E-money can be used as a substitute: RBI

Mumbai: The Reserve Bank of India working group, chaired by Mr Z Cama of HSBC, on electronic money has said e-money can be used as a substitute for the central bank notes and coins even though it would not be “desirable” to place any limit on storing monetary value in e-money. E-money has been defined as an electronic store of monetary value on a technical device.

“E-money could have a profound impact on compilation of monetary statistics and money supply unless regulated prudently. Since e-money is the close substitute of central bank money, these should be explicitly accounted for in monetary statistics,” the group said in its report.

It has recommended that multipurpose e-money may be permitted to be issued only against the full value of central bank money or against credit only by banks.

With regard to the status of issuers of e-money, the group has said only banks should be allowed to issue multipurpose e-money. However, single purpose and limited purpose e-money should be allowed to be issued by an entity, including banks.

Non-banks should not be permitted to issue multipurpose e-money and if they are permitted, they along with banks must conform to seven minimum prudential requirements as laid down by the European Central Bank, the report said.