6-Aug-2021: Know all about e-RUPI, the new digital payment instrument
What is e-RUPI and how it works ?
e-RUPI is basically a digital voucher which a beneficiary gets on his phone in the form of an SMS or QR code. It is a pre-paid voucher, which he/she can go and redeem it at any centre that accepts its.
For example, if the Government wants to cover a particular treatment of an employee in a specified hospital, it can issue an e-RUPI voucher for the determined amount through a partner bank. The employee will receive an SMS or a QR Code on his feature phone / smart phone. He/she can go to the specified hospital, avail of the services and pay through the e-RUPI voucher received on his phone.
Thus e-RUPI is a one-time contactless, cashless voucher-based mode of payment that helps users redeem the voucher without a card, digital payments app, or internet banking access.
e-RUPI should not be confused with Digital Currency which the Reserve Bank of India is contemplating. Instead e-RUPI is a person specific, even purpose specific digital voucher.
How is e-RUPI advantageous to the Consumer?
e-RUPI does not require the beneficiary to have a bank account, a major distinguishing feature as compared to other digital payment forms. It ensures an easy, contactless two-step redemption process that does not require sharing of personal details either.
Another advantage is that e-RUPI is operable on basic phones also, and hence it can be used by persons who do not own smart-phones or in places that lack internet connection.
What are the benefits of e-RUPI for the sponsors?
e-RUPI is expected to play a major role in strengthening Direct-Benefit Transfer and making it more transparent. Since, there is no need for physical issuance of vouchers, it will also lead to some cost savings as well.
What benefits accrue to the Service Providers?
Being a prepaid voucher, e-RUPI would assure real time payments to the service provider.
Who has developed the e-RUPI?
The National Payments Corporation of India (NPCI), which oversees the digital payments ecosystem in India, has launched e-RUPI, a voucher-based payments system to promote cashless transactions.
It has been developed in collaboration with the Department of Financial Services, Ministry of Health & Family Welfare and National Health Authority.
Which Banks issue e-RUPI?
NPCI has partnered with 11 banks for e-RUPI transactions. They are Axis Bank, Bank of Baroda, Canara Bank, HDFC Bank, ICICI Bank, Indian Bank, IndusInd Bank, Kotak Mahindra Bank, Punjab National Bank, State Bank of India and Union Bank of India.
The acquiring Apps are Bharat Pe, BHIM Baroda Merchant Pay, Pine Labs, PNB Merchant Pay and YoNo SBI Merchant Pay.
More banks and acquiring Apps are expected to join the e-RUPI initiative soon.
Where can e-RUPI be used now?
To begin with NPCI has tied up with more than 1,600 hospitals where e-RUPI can be redeemed.
Experts say, in the days to come the user base of e-RUPI is expected to widen, with even private sector using it to deliver employee benefits and MSMEs adopting it for Business To Business (B2B) transactions.
2-Aug-2021: PM launches digital payment solution e-RUPI
Prime Minister Shri Narendra Modi launched digital payment solution e-RUPI, a person and purpose specific digital payment solution, today via video conference. e-RUPI is a cashless and contactless instrument for digital payment.
Addressing the event, the Prime Minister said that the eRUPI voucher is going to play a huge role in making DBT more effective in digital transactions in the country and will give a new dimension to digital governance. This will help everyone in targeted, transparent and leakage free delivery. He said e-RUPI is a symbol of how India is progressing by connecting people’s lives with technology. He also expressed happiness that this futuristic reform initiative has come at a time when the country is celebrating the Amrit Mahotsav on the 75th anniversary of independence.
He said in addition to the government, if any organization wants to help someone in their treatment, education or for any other work, then they will be able to give an eRUPI voucher instead of cash. This will ensure that the money given by him is used for the work for which the amount was given.
The Prime Minister said eRUPI is person as well as purpose specific. eRUPI will ensure that the money is being used for the purpose for which any help or any benefit is being provided.
The Prime Minister recalled that there was a time when technology was considered a domain of the rich people and there was no scope for technology in a poor country like India. He remembered when this government took technology as a mission, it was questioned by the political leaders and certain types of experts. He added that today the country has also denied the thinking of those people, and has proved them wrong. Today the thinking of the country is different, it is new. Today we are seeing technology as a tool to help the poor, a tool for their progress.
The Prime Minister noted how technology is bringing in transparency and integrity in transections and creating new opportunities and making them available to the poor. He mentioned that for reaching today’s unique product, foundation was prepared over the years by creating the JAM system which connected mobile and Aadhaar. Benefits of JAM took some time to be visible to people and we saw how we could help the needy during the lockdown period while other countries were struggling to help their people, said the Prime Minister. He noted that in India, more than seventeen and half lakh crore rupees have been transferred directly to the accounts of the people via Direct Benefit Transfer. More than three hundred schemes are using DBT. 90 crore Indian are being benefited in some way or the other through in areas like LPG, ration, medical treatment, scholarship, pension or wage disbursal. 1 lakh 35 thousand crore rupees have directly been transferred to farmers under PM Kisan Samman Nidhi, 85 thousand crore rupees for government purchase of wheat were also disbursed in this manner. “The biggest benefit of this all is that 1 lakh 78 thousand crore rupees were prevented from going to the wrong hands, '' he added.
The Prime Minister noted that development of digital transactions in India has empowered the poor and deprived, small businesses, farmers and tribal population. This can be felt in the record of 300 crore UPI transactions in the month of July amounting to 6 lakh crore rupees.
The Prime Minister said India is proving to the world that we are second to none in adopting technology and adapting to it. When it comes to innovations, use of technology in service delivery, he said that India has the ability to give global leadership alongside major countries of the world.
The Prime Minister said that the PM SVANidhi Yojana has helped more than 23 lakh street vendors in small towns and large cities of the country. During this pandemic period, about Rs 2300 crore has been disbursed to them.
The Prime Minister said the world is recognizing the impact of the work done in the last 6-7 years for digital infrastructure and digital transactions in the country. Especially in India, a huge base of fintech has been created which is not present even in developed countries, he added.
19-Oct-2020: IFSCA introduces Framework for Regulatory Sandbox to tap into innovative FinTech solutions
The International Financial Services Centres Authority (IFSCA), with an objective to develop a world class FinTech hub at the IFSC located at GIFT City in Gandhinagar (Gujarat, India), endeavours to encourage the promotion of financial technologies (‘FinTech’) initiatives in financial products and financial services across the spectrum of banking, insurance, securities and fund management.
As a step towards attaining this vision, IFSCA has introduced a framework for “Regulatory Sandbox”. Under this Sandbox framework, entities operating in the capital market, banking, insurance and financial services space shall be granted certain facilities and flexibilities to experiment with innovative FinTech solutions in a live environment with a limited set of real customers for a limited time frame. These features shall be fortified with necessary safeguards for investor protection and risk mitigation. The Regulatory Sandbox shall operate within the IFSC located at GIFT City.
All entities (regulated as well as unregulated) operating in the capital market, banking, insurance and pension sectors as well as individuals and startups from India and FATF compliant jurisdictions, shall be eligible for participation in the Regulatory Sandbox. Entities desirous of participating in the sandbox to showcase their innovative FinTech solutions, concepts and business models shall apply to IFSCA.
IFSCA shall assess the applications and extend suitable regulatory relaxations to commence limited purpose testing in the Sandbox. The details on the eligibility criteria, the application and approval process and other operational aspects of the Sandbox have been provided in the circular.
As an additional steps towards creating an innovation-centric ecosystem in the IFSC, IFSCA has proposed the creation of an “Innovation Sandbox”, which will be a testing environment where FinTech firms can test their solutions in isolation from the live market, based on market related data made available by the Market Infrastructure Institutions (MIIs) operating in the IFSC. The Innovation Sandbox will be managed and facilitated by the MIIs operating within the IFSC.
13-Aug-2019: RBI issues final norms for regulatory sandbox
The Reserve Bank of India (RBI) issued the final framework for regulatory sandbox in order to enable innovations in the financial technology space.
A regulatory sandbox usually refers to live testing of new products or services in a controlled/test regulatory environment for which regulators may permit certain regulatory relaxations for the limited purpose of the testing. The objective of the sandbox was to foster responsible innovation in financial services, promote efficiency and bring benefit to consumers.
The proposed FinTech solution should highlight an existing gap in the financial ecosystem and the proposal should demonstrate how it would address the problem, and bring benefits to consumers or the industry and/or perform the same work more efficiently.
RBI will launch the sandbox for entities that meet the criteria of minimum net worth of ₹25 lakh as per their latest audited balance sheet. The entity should either be a company incorporated and registered in the country or banks licensed to operate in India.
While money transfer services, digital know-your customer, financial inclusion and cybersecurity products are included, crypto currency, credit registry and credit information have been left out.
9-Sep-2020: Finance Minister unveils Doorstep Banking Services and declares EASE 2.0 Index Results
Union Minister of Finance & Corporate Affairs Smt. Nirmala Sitharaman today inaugurated Doorstep Banking Services by PSBs and participated in the awards ceremony to felicitate best performing banks on EASE Banking Reforms Index.
Secretary, Department of Financial Services Shri Debasish Panda and Chairman IBA, Shri Rajnish Kumar, were also present at the virtual event.
Doorstep Banking Services by PSBs
As part of the EASE Reforms, Doorstep Banking Services is envisaged to provide convenience of banking services to the customers at their door step through the universal touch points of Call Centre, Web Portal or Mobile App. Customers can also track their service request through these channels.
The services shall be rendered by the Doorstep Banking Agents deployed by the selected Service Providers at 100 centres across the country.
At present only non-financial services viz. Pick up of negotiable instruments (cheque / demand draft / pay order, etc.), Pick up new cheque book requisition slip, Pick up of 15G / 15H forms, Pick up of IT / GST challan, Issue request for standing instructions, Request for account statement, Delivery of non-personalised cheque book, demand draft, pay order, Delivery of term deposit receipt, acknowledgement, etc., Delivery of TDS / Form 16 certificate issuance, Delivery of pre-paid instrument / gift card are available to customers. Financial services shall be made available from October 2020.
The services can be availed by customers of Public Sector Banks at nominal charges. The services shall benefit all customers, particularly Senior Citizens and Divyaangs who would find it at ease to avail these services.
Performance of PSB on EASE 2.0 Index
A common reform agenda for PSBs, EASE Agenda is aimed at institutionalizing clean and smart banking. It was launched in January 2018, and the subsequent edition of the program ― EASE 2.0 built on the foundation laid in EASE 1.0 and furthered the progress on reforms. Reform Action Points in EASE 2.0 aimed at making the reforms journey irreversible, strengthening processes and systems, and driving outcomes.
PSBs have shown a healthy trajectory in their performance over four quarters since the launch of EASE 2.0 Reforms Agenda. The overall score of PSBs increased by 37% between March-2019 and March-2020, with the average EASE index score improving from 49.2 to 67.4 out of 100. Significant progress is seen across six themes of the Reforms Agenda, with the highest improvement seen in the themes of 'Responsible Banking’, ‘Governance and HR’, ‘PSBs as Udyami Mitra for MSMEs’, and ‘Credit off-take’.
PSBs have adopted tech-enabled, smart banking in all areas, setting up retail and MSME Loan Management Systems for reduced loan turnaround time and PSB loans in 59 minutes. Command TReDS for digital lending. PSBs have instituted real-time visibility to retail and MSME customers on the status of their loans. Most branch-based services are now accessible from home and mobile, including in local languages.
EASE Reforms Index has equipped Boards and leadership for effective governance, instituted risk appetite frameworks, created technology- and data-driven risk assessment and prudential underwriting and pricing systems, introduced Early Warning Signals (EWS) systems and specialised monitoring for time-bound action in respect of stress, put in place focussed recovery arrangements, and established outcome-centric HR systems.
Bank of Baroda, State Bank of India, and erstwhile Oriental Bank of Commerce were felicitated for being the top three (in that order) in the ‘Top Performing Banks’ category according to the EASE 2.0 Index Results. Bank of Maharashtra, Central Bank of India & erstwhile Corporation Bank were awarded in the ‘Top Improvers’ category basis EASE 2.0 Index. Punjab National Bank, Union Bank of India, and Canara Bank were also recognized for outstanding performance in select themes.
Major Reform achievements between March 2018 to March 2020
- Most PSB customers now have access to 35+ services such as IMPS, NEFT, RTGS, intra-bank transfer, account statement, cheque book request on mobile/ Internet banking and23 services such as cheque book issuance, cheque status, issuance of form 16A, block/activate debit card on the call centre. The availability of services has nearly doubled over the last 24 months.
- Nearly 4cractive customers on mobile and internet banking with 140% increase in financial transactions through mobile and internet banking channels and almost 50% of financial transactions through digital channels.
- Call centers now offer services in 13regional languages such as Telugu, Marathi, Kannada, Tamil, Malayalam, Gujarati, Bengali, Odia.
- Complaint redressal average turnaround time reduced from the average of approximately 9 days to 5 days
- 23 branch-equivalent services such as account opening, cash deposit, cash withdrawal, fund transfer made available by PSBs through Bank Mitras
- PSBs have issued RuPay credit cards to nearly 23 crore basic savings account customers
- Significant improvement in customer outreach through dedicated marketing force and external partnerships. The number of dedicated marketing employees has increased from 8,920 to 18,053.
- Sourcing of retail and MSME loans through the dedicated salesforce and marketing tie-ups has increased nearly five times from 1.5 lakhs to 8.3 lakh loans
- Turnaround time (weighted average) for retail loans reduced by 67% from the average of nearly 30 days to nearly 10 days
- Cross-sell of non-banking financial products has made available bouquet of financial products to the customer
- For prudential lending, PSBs are now systematically keeping watch on adherence to risk-based pricing, and cases with deviation have reduced from 59% to 20%, and have put in place data-driven risk-scoring for appraisal of high-value loans that factors in group-entities.
- Most PSBs have deployed IT-based EWS systems leveraging third-party data, which have enabled early, time-bound action in stressed accounts. Monitoring has also been strengthened by deploying Agencies for Specialised Monitoring, and proactively monitoring listed entities based on published financials. Slippage into NPA has reduced from 3.90 lakh crore in 12-months ending March-18 to 1.45 lakh crore in 11-months ending February-20.
- PSBs have adopted digital platforms such as online OTS, e-Bक्रय, e-DRT for expedited recovery. 88% of one-time settlement (OTS) cases are now tracked through dedicated IT systems.
- PSBs have adopted new ways of credit, such as PSBloansin59minutes.com and Trade Receivables Discounting System (TReDS) for digital lending for MSMEs and retail. 73% of all PSB inland bills are now discounted through online TReDS.
- The Government has introduced several governance reforms. The governance reforms include arm’s length selection of top bank management through Banks Board Bureau, introduction of non-executive chairpersons, broader talent pool for such selections, empowered bank Boards, strengthening of the Board committees system, enhancing the effectiveness of non-official directors, and leadership development and succession planning for the top two levels below the Board. In larger PSBs, Executive Director strength has been increased, and Boards are empowered to introduce CGM level for increased business.
Like in the previous year, progress made by PSBs was tracked quarterly through a published EASE Reforms Index leading up to the annual review. In addition to the inclusion of the EASE Reforms Index in the evaluation of Whole Time Directors of PSBs, it has now been made part of the annual appraisal of PSB leadership up to two levels below the Whole Time Directors.
The Index measures the performance of each PSB on 120+objective metrics across six themes. It provides all PSBs a comparative evaluation showing where banks stand vis-à-vis benchmarks and peers on the Reforms Agenda. The Index follows a fully transparent scoring methodology, which enables banks to identify precisely their strengths as well as areas for improvement. The goal is to continue driving change by spurring healthy competition among PSBs and by encouraging them to learn from each other.
PSBs have stepped up to support the country during COVID-19
PSBs have massively stepped up to support the nation during the COVID-19 crisis. From different modes of staffing to remote working, 80,000+ bank branches were operational during COVID-19. Additionally, there has been 90% uptime of self-service machines during the COVID times and around three times increase in Aadhaar Enabled Payment System (AEPS) transactions through micro ATMs, and enhanced doorstep banking support by 75,000+Bank Mitras. To further support the customers in these times, the banks have drastically increased the number of services being offered at the call centers, from 11 in March-19 to 23 as of June-20 in 13 regional languages.
PSBs way forward to Smart, Tech-enabled Banking for Aspiring India
A comprehensive agenda for smart, tech-enabled banking has been adopted for FY2020-21, under which PSBs have initiated eShishu Mudra for straight-through processing of loans to micro-enterprises and digital personal loan for customers. PSBs have started providing customer-need driven credit offers through analytics and partnerships with FinTechs and e-commerce companies.
Many PSBs have already started taking steps in line with the reform priorities. Progress of PSBs will continue to be tracked on metrics linked to Reform Action Points, and their progress will be published through a quarterly index.
Financial Health of the PSBs during the EASE Reforms journey
Following the completion of recognition of legacy stress as NPA, PSBs have returned to profitability with sound financial health and institutionalised systems to prevent the recurrence of past weaknesses. The improved financial health of PSBs reflects in many parameters—
- Gross NPAs reduced from ₹8.96 lakh crore in March-2018 to ₹6.78 lakh crore in March-2020;
- A sharp decline in fraud occurrence from 0.65% of advances during FY10-FY14 to 0.06% in FY19-20; due to fraud prevention reforms and proactive checking of legacy NPA
- Record recovery of ₹2.27 lakh crore in FY19-FY20 driven by newly setup dedicated stressed account management verticals in PSBs;
- Asset quality has improved significantly, with the net NPA ratio reducing from 7.97% in March 2018 to 3.75% in March 2020
- Number of PSBs under PCA down to three;
- CRAR 197 bps above the regulatory minimum; and
- The highest provision coverage ratio of 80.9% in eight years.
Link for Doorstep Banking Services and Declaration of EASE 2.0 Index Results: https://www.iba.org.in/events/past-events/launch-of-dsb-and-declaration-of-ease-2-0-index-results_972.htmlor https://www.iba.org.in