RBI weighs e-cheques to modernise payment system, Pg17

Key Highlights:

• The Reserve Bank of India (RBI) is considering introducing electronic cheques (e-cheques) to modernize India's payment system.
• The initiative aims to combine the reliability of traditional paper cheques with the efficiency of digital payments.
• A comprehensive review of cheque design and security features will be undertaken to enhance uniformity and prevent fraud.
• The RBI will review the cross-border payments framework to enhance efficiency.

Detailed Insights:

• E-cheques are digital versions of paper cheques, offering faster, more secure, and paperless transactions.
• The RBI aims to standardize security features across all cheque instruments, building upon the existing CTS-2010 standards.
• The regulatory process for cross-border payment authorization under the PSS Act, 2007 and FEMA, 1999 will be streamlined to promote ease of doing business.
• The RBI will examine the possibility of implementing a Payments Switching Service (PASS) to allow customers to seamlessly switch between payment service providers.
• Entities playing a critical role in facilitating digital payments will be brought under regulatory oversight to promote systemic stability.

Key Concepts Involved:

• E-cheque: A digital version of a paper cheque, created and sent online.
• CTS-2010: Standards for cheque truncation system to enhance efficiency in cheque processing.
• PSS Act, 2007: The Payment and Settlement Systems Act, 2007, provides the legal basis for the regulation and supervision of payment systems in India.
• FEMA, 1999: The Foreign Exchange Management Act, 1999, regulates foreign exchange transactions in India.