Vishwas Mysore™

NPCI profits soar, but banks struggle with UPI transactions. Experts propose two solutions to unclog India's banking networks, insights by Jochelle Mendonca and Alekh Angre. #Digitalpayments #banking.

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IT Governance in Banks has been in the news over the recent past after a series of regulatory actions against lenders by the RBI. My piece here just provides an overview of the issues / challenges on this front. Comments welcome, as always.

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The bulk of cash-in cash-out (CICO) operators across the country rely on Aadhaar enabled Payments System or AePS for enabling transactions. In response to concerns of fraud perpetrated over AePS, on 31st July 2024, RBI issued (draft) directions to all banks and to the NPCI for onboarding and ongoing due diligence of AEPS touchpoint operators. This is very welcome. However, the RBI has also reiterated an older 2010 prohibition disallowing CSPs from offering services of multiple acquiring banks at his/her location. Our field research indicates that this could result in loss of convenience for the last mile cash-reliant customer. Banks' server failure/downtime is a recurring issue for AePS - As a workaround, CSPs acquire licenses from multiple providers at a time and use them when a particular bank server is down. This 'multi-homing' practice that has been observed by our researchers on the ground for many years now and has been corroborated by other stakeholders we have spoken to. By multi-homing, CSPs ensure continuous availability of AePS withdrawal services to customers who approach them. The prohibition may help prevent organised fraud, but for CSPs who genuinely want to service customers and make a viable business of it, they can quite easily find a workaround to this rule - after all, it's in their interests to maintain a reputable, reliable & sustainable business. We humbly submit that the RBI may consider alternative approaches - Non-exclusivity may be enabled by requiring banks and the NPCI to adopt a graded, risk-based approach. Operators who have been regularly active, have a long history of undertaking CICO transactions in the exact location, operators who do not appear in the NPCI blacklist, who do not have a history of customer complaints, can be assessed for this permission, by the acquiring banks as well as by NPCI itself, and network managers, depending on where the data for each layer rests. Those CSPs with higher risk score may be disallowed from accessing the AePS servers through any bank other than the one which shows more prominent activity for. The score can be updated on a convenient cadence to allow for genuine operators to expand their business and customer-convenience offerings. Can we prioritise convenience for the last-mile consumer and use technology fully to solve for monitoring and safety? - perhaps there is a DPI to be built? Seeking comments and feedback Dilip Modi sameer nagpal Reserve Bank of India (RBI) National Payments Corporation Of India (NPCI) Ram Rastogi 🇮🇳 Kuldeep Pawar Spice Money Sub-K IMPACT Solutions Ltd Sasidhar Thumuluri BUSINESS CORRESPONDENT FEDERATION OF INDIA #uninterruptedCICO #customerconvenience #customerservice We submitted our response to the RBI, available at https://lnkd.in/dNfKmMGs Dvara Research

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Fintech Innovation within Regulatory Framework of data privacy and protection ! DigiLocker as singe source of TRUTH , with robust consent mechanism , access to Aadhar, Driving Licence , Vehicle ownership , Address Proofs , PAN insurance policies and many more permitted data and documents certified by Digilcoker or respective departments , like UIDAI, Transport Authority , IT Department many central and state government authorities offer access to issued documents for fetch and verification as requestor status to fintechs , Large discount brokers like , Zerodha , Groww are largest beneficiaries of this access reducing their KYC cost by > 90% This acces to data under consent framework should continue for fintechs for innovation for creating ease of access to BFSI India , any such restrictions under various departments of govt would stall the all innovation that’s happening in India 🇮🇳! Financial inclusion is at basic level in India now ! There is lot to do in credit inclusion , access to insurance , asset and wealth inclusion. Digital Data with DPI and appropriate access to customer data with consent is integral part of financial innovation!

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FinTechs keen to be regulated, express need for broader licensing framework FinTech Leaders spoke on the need of a broader licensing framework for the fintech ecosystem, with more and more fintechs voluntarily wanting to be regulated. They further highlighted how every digital lender has a hero product today but are unsure about what next they can bring to the table. Sashank Rishyasringa | axio Ashish Goyal | Fibe.India (Formerly EarlySalary) Sanjay Aggarwal | Moneyview Anurag Jain | KredX Karan Mehta | Ring Rohit Taneja | Decentro Story by Anushka Sengupta #ETBFSI #ETBFSIFINNEXT #FINNEXT #Fintech #DigitalLending #InsuranceTech #NeoBanks #PayTech #LendTech #Bengaluru https://lnkd.in/grDg_BFU

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Unsure how to reach the underbanked MSME sector? By leveraging digital payments and lending software, you can tap into this underserved sector with accurate loan decisions. Here’s how. https://lnkd.in/dVNhCvDp #Finezza

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Digital transactions on ONDC will be collateral for credit providers, says T Koshy T Koshy, MD & CEO of Open Network For Digital Commerce (ONDC), shares how digital transaction history will serve as collateral, simplifying loan processes. He also discusses ONDC's journey, key milestones in merchant participation, transaction growth, and how ONDC's network model is transforming digital commerce. In conversation with: Amol Dethe #DigitalTransactions #ONDC #CreditCollateral #DigitalCommerce #NetworkModel #Fintech #TandC #ETBFSI #BFSI Watch here: https://lnkd.in/eqb8uJae

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Banks don't like changes. Even if the instructions come from RBI. The regulator's direction to move away from OTP as the 2FA requires banks to spend a lot of money and time to do it. And it is not happening anytime soon. Banks have been using OTPs for a decade and a half. While there are other alternatives, changes bring legal and compliance complications. When RBI introduced 2FA, banks were given the option to choose their preferred method. OTPs were the easiest and cheapest solution then. However, the technology has advanced much but banks are striking with what worked well for them. Please read my story on this https://lnkd.in/db_VzAYQ

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FinTalks: The National Payments Corporation Of India (NPCI) has introduced a new ‘UPI Circle’ feature on its Unified Payments Interface (UPI) platform. This feature allows primary UPI account holders to delegate payment responsibilities to trusted secondary users securely. UPI Circle-Delegate Payments is a feature where a UPI user acts as a primary link with their trusted secondary users on their UPI App for either partial or complete delegation. Delegated Payments would allow an individual (primary user) to set a UPI transaction limit for another individual (secondary user) on the primary user’s bank account. This product is expected to expand the reach and usage of digital payments across the country. Detailed instructions will be issued shortly. How do UPI Circle delegate payments work?   📍 Primary User: The account holder initiates the Circle and controls the delegation.   📍 Secondary User: A trusted individual granted partial or full access to the account to make payments.   UPI Circle enables two types of delegation:   📍 Full Delegation: The primary user authorises the secondary user to initiate and complete transactions within predefined spending limits without requiring further approval.   📍 Partial Delegation: The secondary user can initiate transactions, but the primary user must authenticate and finalise the payment using their UPI PIN.   Members are required to ensure the below guidelines are followed:   📍 UPI apps and PSP offer independent user journeys for Primary and Secondary users. Users shall have their own choice of UPI app.   📍 UPI apps shall ensure that app passcodes/biometrics (finger/face) are mandatory for all secondary users. For linking, the primary user shall scan the QR code and enter the UPI ID, followed by selecting a contact number from the contact list. In the later phase, primary users shall be able to link with secondary users in lieu of a QR code scan by selecting a contact number from the contact list only. A primary user can delegate up to 5 secondary users, and a secondary user can accept delegation from only one primary user. Members shall ensure that the primary authorises the secondary user on full or partial delegation.   Members shall ensure limited control is available for the primary to set usage controls over their secondary users. For the entire delegation, members shall provide a maximum monthly limit of ~15,000 per delegation and a maximum per transaction limit of ~5000.   Existing UPI limits shall be applicable in case of partial delegation. Members shall ensure that during the cooling period - first 24 hours, a daily transaction limit of ~5000 shall be prescribed after successfully linking primary and secondary users for both full and partial delegation. #fintalks #upi #delegatepayments #seamlesstransactions #qr #tsp

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Sandeep Indurkar, CBO of BharatPe's payment vertical, shares insights on the evolution of UPI, its impact on India's digital payments landscape, and BharatPe's role in driving innovation. Read more #ETEdgeInsights #BharatPe #Innovation #Fintech #DigitalPayments #UPI Poonam Mondal

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#RBI's new Regulatory #Sandbox includes tech for enhancing credit access to streamlining #KYC From advanced loan default prediction and seamless digital account openings to blockchain-based vendor financing and unassisted video KYC, these innovations aim to address critical challenges and improve efficiency across the financial landscape. #tech #FintechInnovation #CreditAccess #KYCInnovation #DigitalFinance #BlockchainFinance #LoanPredictionTech #VideoKYC #FinancialInclusion #TechInFinance #SeamlessBanking #FutureOfFinance #RegulatoryTech https://lnkd.in/gHyUJGmQ

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RBI is collaborating bilaterally with various countries to link India’s #DigitalPublicInfrastructure – #UnifiedPaymentsInterface (UPI) with their respective counterparts for #CrossBorderPayments. While India and its partner countries will continue to benefit through such bilateral connectivity of fast #PaymentSystems, a multilateral approach like #ProjectNexus will further boost such efforts to expand the international reach of Indian payment systems. Reserve Bank of India (RBI) Bank for International Settlements – BIS https://lnkd.in/dVZdcAPT

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Fintech

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FinTalks: National Payments Corporation Of India (NPCI) has taken a strategic step by incorporating National Payments Corporation Of India (NPCI) BHIM Services Ltd as a wholly-owned subsidiary. Lalitha Nataraj, a former banker with experience at IDFC FIRST Bank and ICICI Bank, will lead the new entity as CEO. This move aims to meet the rising demand for digital transactions, address market expectations, and enhance financial inclusion. With PhonePe and Google Pay dominating 85% of UPI volumes, the National Payments Corporation Of India (NPCI)'s decision to boost BHIM's presence is crucial. In June, BHIM accounted for a mere 0.16% of payment volumes, highlighting the need for expansion. This isn't NPCI's first venture into subsidiaries, having previously transferred its bill payment system to NPCI Bharat BillPay Ltd. Incorporating National Payments Corporation Of India (NPCI) BHIM Services Ltd signifies a strategic shift in the National Payments Corporation Of India (NPCI)'s approach towards fostering a competitive UPI market. #fintalks #npci #bhim #upi #seamlesstransactions #digitaltransactions

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