RBI Bets on Pay­ments Banks for In­no­va­tion

New en­tites can push ex­ist­ing banking sys­tem to be in­no­va­tive, says Guv

The Economic Times - - Economy & Companies - Our Bu­reau

Mum­bai: The Re­serve Bank of In­dia is tak­ing a bet on pay­ments banks so that these new en­ti­ties can push the ex­ist­ing banking sys­tem to be in­no­va­tive, gover­nor Raghu­ram Ra­jan said on Mon­day. The cen­tral bank is open to new tech­nol­ogy and would wait for reg­u­la­tions to evolve rather than dis­miss new sys­tems, Ra­jan said. “We at­tempt to be an in­formed and adap­tive reg­u­la­tor…The eas­i­est thing to say is ‘no’. When there’s un­cer­tainty, it is easy to say no. But say­ing no pre­vents the sys­tem from de­vel­op­ing. What should be the pre­ferred thing to say is that wait, we should watch it and see how bet­ter the reg­u­la­tion can evolve,” Ra­jan said while launch­ing a new pay­ment sys­tem called the Uni­fied Pay­ments In­ter­face (UPI), which will al­low peo­ple to send and re­ceive money across banks just through a sin­gle iden­ti­fi­ca­tion with­out shar­ing fi­nan­cial in­for­ma­tion.

Ra­jan listed the launch of pay­ment banks, in­ter­est rate fu­tures and a new liq­uid­ity frame­work for banks as ex­am­ples of how the cen­tral bank has pushed for in­no­va­tion. “We are tak­ing a bet on pay­ment banks. PayTm is an in­no­va­tive firm and in­no­va­tive firms are not al­ways com­fort­able with the reg­u­la­tors. But we want to see where they push the sys­tem and so they have a pay­ments bank li­cence. We are look­ing at these telecom com­pa­nies and the- se star­tups and fig­ure out as we go. Then we would know what more struc­ture that we have to put on the sys­tem,” Ra­jan said.

He also cited the ex­am­ple of a re­vival in the in­ter­est rate fu­tures mar­ket af­ter im­ple­ment­ing some sug­ges­tions from the mar­ket. “For a num­ber of years, we have been say­ing a banking rev­o­lu­tion is needed. The rev­o­lu­tion is upon us to­day,” he said.

(From left) Axis Bank MD Shikha Sharma, UIDAI ex-chair­man Nan­dan Nilekani, RBI gover­nor Raghu­ram Ra­jan and ICICI MD Chanda Kochhar at the launch of Uni­fied Pay­ments In­ter­face (UPI) in Mum­bai on Mon­day

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