Deputy Governor V Leeladhar said banking regulator Reserve Bank of India is worried on the rising defaults in credit cards.
He said, “Credit card defaults are rising and it is a matter of concern. It just shows that due diligence was not done while selling cards”. Deputy Governor added credit card issuances are not picking up the face.
While speaking on the sidelines of a banking conference Leeladhar said that the Payment & Settlements Systems Act 2007 is likely to be conveyed by the government in a week’s time.
The act will legalize electronic payment systems in the country and will bring global non-banking payment companies like Western Union, Visa and Mastercard under the control of the RBI.
Leeladhar informed RBI has plans to make ATM usage free from 2009, the process is on track after the largest public sector bank State Bank of India, joined the National Financial Switch (NFS) two months ago.
“SBI handles about 25% of the three lakh daily ATM transactions. After they have joined the NFS, they have got customers from other banks using their ATMs, which is a good sign,” he said.
SBI is having the largest ATM network in the country and it is the only largest bank which had avoided getting into an ATM sharing agreement with any bank, or joined a switch.
Leeladhar added as SBI has joined the NFS, soon other banks will follow suit. “There are 2-3 public sector banks which are yet to join, but I am sure they will also do so soon,” he said.
The RBI will be recommending a national centralized electronic clearing system (ECS) for funds transfer. The ECS system has gained popularity for payment of bills and mutual fund systematic investment plans has been currently divided into different zones.
“We are planning to centralize it at the RBIs national clearing cell at Nariman Point. It will be linked to banks’ core banking platform,” he said.
The RBI also has plans to make use of satellites to reach banking services to areas which are unreachable. The RBI will be helping banks lease satellite’s for this purpose and also pay the cost on behalf of the banks.
“For hilly terrains like the North East we plan to pay the full cost, while for rural areas we will pay 75% of the cost and 50% of cost for semi urban areas,” Leeladhar said.
He added that satellite is the most ideal back up for banks as it is most disaster proof.
Meanwhile, the Indian Banks’ Association (IBA) also has plans to start a payment and settlement switch for which it expects to get license by the middle of August. “It will be called National Payment Corp of India and will be owned 51% public sector banks,” said K Unnikrishnan, deputy chief executive, IBA.