Indian Economy News

RBI to issue rules on consumer protection

New Delhi: The Reserve Bank of India (RBI) will soon introduce guidelines aimed at reinforcing consumer protection, governor Raghuram Rajan said on Friday, as the central bank strives to ensure the millions included recently in the financial system are not exploited.

“We need to make sure that if we are bringing the financially excluded into the system, we should protect them. We have in the works rules on consumer protection. We will roll out the regulations on that by end of this year,” he said at a session on financial inclusion and direct benefits transfer at the Delhi Economics Conclave organized by the ministry of finance.

The government’s ambitious drive to open a bank account for every household has seen a massive spurt in the number of people in the country with access to banking services. The Pradhan Mantri Jan Dhan Yojana has seen banks open more than 110 million new bank accounts over the last one year.

Another big game-changer in this space will be the proposed common risk-based know-your-customer (KYC) norms that will be used by all financial regulators, Rajan said.

“It is important to make a common risk-based KYC simple and easily accessible.., say which can be triggered by a biometric or Aadhaar (unique identity number). There should be basic KYC for basic products. If they want more sophisticated products, then we can ask for more KYC,” he said. “That is where we are going. We are nearly there. Now we need to integrate it across all financial regulators. FSDC (Financial Stability Development Council) has a proposal which we have been working on.”

Payments banks will also play an important role in facilitating the last-mile delivery. Another game-changer will be online markets, he said.

Pointing out that direct benefit transfer is an effort to ensure the bottom of the pyramid also becomes a profitable proposition, Rajan stressed the need for banks to be paid the commissions due to them for transfers made under it.

“It will be important to pay the banks the commissions they were promised...this has to be a commercial activity and banks should be paid their dues,” he said.

Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.

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