Non-resident Indians (NRIs) will soon be able to pay utility bills and other recurring payments such as fees using the Bharat Bill Payment System (BBPS), the Reserve Bank announced on Friday.
The RBI made it clear that the move was not driven by a need to attract more remittances when the domestic currency was under pressure, nor was it a result of its efforts to minimize bank spreads when exchanging currencies.
The Bharat Bill Payment System (BBPS) is an interoperable and standardized bill payment platform. Over 20,000 bookkeepers are part of the system, processing over 80 million transactions per month.
RBI Governor Shaktikanta Das said BBPS has transformed the bill payment experience for users in India and is now proposing to enable the system to accept cross-border inward bill payments.
“This will enable non-resident Indians (NRIs) to pay bills for utilities, education and other such expenses on behalf of their families in India. This will greatly benefit the elderly,” he said in announcing the bi-monthly monetary policy.
The RBI said in a statement that the decision will also facilitate the payment of any bills on the BBPS platform in an interoperable manner.
The central bank will soon issue the necessary instructions in this regard.
“When this was introduced, profit margins were definitely not in mind. It was essentially a convenience measure for the NRI and its relatives to stay here,” Deputy Governor T Rabi Shankar told reporters later.
Meanwhile, Shankar also said that given the current developments, the RBI has received some requests from lenders to open Nostro accounts.
The Governor also announced the formation of a committee to study the possibility of an alternative benchmark for the Overnight Index Swap (OIS) contract based on the Mumbai Interbank Direct Rate (MIBOR), the most widely used interest rate derivative (IRD) in the onshore market .
The use of MIBOR-based derivatives contracts has increased as the Reserve Bank took steps to diversify the participant base and facilitate the introduction of new IRD instruments.
Meanwhile, the central bank said that the MIBOR benchmark rate calculated based on redemption fund transactions performed on the NDS-call platform in the first hour after the market opened was based on a narrow trading window.
Internationally, there has been a move to alternative benchmark rates with a wider participant base (apart from banks) and higher liquidity.
“Amid these developments, it is recommended that a committee be formed to delve into these issues, including the need to transition to alternative benchmarks, and propose the most appropriate way forward,” it said.
The RBI has also decided that Independent Primary Dealers (SPDs) will also be allowed to trade foreign exchange-settled overnight index swaps (FCS-OIS) directly with non-residents and other market makers who are also market makers such as banks .
In February, Indian banks were allowed to trade with non-residents and other market makers in the offshore FCS-OIS market.
This is allowed to eliminate the fragmentation between the onshore and offshore OIS markets and to improve the efficiency of price discovery.
Meanwhile, Das reiterated that most fraud in digital lending occurs in the context of apps, which are not regulated, adding that the RBI will soon develop guidelines for such entities.
The RBI’s top management also said that it has no objection to the current set of regulations by credit rating agencies under Sebi, but is taking action to ensure banks’ balance sheets are not at risk from their actions. PTI AA Barbar