The government is planning to introduce amendments in the Reserve Bank of India Act of 1934 to facilitate setting up of multiple electronic funds transfer (EFT) systems that will spur growth of e-commerce.
The proposed amendments, which will empower the Reserve Bank to grant permission to banks to set up full-fledged multiple EFT systems, is part of the Information Technology Bill 1998.
A draft copy of the Bill, referred to as "cyberlaws", has been selectively circulated to the software and banking industry for their inputs.
The amendments will empower the RBI to receive and clear applications from banking companies, financial and other institutions or any other person interested in setting up an EFT system.
Such EFT systems will enable interbank and intrabank funds transfers within India through EFT centres connected by a network. They will also provide for settlement of payment obligations arising out of such funds transfers, between participating banks and institutions.
The RBI is also being given powers to regulate the working of these EFT systems. "Any regulation framed by the Bank (RBI) for regulation of multiple payment systems shall be binding on the applicants, the proposed participants, and any other person likely to be affected or benefited thereby," says the draft of the Bill.
Though electronic funds transfer services are even now available in the country, they are today mainly restricted to the transfer of funds between different branches of a same bank.
A full-fledged multiple EFT system, outlined in the Cyberlaws will facilitate wider funds transfer applications including those done over the Internet.
For example, consider a merchant with an e-commerce site selling his products on the Internet. A customer from anywhere in the country who buys the product, would be allowed to pay for the product by transferring funds from his bank account to the merchant's account: all through the Internet.
"This move will provide a big fillip to the growth of e-commerce in the country," sources in the banking software industry in Chennai said.
The proposed Cyberlaws will also empower the RBI to reject any application from a bank requesting for permission to set up an EFT system.
However, the application should be rejected only after issuing a show-cause notice.
"If so requested by the applicant, an opportunity for hearing should also be given," the draft copy states.
The Information Technology Bill 1998 primarily aims to promote electronic commerce and electronic communications by recognising digital signatures, contracts etc and to facilitate electronic filing of documents with government agencies.
