Media Statement from NPCI During June 2020 on Digital Payments

“We have come across some quotes on social media which suggest that transferring money through Google Pay is not protected by the law, since the app is unauthorised. RBI has authorised NPCI as a Payment System Operator (PSO) of UPI and NPCI in its capacity as PSO authorises all UPI participants.

We would like to clarify that Google Pay is classified as Third Party App Provider (TPAP) that also provides UPI payment services like many others, working through banking partners and operating under the UPI framework of NPCI. All authorised TPAPs are listed on the NPCI Website. 

Enclosed:

Annexure 1 – List of UPI Live Members and Annexure 2 – List of 3rd Party Apps) All transactions made using any of the authorized TPAPs are fully protected by the redressal processes laid out by applicable guidelines of NPCI/RBI and customers already have full access to the same. Further, we would also like to clarify that all authorised TPAP’s are already bound by full compliance to all the regulations and applicable laws in India. UPI ecosystem is fully safe and secure, and we appeal to the citizens not to fall prey to such malicious news. We also request UPI customers not to share their OTP (one time password) and UPI Pin with anybody”.

Will FII investment touch $2 billion-mark in 2009?

Investment by Foreign Institutional Investors in Indian equities has touched the two billion dollar-mark (nearly Rs 10,000 crore) so far this year, which includes a record single day net purchase of Rs 4,085 crore.

According to the latest available data on SEBI website, FIIs made net purchases worth $2 two billion or about Rs 9,973 crore so far in 2009, with the stock market seeing major investments in the past two weeks.

"FIIs have been in the buying mode for the last couple of months and after their initial sell-off in early 2009, have turned net buyers of Indian equities year-to-date. Positive trend is likely to continue well into FY'10," Angel Broking Head of Research Hitesh Agrawal said.

Yesterday, FIIs put in as much as Rs 4,085 crore ($838 million) in a single day with an over Rs 2,000 crore investment in shares of realty firms DLF alone.

Since the beginning of the new fiscal year, FIIs have started putting money in domestic stocks, including blue-chips like Housing Development Finance Corporation, private sector lender HDFC Bank and realty major DLF.

In May alone, FIIs made gross purchases of equities worth Rs 27,872 crore and sold shares of Rs 18,255 crore, resulting in a net investment of Rs 9,616 crore ($1.93 billion), as per the data available with SEBI.

Three foreign fund houses, Deutsche Securities Mauritius, Euro Pacific Growth Fund and Copthall Mauritius had purchased a total 9.15 crore shares representing 5.39 per cent in DLF for Rs 2,106.1 crore in open market transactions yesterday.

"We believe the positive trend will continue well into FY 2010. Notably, after having reduced their stake in many blue-chip companies in FY 2009 on account of the global liquidity shortage and economic slowdown concerns, FIIs are now coming back into market," Agrawal added.

The previous week also recorded the biggest weekly infusion by FIIs in the current calendar year. With a bulk investment of Rs 1,491 crore in a single day, FIIs remained net buyers in equities in the remaining days.

FIIs have turned net buyers from last week of April, after pulling out a hefty Rs 52,987 crore from Indian stock markets in 2008, which saw Sensex plunging 51 per cent.

Earlier, two Foreign fund houses Capital Group and Sansar Capital Mauritius bought HDFC shares worth Rs 316 crore, while Deutsche Securities bought Rs 422 crore shares of HDFC Bank.

Agrawal said if no further bad news comes, the world wide the markets would revive by 2010 if FII buying spree continues.

"Pre-empting this, FIIs will look at increasing their stakes in firms that are best placed to ride the recovery and large-cap stocks are preferred ones to begin with," he added.

Agencies

From April 1 withdraw cash with no extra charge from any bank across India

Beginning April 1, one can walk into the ATM of any bank and withdraw cash or check the balance, at no extra charge.

This is when the Reserve Bank of India’s guidelines, allowing free access to ATMs, become effective.

It was feared that the move may prompt banks to go slow on ATM expansion, in view of the fee from customers disappearing. But this does not seem to be the case, as most banks plan to continue with their ATM expansion.

This is because, the interchange fee, which is paid between banks, will continue. So, the RBI move could prove to be advantageous for banks with large ATM networks. They could earn more fee income, as more customers access their ATMs. The interchange fee is broadly between Rs 15 and 20 per transaction.

Sanjeev Patel, Head, Direct Banking Channels, HDFC Bank, said the bank, which has about 3,500 ATMs, is not planning to go slow on ATM expansion. “We are a big acquirer. We have a large distribution network and this will benefit us. It is unlikely that my customer will move out. Other banks’ customers will come to us,” he said.

Hemant Kaul, Executive Director, Retail Banking, Axis Bank, said that the beneficiaries of the RBI guidelines would be large banks who have invested money in setting up their own ATMs. The number of ATM transactions per debit card would also register an increase, he added.

Axis Bank, which added close to 400 ATMs this quarter, will have a network of around 3,600 by this fiscal.

For both HDFC Bank and Axis Bank, around 15 per cent of ATM transactions are from customers of other banks.

Banks could see some downward pressure on the network charge, due to the disappearance of the Rs 20 fee charged from customers. But as the interchange fee will continue, a small bank with a smaller ATM network will see more impact.

“Banks that tried to save capital cost by going slow on their ATM expansion would now have to pay for it, as from April 1, customers would not think twice before using another bank’s ATM and their banks would have to pay for it,” said a banking analyst.

Union Bank of India is one of the few banks that already allows its customers to use ATMs of other banks free of cost.

The bank will continue with its own ATM expansion, said M.V. Nair, Chairman and Managing Director.

The bank opened 500 branches and set up 500 ATMs this year. It has set the same target for next year as well.

According to Nair, the decision to expand ATMs will depend on the individual bank. But the RBI move could also give rise to alternative methods of proliferation of ATMs. “I see the distinct possibility of white labelled ATMs, which are present worldwide, catching on in India. The Payment Corporation of India could be the right vehicle to implement this,” he said.

YES Bank also offers its customers free access to ATMs of other banks.

The bank had, in a sense, implemented the RBI move four years ago, when it began operations, as it wanted to increase its retail customer base, said Suresh Sethi, President, Transaction Banking Group.

“We don’t see any change in our core banking operations as our customers already enjoy free ATM use. ATM expansion is critical to improving the visibility of the bank and building its image. Our expansion strategy will be guided by that,” he said.

Source : Business Line

Fiscal year 2010 to be more challenging, says RBI chief

Next year will be a more challenging year than this has been but the Reserve Bank of India (RBI) will continue to do everything possible to lessen the domestic effects of the global financial crisis, its chief said.

In speech released on Thursday, RBI Governor Duvvuri Subbarao said the outlook for India and the world remained uncertain and the path of the global crisis and its resolution remained unclear.

While the central bank had a roadmap, it was not possible to deploy it all in one go.

"It would be our endeavour to adapt this roadmap to the evolving global developments and implement it flexibly and pragmatically," he said.

"Our approach, as indeed of every prudent central banker around the world, has been to 'cross the river by feeling the stones'."

Subbarao said India's economic fundamentals remained strong, but developments in the real economy, financial markets and global commodity prices pointed to a period of moderating growth and declining inflation.

"The year 2009-10 will be more challenging than the current one," he said.

"The RBI will continue to be on vigil and do everything possible within its mandate to mitigate the impact of the crisis on the Indian economy."

Since mid-October, the central bank has lowered its key lending rate by 250 basis points to 6.5 percent to shield the economy from the spillover of the global credit crisis.

It has also aggressively slashed banks' reserve requirements to shore up growth, which many expect to slow to 7 percent in the fiscal year which ends in March from 9 percent in 2007/08.

The government bond market is widely expecting interest rates to fall again soon, with the benchmark 10-year bond yield dropping 30 basis points on Thursday to 5.50 percent.

Subbarao noted inflation had been declining for the four weeks before he spoke, pointing to a faster-than-expected reduction in the pace of rising prices, while a recent cut in state-set fuel prices should further ease inflation pressures.

Data on Thursday showed India's wholesale price index, its most widely watched inflation measure, rose 6.84 percent in the 12 months to Dec. 6, sharply below the previous week's 8 percent and lower than a Reuters estimate of 7.49 percent.

Source: Agencies

India's factory output falls for first time in 13 years

India's factory output fell for the first time in more than 13 years in October, further evidence of a rapid economic slowdown which could spark more monetary easing by the Reserve Bank of India (RBI) after aggressive weekend rate cuts.

Industrial output declined 0.4 percent in October from a year earlier, the first annual drop since data in the current series became available in April 1995, and sharply below the previous month's upwardly revised 5.5 percent.

The figure was below a forecast for growth of 2.2 percent in a Reuters poll of economists. Manufacturing production in Asia's third-largest economy fell 1.2 percent from a year earlier, data showed on Friday.

"It is a shocking figure and only underlines the fact that the Indian economy is in a very bad situation," said T.K. Bhaumik, economist at JK Industries Group. "This is a wake up call for the government."

Bhaumik called on the government to consider additional stimulus to that announced at the weekend and to use fiscal measures to lift consumer demand. Lending banks should move fast to pass on the RBI's recent rate cuts.

"Since the RBI has already done its job, now commercial banks should be fast to ease the credit line," he said referring to the Reserve Bank of India.

The Reserve Bank of India (RBI) Governor Duvvuri Subbarao has said India faces a period of painful adjustment after the global financial crisis froze credit markets in October, further weakening an economy struggling with high borrowing costs.

Subbarao said the bank's growth forecast for 2008/09 was likely to be cut from 7.5-8.0 percent. Many private economists expect it to dip below 7 percent.

The RBI cut its main rates by 1 percentage point on Saturday, lowering its key lending rate for the third time since October, and has indicated that it was ready to act again to bolster an economy slowing much faster than expected.

The government followed up with an additional $4 billion in additional spending to stimulate activity. The benchmark 10-year bond yield plunged to its lowest in more than four years after the data was published on increased expectations of further central bank action.

Industrial output rose 8.1 percent in the 2007/08 (April-March) fiscal year, compared with 11.6 percent in 2006/07.

Source: Agencies

Who will be the new Indian finance minister?

Hunt is on for a new finance minister with the names of SM Krishna, C Rangarajan and Kapil Sibal under consideration in the wake of Chidambaram's shift to the home ministry.

Prime Minister Manmohan Singh, more comfortable with bureaucrats and technocrats, would ideally like Planning Commission Deputy Chairman Montek Singh Ahluwalia to take over finance. But this is something not acceptable to the Congress party, say well placed sources.

For the same reason, the Congress would have reservations about C. Rangarajan, former governor of the Reserve Bank of India, who has headed the prime minister's Economic Advisory Council.

The Congress would like to elevate a politician to the position.

Though Manmohan Singh took over the finance portfolio in the wake of Shivraj Patil's resignation as home minister and Chidambaram's move to home following the terror strike in Mumbai, he would like a full time finance minister, party sources say.

The prime minister already has charge of three weighty ministries - coal, after the exit of Shibu Soren who has taken over as chief minister of Jharkhand, information and broadcasting after the illness of Priya Ranjan Dasmunsi, and environment and forests.

As things stand, the government may go in for vote on account in February, rather than a full budget, on the eve of general elections. But finance entails a very heavy load, the sources say. This is even more urgent now with a full-blown economic crisis the world over with India not being spared either from its fallout.

The name of S.M. Krishna, former chief minister of Karnataka, is doing the rounds for finance. His name was also under consideration for home minister after Shivraj Patil's resignation, but the party decided to plump for Chidambaram instead.

Then there is Kapil Sibal - the prime minister enjoys a sense of comfort with him - but he is being considered too junior by the party.

It is said that 10, Janpath (residence of Congress president Sonia Gandhi) was wary of both External Affairs Minister Pranab Mukherjee and Congress general secretary Digvijay Singh - both names were under consideration - for home minister because they are considered politically astute and "may do a Narasimha Rao on Sonia Gandhi" and outsmart her.

The prime minister has not been enthusiastic about giving finance to Pranab Mukherjee, even though Manmohan Singh has relied heavily on Mukherjee in the last four years to run his government, and made him head of the 50 plus Group of Ministers (GOMs). It has been a government that has ruled through GOMs.

Whenever the question of a cabinet reshuffle has come up for discussion during the last three years, the idea of Mukherjee as either home minister or as finance minister has not found favour.

Mukherje is identified with a left-of-centre image. He was not given finance even in 1991 when P.V. Narasimha Rao became prime minister and opened up the economy, choosing Manmohan Singh as his finance minister to lead the process of reforms.

Left to himself, the "non-political" prime minister is happier working with bureaucrats than with politicians. He has given cabinet and minister of state status to almost as many bureaucrats and technocrats as to the politicians in his government.

These include those heading the Economic Advisory Council, National Knowledge Commission, National Disaster Management Authority, Inter State Council, National Manufacturing Competitiveness Council, to name a few. And of course, the powerful National Security Adviser M.K. Narayanan.

Source: Agencies

Rs 300,000cr package to boost Indian economy

The government on Sunday announced major tax cuts across the board to boost demand and allocated additional funds and incentives for exports, housing, textile and infrastructure to stimulate the economy, hit by the global financial crisis.

"The government has been concerned about the impact of global financial crisis on the Indian economy
and a number of steps have been taken to deal with this problem," an official statement said.

The package, coming on the back of fresh monetary measures announced by the RBI on Saturday, includes a four per cent cut in ad-valoram duty across the board, to boost additional spending, besides enhanced credit for exporters, along with a Rs 10,000 crore mop up for India Infrastructure Finance Company.

The measures include additional plan expenditure up to Rs 20,000 crore in current year; total spending in four months till March expected at Rs 300,000 crore. A series of steps to boost exports; Rs 350 crore additional funds for export incentives; back-up guarantee to ECGC for up to Rs 350 crore; to be allowed refund of services in some areas.

The package also includes import duty on Naptha for use in power sector as well as export duty on iron ore to be eliminated. India Infrastructure Finance Company to raise Rs 10,000 crore through tax-free bonds by March 2009. PSU banks to soon announce package for borrowers of home loans upto Rs 20 lakh. An across-the-board cut on ad valorem rate to encourage additional spending; additional Rs 1,400 crore for textile sector.

Source: Agencies