The Reserve Bank of India (RBI) has said that it will ensure that the government’s market borrowings would be conducted in a non-disruptive manner.
The statement, made by the central bank’s deputy governor Shymala Gopinath on the sidelines of a CII conference here on Monday, came in the light of the increase in market borrowings by the government over the past few weeks. The high volume of borrowing by both central and state governments has put pressure on the market, testing its ability to absorb a huge supply of paper.
“From the market perspective, what is necessary is that we ensure a non-disruptive way of government borrowing. We will ensure that this year’s government borrowing and the next year’s borrowing is done smoothly,” she said.
The RBI deputy governor, while dwelling on payment and settlement system, also said that the central bank will come up with an approach paper very soon to push electronic payment.
She said that this will reduce the clearing time required for the high-value transactions and also minimise risks related with the transaction.
At present, RBI handles 60,000 real time gross settlements (RTGS) and around 50 lakh cheque clearing transactions, she revealed. The central bank is planning to shift all retail payment and settlement activities, except RTGS transactions, to the National Payment Corporation of India (NCPI).
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“The regulator is working on NCPI and this will help in 24-hour retail payment,” RBI executive director G Gopalakrishnan said. Transactions through RTGS have picked up, but those conducted through the National Electronic Fund Transfer (NEFT) and Electronic Fund Transfer (EFT) platforms are yet to gain momentum, he added.
RBI has implemented Cheque Truncation System (CTS) in the National Capital Region (NCR). CTS helps banks send images of paper cheques for clearing and settlement purposes, instead of the actual instrument.
“It will be implemented in Chennai covering the southern region,” Gopinath said, adding that, to bring down the cost of settlement for the banking system, banks should make use of the technology more effectively.
She also pointed out that the economic downturn had posed challenges for the banking system and banks should adopt more cost-effective services. “The downturn in the market may take a toll on the IT spending of Indian banks in the next financial year,” she said.
Gopalakrishnan said that management information system (MIS) is an area of concern for the central bank, citing the unavailability of data. Whenever inspectors go to banks, they do not have data available with them even though they have core banking services (CBS), he added. At present, 70 banks have CBS, 48 have 100 per cent CBS and 60 banks provide internet services.
“Capturing the IT risk is an important agenda for the central bank. In the next five years, the banking system should have a robust IT system,” he added.