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The Reserve Bank of India (RBI) is working on a system that would allow small value electronic transactions without a second level of verification, said deputy governor H R Khan on Friday.
He said at the launch of State Bank of India's Tech Learning Centres for customers.
“We are working on some system where some small value transactions up to a certain limit need not have second factor authentication. A few nuts and bolts need to be tightened,” said Khan. RBI is likely to come up with with a structure towards this in two months.
RBI requires online transactions to undergo a two-step verification. Global e-commerce companies such as Uber Technologies had sought to avoid this, by routing online payments through an offshore server. Uber had faced issues with its payment system, including its authentication process. Following RBI's direction, the company has now complied with the norms.
“We are discussing with banks. We will be discussing with Nasscom (apex association of the software services sector). This will be very convenient. We are working on that and maybe in a couple of months, we will come up with something with which convenience can happen without any additional factor of authentication,” Khan said.
No-cash payments
He also stressed the need for a near-zero cash society. “From RBI's point of view, we have been trying to be in the forefront for electronic banking moving towards (this). It will be near-zero because cash cannot be totally eliminated. Electronic banking and payment system products are very important,” he said. To achieve this aim, Khan says there is need for products which will be acceptable, affordable, have an assurance of safety, plus awareness created for these.
“The brick and mortar, human touch and customer relationship will remain but the mode of delivery has to increasingly be new methods of technology. It makes sense for banks to move to this and it will provide a lot of ease and convenience for customers,” he said.
Awareness is a major plan. “We are working on a programme in the past two years called E-bat. It means electronic banking awareness and training. It is a partnership with banks, RBI and National Payments Corporation, to talk to people on how they should use electronic products,” said Khan.
On the Tech Learning Centres, the deputy governor said there was a need for counselling, too. “How to use credit cards? How to use different electronic products? Whether they are appropriate for you or not and what sort of safeguards you need to take? All this counselling should happen,” he said.
Recently, RBI laid down the final guidelines for payment banks. According to Khan, this will give a thrust to remittance products. “Possibly, a lot of telecom companies which use networks will come in. There is a scope for banks to create joint ventures with telcos, with payment banks. Payment banks are both an opportunity and challenge for traditional banks,” said Khan.
RBI has come up with a Bharat Bill Payment System, which will have a standardised and centralised structure. “We hope this will be in place before end-2015,” Khan said.
Mobiles' use
The other thrust areas he highlighted were mobile banking, in which volumes have increased but the technology has not gone that far. “In 2010, 2011 and 2012, we had 26 million transactions. It moved to 94 million in 2013-14. Between April (when the financial year begins) and October this year, we moved to 84 million. In terms of value, mobile banking was Rs 24,400 crore in 2013-14. This year between April-October, we have Rs 36,400 crore,” Khan said.
It is believed that with the advent of payment banks, mobile banking will get a boost.
“In the mobile banking field, there is still scope for innovations. For example, we had heard about the Uber controversy. If mobile banking is permissive, then we can make mobile to mobile payment and there is no need to look for cards Maybe SBI and other banks can take the initiative with in-store mobile banking, where I go to the store and tap with the agent's mobile and I get confirmation, he gets confirmation. The other area is how to you bring cards into mobiles. So, tab banking, where there are proposals from banks, including SBI,” said Khan.
He said ATM deployment was working against the move for a less-cash society. “The moment people see an ATM, whether they need money or not, they will withdraw money,” said Khan.
The others areas identified by Khan include using cloud computing and leveraging of social media for banking.
