Proposes simplified KYC procedures for poor
Geetanjali Minhas | February 12, 2014
Admitting that financial inclusion is a tall order for the country, Reserve Bank of India (RBI) governor Raghuram Rajan, however, did not commit on implementation of Nachiket Mor committee. Last month, the committee gave slew of measures on boosting the financial inclusion.
The central bank is yet to take a call on implementation of the Mor panel, he said on the sidelines of the Nasscom India Leadership Forum 2014 in Mumbai on Wednesday.
On the question of the Mor committee’s recommendation on ‘payment banks’, the RBI governor said, “At this point there is no decision to move forward. We will look at it in great detail, including what value it brings, the viability as well as whether it presents arbitrage opportunities vis-a-vis the schedule commercial banks.” The Mor committee suggested about setting up of ‘payment banks’ with an initial capital of Rs 50 crore, whose purpose was to deepen access of finance, especially in the case of small businesses.
Mor panel had earlier recommended for a bank extension within 15 minute walking distance for a citizen across the country.
However, Rajan admitted that much needs to be done in reaching to the unbanked areas of the country. He advocated easing of know your customer (KYC) norms. “It is very essential to get the poor to put aside some money no matter how difficult it is. The KYC, norms is a regulatory requirement however experts have suggested minimising these requirements as today stringent KYC norms are keeping many out of the banking fold,” said RBI governor.
Rajan also proposed standardised and simplified procedures for registration and authentication of customers for mobile banking services and creating awareness programmes across banks for generating customer services along with SMS services and USB technology. The RBI governor also added that the regulatory mechanism for mobile base and expansion is already in place.
On virtual currencies, he underlined concern about the alternative currencies like Bitcoins. “As a currency I do worry a little bit when the underlying values fluctuate tremendously. One of the values of a currency is stability. Who will maintain value - can we have confidence in an unseen, unknown centre which will maintain the value of the currency or an algorithm which will maintain the value of the currency,” Rajan said.
He added that RBI is currently studying the issue and will come out with a "considered view" on it soon.
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