NEFT services to be available 24x7 from December this year
RBI will set up a fraud tracking registry for online payments
Markets slump after the central bank cut India’s GDP growth expectations
India’s BSE Sensex crashed after the Reserve Bank of India lowered the GDP growth estimates for the current financial year, but the central bank introduced a few powerful amendments for the fintech industry as part of its bi-monthly monetary policy announcement today (August 7).
Firstly, RBI said it would make National Electronic Funds Transfer (NEFT) available 24×7 by December, in the hope that it will solidify India’s adoption of digital payments. The facility of electronic transfer of funds is currently available from 8 am to 7 pm on all working days of the week, except the second and fourth Saturdays in a month
“This is expected to revolutionise the retail payments system of the country,” RBI said in a press release, speaking about the extension of NEFT.
The banking regulator had signalled its intention to make NEFT a round-the-clock service earlier in May as part of its Payment System Vision 2021. Aside from highlighting the need to add more features to NEFT, in July, RBI also removed charges on digital transactions to make online transfer of funds cheaper.
Along with NEFT, RBI has decided to permit all bill payments through Bharat Bill Payment System (BBPS), the interoperable platform for repetitive bill payments, which is run by the National Payments Corporation of India. This will remove cash-based billing for all bill payments except prepaid recharges. BBPS is used to process payments direct-to-home (DTH), electricity, gas, telecom and water bills.
“In order to leverage the advantages of the BBPS and harness its full potential, it has been decided to permit all categories of billers (except prepaid recharges) who provide for recurring bill payments to participate in BBPS on a voluntary basis,” the RBI said in ‘Statement on Developmental and Regulatory Policies’ released along with the monetary policy review.
RBI also said a detailed guideline on this will be issued by September-end. It added that it would also facilitate the creation of a Central Payment Fraud Registry for tracking payment system frauds.
“Participants in payment systems will be provided access to this registry for near-real time fraud monitoring. The aggregated fraud data will be published to disseminate information on emerging risks,” the statement said.
Market Sentiment Sours Post RBI Announcement
Earlier in the day, the RBI slashed the repo interest rate by an unconventional 35 basis points to a nine-year low so as to boost an economy which has been crawling forward at its slowest pace in nearly five years. This is the fourth successive rate cut by the central bank.
The RBI also reduced its growth projection for the Indian economy to 6.9% for the current financial year, from 7% forecast in June, due to an economic slowdown and fall in investments.
Following the gloomy outlook, the BSE Sensex lost 286 points or 0.77% on Wednesday. The broader NSE Nifty also fell 92.75 points or 0.85% to 10,855.50.