac­tions us­ing bank ac­counts may ben­e­fit con­sumers. The mo­bile pay­ment sys­tem may be­come the ‘rails’ for prod­uct dis­tri­bu­tion by fi­nan­cial in­ter­me­di­aries. Busi­ness model for MNOs would de­velop around prod­ucts pushed through the e-money-pay­mentsys­tem and own­er­ship of pat­terns of fi­nan­cial be­hav­ior in the e-money econ­omy. MNOs in their ex­ist­ing le­gal form could be li­censed as ‘do­mes­tic money ex­changes’ and as ‘pay­ment oper­a­tors’, which may re­quire mul­ti­ple reg­u­la­tors, but one for each func­tion -RBI and Trai. The IMPS (in­ter­bank) sys­tem cre­ated by NPCI uses plat­forms of MNOs. An in­ter-op­er­a­ble switch for e-money will form the back­bone of a very low cost pay­ment sys­tem for emoney, across all MNOs.

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