A top Indian central bank official rejected a federal planner's proposal of easier norms for handphone companies creating mobile payment businesses, tying customer-deposit privileges to banking licenses that ensure prudential standards on capital safety.“The (Ratan Watal) committee thinks of banking as different from payments as the latter is more of a technology business: I beg to differ,“ said R Gandhi, deputy governor, Reserve Bank of India. “Payments can be enacted only in either of two ways - one you use cash to make payments, and the other you transfer money from your bank account. Thus, minus the banks, there is no other mode of payment instruments.“
Gandhi was speaking at the launch of BharatQR that facilitates smartphone-based QR code-enabled digital payments at retail merchant outlets.
He also took the opportunity to articulate the RBI's vision on payments and the recent recommendations by a Committee on Digital Payments. The committee, headed by Ratan P Watal, principle advisor in NITI Aayog, made its recommendations to the finance ministry.
“Mobile phone companies believe that they can offer account-based payment services. If you maintain an account, then you are a bank and you need a banking licence to operate. If you are taking deposits, then you have to be a publicly reliable entity and for that you need to be regulated,“ said Gandhi.
He said there should be free entry of players in the payments space as the money involved is very small: However, if any entity is taking deposits, they have to be a bank.
“Such a free entry may not be appropriate for entering this space. These entities are entrusted with public money therefore selection (of the right player) is of utmost importance else it can pose a risky proposition,“ said Gandhi.
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