RBI to regulate credit cards, financial transactions
15 November 2005
New Delhi: The government is planning to give more powers to the Reserve Bank of India to regulate and oversee various payment and settlement systems including that of credit cards.
The finance ministry has finalised the draft payment and settlement Bill, to be introduced in the winter session of Parliament beginning on November 23. Official sources said, the Bill would also enable RBI to regulate entities like the Clearing Corporation of India.
With the law in place, finality of financial settlements would be backed by a statute.
Sources say at present, all payments are carried out on a contractual basis and there is no legal teeth to the financial transaction and settlement system in the country. Though there has been no major disruption in the system, the Bill would ensure that such a disaster never occurred.
The law would also enable RBI to authorise payment systems, revoke authorisation and debar system providers from operating sub-standard payment. RBI can also issue standards of access and levy penalty.
Apart from credit card issuers, payment associations like Mastercard and Visa would also be under the RBI lens and with the law in place, RBI would also get the power to give directions to these companies in various matters, like risk mitigation. The finance ministry is currently awaiting the law ministry's nod on the issue.