Says value of bank notes, coins in circulation is a high 12% of GDP
RBI Governor D. Subbarao said India needs to proactively shift from cash to electronic payment systems.
“Large value payments have mostly shifted to the electronic mode, possibly because of the regulatory fiat. Disappointingly, retail payment systems continue to be paper-centric and electronic systems have not penetrated deep enough,” he said at the IDBRT Banking Technology Awards function here on Friday.
When compared with other emerging markets such as Brazil, Mexico and Russia, the value of bank notes and coins in circulation in India is high, at 12 per cent of GDP.
The number of non-cash transactions per person in India stands at just six per year, which again is “very low” in comparison with other emerging economies.
The RBI chief said that in proportional terms, India has one of the lowest numbers of ATMs and PoS (Point of Sale) terminals — 63 ATMs and 497 PoS terminals per million population.
Only a small fraction of the over 10 million retailers in India have card payment infrastructure.
“Though the usage of mobile banking and Internet banking is growing, a significant percentage of customers is not covered,” he pointed out.
Subbarao felt that limited product innovation is one factor behind the “tepid growth” of retail payment systems.
While the private non-bank entities, including mobile network operators, have introduced prepaid payment instruments, including mobile wallets, the market is yet to deepen.
In this context, he asked: “Are banks taking the easy way out by being content with the measures initiated by the regulator, rather than leading the effort towards electronification of payments?”
He said the central bank was now focussing on graduating to the next-generation RTGS (Real Time Gross Settlement) system with enhanced liquidity saving features and fast and higher processing capabilities.
The RBI introduced the RTGS system in March 2004 for settling gross inter-bank and customer transactions of values over Rs 2 lakh.
The gross daily turnover on the RTGS system has risen 500 times from Rs 500 crore then to Rs 2.5 lakh crore today.
Keywords: D. Subbarao, RBI Governor, IDBRT meeting, electronic payment systems, shift away from cash, RTGS
Comments:
Reserve bank is trying hard to reduce cost of stationary, transaction cost, manpower by advising Banks to convince custoers to start taking advatage of fast clearence of cheques by using RTGS.RTGS is cheaper & fastest. Similarly Banks need to start agressive marketing of ATM,ECS, Neft,Net banking. These are most convinient for customers & economical for Banks. This is most competitive time, Banks who satisfies their customers, extends hassle free banking , cuts cost of transaction shall remain in better position , shall get low cost deposits.Banks needs to start agressive marketing, make publicity about deregulation of interest on NRE/FCNR deposits. What is requested ,presently to get interest on nre term deposit deposit must not be withdrawan before one year period, ok fine but after same term deposit receipt is renewed , again one year lock in period to become eligible for interest is detrimental to depositors interest
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