The Hindu Business Line : RBI working on multi-purpose smart cards

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Pilot project on smart cards launched with Sri Visakha Grameena Bank in Andhra Pradesh.
Banks could consider feasibility of using smart cards for `no-frills accounts' to help increase coverage of banking services in low-cost deposits, says RBI Governor.

Hyderabad , Sept. 2

To promote financial inclusion, involving provision of banking services to people, the Reserve Bank of India (RBI), along with the Institute for Development and Research in Banking Technology (IDRBT), is currently working on the use of multi-application smart-card systems, the RBI Governor, Dr Y. Venugopal Reddy, has said.

Addressing the bank chiefs and heads of their IT departments at the IDRBT here on Saturday, Dr Reddy said these smart cards can operate as a bank account and also store of electronic cash.

The multi-purpose smart cards can hold information relating to the cardholder and have security features such as biometric identification. They can also double up as an entitlement identifier or as a social security card, he said.

Pilot project

A pilot project on smart cards had has already been launched with Sri Visakha Grameena Bank in Andhra Pradesh, which has been one of the front-runner banks in financing self-help groups (SHGs). The Banks could consider the feasibility of using smart cards for the `no-frills accounts' so as to help increase the coverage of banking services in the much needed low-cost deposits, Dr Reddy said.

The RBI was is also planning to make the RTGS (real time gross settlement) as the preferred mode for specified large-volume transactions in the financial markets once the RTGS system achieved achieves a critical mass of usage by the participants, Dr Reddy said. According to him, the introduction of RTGS system has had already paved the way for risk-free, credit push-based fund transfers settled on a real time basis and in the central bank money.

Stating that the Indian RTGS was is close to the best in most of the parameters of the Bank for International Settlement of Basel, the RBI Governor said it had has been made available across more than 23,700 branches of banks spanning more than 500 centres in the country.

While it was is reassuring to note that large values were are being settled through the RTGS system with average daily values aggregating more than Rs 60,000 crore, there was is still potential to shift many more systemically important payments.

Dr Reddy said the RBI was is in the process of fully integrating the Negotiated Dealing System (NDS) settlements with the RTGS.

In a bid to improve the functioning of the corporate bond market, a high-level expert committee on corporate bonds and securitisation under the chairmanship of Dr R.H. Patil had suggested measures to revitalise the corporate bond market through setting up trade reporting systems, trading platforms, auction platforms and clearing and settlement systems.

According to the RBI Governor, such online real-time data dissemination would help the participants in making efficient trading decisions and, at the same time, enable regulators to obtain and monitor information on market trends.

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