RBI’s Cross-Country Payments With UPI- A Detailed Look At The Central Bank’s Future For International Remittance

India was the top recipient of remittances in the world in 2021, receiving over USD 87 billion. This represented a 4.6% increase above its remittance inflows from prior years. This is because remittances only represented 3.1% of the nation’s GDP in 2020.

Cross-country remittances are growing, and the Reserve Bank Of India(RBI) acknowledges this as they are deciding to act on it. Their initial plan is to add newer options to the 6-year-old Universal Payments Interface(UPI) that includes international payments. Prima facie is undoubtedly a step in the right direction. Yet we must look closely to see how it will impact the sector.

What Is RBI’s Initiative?

The Reserve Bank of India (RBI) stated in its annual report for FY21 that it is working on using UPI for cross-country transfers among jurisdictions.

RBI has looked into the idea of connecting UPI with comparable systems in other jurisdictions, particularly in the G20 countries, to improve cross-country and international payment arrangements. In addition, the apex bank claims to participate in the discussions over the fundamentals and roadmap of UPI and cross-country remittance with the Committee on Payments & Market Infrastructures (CPMI) and Financial Stability Board (FSB).

What Are Cross-Country Remittances?

For the uninitiated, cross-country remittances are transactions between individuals, companies, or banks in at least two countries. At the moment, cross-country and international payments are settled through a bank with branches in both nations. The bank converts money to local currency and charges users a commission of up to 10%. As a result, the procedure is time- and money-consuming.

What Is The Future Of Cross-Country Remittances In India?

The cornerstone of the cross-country payments ecosystem in India is likely to be laid by a similar agreement between PayNow, based in Singapore, and UPI’s governing organization, the National Payments Corporation of India (NPCI). The integration of UPI with PayNow has been formally announced, even though the efforts with different nations are at varying levels. According to the RBI, it should start operating in the second half of 2022.

The interlinking lowers the cost of cross-country remittances and will further anchor commerce, travel, and remittance flows between the two nations. It might also be used as an illustration of how different fast payment systems can be linked to sending money quickly and cheaply.

Essentially,

  • NPCI, an RBI initiative, has collaborated with several foreign organizations to share the UPI infrastructure but prevents cross-country payments.
  • The cross-country payments ecosystem in India is likely to be built around PayNow, a Singapore-based company, which is the sole partner of UPI.
  • According to the RBI, efforts are in various phases with different countries, but cross-country remittance via PayNow will start after July 2022.

UPI For Cross-Country Remittances

One of India’s payment settlement infrastructures with the quickest growth is UPI. The interface enables peer-to-peer payments across banks and platforms with a single pin. UPI recorded transactions of INR 10.4 Lakh Cr. in May 2022 alone because of its scalability and simplicity of usage.

As a result, numerous nations took note of the stack and made plans to implement the UPI functioning model in their countries. For this, NPCI’s international division, NIPL, has agreements with several banks in nations like the UAE, the US, Nepal, China, Japan, and several regions of Africa. However, so far, these partnerships have been signed to share the infrastructure and not enable cross-country payments.

For instance, in August 2021, NIPL announced its partnership with UAE-based Mashreq Bank to benefit 2 Mn+ Indians who travel to UAE for business or leisure every year.

In July 2021, NPCI partnered with the Royal Monetary Authority (RMA) of Bhutan to initiate UPI-based payments in Bhutan and benefit an estimated 200,000 tourists from India who travel to the mountain nation annually.

Other successful international partnerships in this space include Discover Financial Services (DFS) USA, Japan Credit Bureau (JCB) Japan, Union Pay International (UPI) China, PPRO Financial, UK, and Network for Electronic Transfers (NETS), Singapore, and Liquid Group, Singapore.

Bottomline

Once RBI implements this aspect of UPI, transactions will boom, and fintech enterprises need to be ready. A simple digital adaptation to accommodate the transforming technology won’t cut it. All processes will have to qualify for international standards, and better security measures must be implemented. All this needs to be done without compromising the experience of the customer.

If you seek to improve your processes and be ready for the looming change, we at Signzy might be able to help out. Our No-code AI-driven resources that are fully customizable are built for your needs. Check it out here.

About Signzy

Signzy is a market-leading platform redefining the speed, accuracy, and experience of how financial institutions are onboarding customers and businesses – using the digital medium. The company’s award-winning no-code GO platform delivers seamless, end-to-end, and multi-channel onboarding journeys while offering customizable workflows. In addition, it gives these players access to an aggregated marketplace of 240+ bespoke APIs that can be easily added to any workflow with simple widgets.

Signzy is enabling ten million+ end customer and business onboarding every month at a success rate of 99% while reducing the speed to market from 6 months to 3-4 weeks. It works with over 240+ FIs globally, including the 4 largest banks in India, a Top 3 acquiring Bank in the US, and has a robust global partnership with Mastercard and Microsoft. The company’s product team is based out of Bengaluru and has a strong presence in Mumbai, New York, and Dubai.

Visit www.signzy.com for more information about us.

You can reach out to our team at reachout@signzy.com.

Written By:

Mahesh Mohan

Mahesh is a Creative Writer intent on learning and sharing knowledge. He ensures to deliver well-researched and precise information to the reader without squandering their time or tag. He is well versed in financial technology and digital marketing with a passion for stories of all forms.

RRA Refocus On Circulars- What The RRA’s recommendation To RBI Was And What It Means For The Fintech Industry

The Reserve Bank of India(RBI) stated the Regulations Review Authority(RRA 2.0) had recommended withdrawing an additional 225 redundant circulars on the RBI website. The Reserve Bank had set up the RRA 2.0(Regulations Review Authority) to reduce the burden of compliance on REs(regulated entities).

“RRA 2.0(Regulations Review Authority 2.0) has recommended withdrawal of an additional 225 circulars in the third tranche of recommendations,” the Reserve Bank Of India said in a statement last week.

The RBI is separately issuing the notifications, including the list of specific instructions recommended for withdrawal.

Once the Reserve Bank Of India does remove these redundant circulars, it will be a welcoming step for optimizing the regulatory compliance associated with the sector. Moreover, it will significantly help the banking and fintech industries as financial technology is constantly impeded by regulatory bureaucracy.

In the second tranche, the Regulations Review Authority 2.0 had also recommended merger/ discontinuation/ conversion to online submission of 65 returns. In addition, they also emphasized creating a new ‘Regulatory Reporting’ link on the central bank’s official website to consolidate all the information relating to any regulatory reporting.

History of RRA 2.0

The Reserve Bank of India established the Regulations Review Authority 2.0 to review all the regulatory instructions, reduce the burden of compliance on Regulated Entities (REs), and remove redundant and duplicate instructions.

Regulations Review Authority 2.0 focuses on properly streamlining regulatory instructions, reducing requirements for reporting wherever possible, and reducing the burden of compliance of the regulated entities(REs) by simplifying procedures and processes.

The Reserve Bank of India had established an RRA initially for only a year from April 1, 1999, for mostly reviewing the regulations, reporting systems, and circulars based on the genuine feedback from the banks, the public, and other financial institutions(FIs).

The recommendations of the Regulations Review Authority enabled streamlining and incrementing the effectiveness of various procedures and simplified regulatory prescriptions. It paved the way for issuing master circulars and reduced reporting burden on regulated entities; the RBI had said in April last year while announcing the setting up of RRA 2.0.

What this means for financial technology

The talk needs to be walked from the RBI website to the financial companies and regulated entities in the form of new rules. Once the redundant circulars are effectively withdrawn, it will be a comforting move for regulatory compliance in all sectors. This is particularly true in fintech. As the fintech industry is closely knit with advancing technology, outdated regulations constantly impede the excellent implementation of solutions.

Although RBI and other regulating entities are striving to walk the fine line of easing the processes for regulated entities while affirming the safety and security of the customers, it remains difficult to follow the proper regulatory compliance. This is especially true in cases of compliance involving digitization and automation. 

If you are concerned about how to handle this, you need not seek further. Signzy provides the-state-of-the-art API resources that are No-Code AI-driven and offer customizable options for all your needs. Check out our products here.

About Signzy

Signzy is a market-leading platform that is redefining the speed, accuracy, and experience of how financial institutions are onboarding customers and businesses – using the digital medium. The company’s award-winning no-code GO platform delivers seamless, end-to-end, and multi-channel onboarding journeys while offering totally customizable workflows. It gives these players access to an aggregated marketplace of 240+ bespoke APIs that can be easily added to any workflow with simple widgets.

Signzy is enabling ten million+ end customer and business onboarding every month at a success rate of 99% while reducing the speed to market from 6 months to 3-4 weeks. It works with over 240+ FIs globally, including the 4 largest banks in India, a Top 3 acquiring Bank in the US, and has a robust global partnership with Mastercard and Microsoft. The company’s product team is based out of Bengaluru, and it has a strong presence in Mumbai, New York, and Dubai.

Visit www.signzy.com for more information about us.

You can reach out to our team at reachout@signzy.com

Written By:

Mahesh Mohan

Mahesh is a Creative Writer intent on learning and sharing knowledge. He believes Finance is the matrix of functionality, and Technology is evolution. Amalgamate the two, and you get the most dynamic beast in modern civilization- Fintech. He explores this sphere with keen eyes on the terraforming ecosystem. He tries to balance his professional enthusiasm with his passion-driven love for history, mythology, and stories of all forms.

Know Everything About The RBI’s New Rules Revamp For Credit And Debit Cards

With over 5,90,000 ATM transactions and close to 211 million POS(point-of-sale) credit card transactions, December 2021 was an intriguing month for the financial industry. These numbers keep on increasing, and the government is taking measures to ensure that card issuers do right by the customers.

The Reserve Bank of India(RBI) provided new rules for the Issue of credit and debit cards and apt directions to issuing agencies. The new rules will be implemented from July 1, 2022. 

These directions encompass the conduct regulations relating to credit, debit, and co-branded cards and their payments. They apply to every bank in India.

The official RBI website prescribes the new rules as master directions. These are meant to provide just treatment for debit and credit services customers. The RBI website also hints at further reforms in the coming months.

General guidelines for card issuance

  • If a card is blocked at the customer’s request, a replacement card can only be issued with the customer’s explicit consent. Further, the card issuer must obtain the explicit consent of the cardholder before the renewal of an existing card.
  • The T&C for issuing and usage of a card will be mentioned in simple language with clarity. This will preferably be in Hindi, English, and regional languages.
  • If any convenience fee is charged on specific transactions, it shall be transparently indicated to the cardholder before the transaction.
  • The terms shall specify the time for a reversal of failed transactions and the compensation payable for failure to meet the specified timeline.
  • The card issuer may alter terms, but they must provide a 30 days notice of the change to the cardholder to enable the customer to withdraw if they choose. 

Guidelines for debit cards

  • Debit cards shall only be issued to savings bank or current accounts customers.
  • Banks will not force a customer to avail of a debit card facility and shall not link issuance of a card to opt for any additional facility from the bank.

Guidelines for credit cards

  • Unsolicited upgrading or the Issue of unsolicited cards is strictly prohibited. Suppose an unsolicited card is issued, or an existing card is upgraded and activated without the customer’s explicit consent (a bill is generated). In that case, the card-issuer shall reverse charges and pay the penalty amounting twice the value of reversed charges.
  • The card-issuer is wholly held responsible if there is a misuse of such unsolicited cards (before reaching those whose names it was issued).
  • Consent must be explicit for the Issue of cards- i.e., written consent is required before a credit card issuance. If written permission is difficult to obtain, digital means can be used but must be communicated to the RBI.
  • Card issuers and third-party agents have been told not to resort to intimidation or harassment during the recovery of dues.

Guidelines for loss of cards

  • Card-issuer will block a lost card immediately after being informed.
  • Card issuers shall provide detailed information on reporting loss, theft, or unauthorized use of a card or even the PIN. This must include channels such as a dedicated number for SMS, a dedicated helpline, a dedicated e-mail-id, a visible hyperlink on the website, internet banking and mobile app, etc.
  • Card issuers shall immediately send a confirmation after blocking the card.

Grievances and Complaints

  • Card issuers shall implement mechanisms and provide publicity. They should mention the name, email-id, contact number, and the designated officer’s postal address on the account statements and credit card bills.
  • The designated officer ensures that the grievances of cardholders are redressed promptly without delay.
  • Card issuers must ensure call center staff is trained to manage and escalate complaints. There should be an effective system of acknowledging customers’ complaints about apt follow-ups, including complaint numbers, even if complaints are received over the phone.
  • Card issuers will be liable to compensate the complainant for loss of time, expenses, financial loss, and the harassment suffered for the mistakes of the card issuer if they did not redress the grievance in time. If a complainant receives no satisfactory response from the card issuer within a span of one month from the date of the lodged complaint, they can approach the RBI to redress grievances.

Confidential customer information

  • Card issuers will not reveal information regarding the customers without obtaining their consent. They must tell customers the purpose of the information and the organizations they will share the information with.
  • Information sought from customers cannot violate law provisions relating to maintaining secrecy in transactions. The card issuers will be responsible for the accuracy or otherwise of the data provided.

Conclusion

This master direction for credit and debit cards is an excellent effort from the government’s side to provide customer convenience and ensure just treatment. This will boost credit and debit card usage in the coming years. Notwithstanding this, it is a burden on many financial institutions. The entire onboarding structure will need scrutiny and revamp. They require reliable, safe, and user-friendly fintech services. With a no-code AI-driven platform and multiple customizable API resources, Signzy can undoubtedly provide you with the solutions you seek.

About Signzy

Signzy is a market-leading platform that is redefining the speed, accuracy, and experience of how financial institutions are onboarding customers and businesses – using the digital medium. The company’s award-winning no-code GO platform delivers seamless, end-to-end, and multi-channel onboarding journeys while offering totally customizable workflows. It gives these players access to an aggregated marketplace of 240+ bespoke APIs that can be easily added to any workflow with simple widgets.

Signzy is enabling ten million+ end customer and business onboarding every month at a success rate of 99% while reducing the speed to market from 6 months to 3-4 weeks. It works with over 240+ FIs globally, including the 4 largest banks in India, a Top 3 acquiring Bank in the US, and has a robust global partnership with Mastercard and Microsoft. The company’s product team is based out of Bengaluru, and it has a strong presence in Mumbai, New York, and Dubai.

Visit www.signzy.com for more information about us.

You can reach out to our team at reachout@signzy.com

Written By:

Mahesh Mohan

Mahesh is a Creative Writer intent on learning and sharing knowledge. He believes Finance is the matrix of functionality, and Technology is evolution. Amalgamate the two, and you get the most dynamic beast in modern civilization- Fintech. He explores this sphere with keen eyes on the terraforming ecosystem. He tries to balance his professional enthusiasm with his passion-driven love for history, mythology, and stories of all forms.

Algorithmic Risk Intelligence: The Future of Risk Management

Introduction

The world is becoming more and more data-driven. As a result, data has become the lifeblood of many industries. Organizations are starting to realize the value of collecting and analyzing data to make intelligent decisions. However, this can be challenging if your organization does not have a proven framework for quantitative analysis. Algorithmic risk intelligence is a new way of systematically thinking about data risks with a few key considerations: how significant the potential impact is, the probability of occurrence, and how feasible it would be to prevent or mitigate the risk. Understanding these three factors will allow you to identify your most critical risks and give you an idea of where to focus your efforts when it comes time to prioritize which risks you need to address.

 

Utilization of historical data to build predictive models

The utilization of historical data to build predictive models is a common practice. It can be done by using the ARIMA approach.

ARIMA (Autoregressive Integrated Moving Average) is a technique that uses historical data to predict future values, which can be used to make better decisions. It uses past information to forecast the future. These methods are powerful, but they are also quite complex, and they require more advanced statistical knowledge to make them work properly. Using historical data to build predictive models is essential to algorithmic risk intelligence. 

Utilizing historical data to build predictive models will help you identify risk areas, but it does not mean you should stop there. It would be best to look at other factors that are not captured in the model. For example, you should be looking at data that will help you identify new or emerging risks.

Measurement, quantification, and anticipation roles of ARI

Algorithmic risk intelligence is about understanding, quantifying, and anticipating the risks that matter to your organization. It is a new way of systematically thinking about data risks with a few key considerations: how significant the potential impact is, the probability of occurrence, and how feasible it would be to prevent or mitigate the risk. Understanding these three factors will allow you to identify your most critical risks and give you an idea of where to focus your efforts when it comes time to prioritize which risks you need to address.

Some other vital roles that ARI can play in an organization are measurement, quantification, and anticipation. Measurement is about understanding the scope and magnitude of potential risk. Quantification is about estimating the probability of a risk occurring. Finally, anticipation is about developing a plan to prevent or mitigate risk from occurring.

There are many types of data in the digital world that could be used as a subset of ARI. The three most prominent types are customer, company, and industry data. Customer data includes customer preferences, personal data, customer service records, and customer behavior patterns. Company data has an organizational structure, size, history, and personnel records. Finally, industry data includes information like market trends. 

 

ARI to reduce business loss due to unforeseen circumstances

ARI is a systematic way of understanding your data risks. It can help you identify the most critical risks you need to address and help you prioritize the ones you need to address.

ARI is a framework that includes three key considerations: the risk’s potential, probability, and feasibility. With these three factors in mind, you can create a plan for mitigating your data risks.

ARI is ideal because it can be applied to any data, and it can start with a minor concern and grow into a full-blown disaster recovery plan.

Role of ARI to uncover organization’s most critical surfaces

As we rely on digital technologies to grow and expand, the risk of data breaches and other cyber risks continues to grow. Therefore, it’s critical to understand each risk’s potential impact and probability of occurrence and decide what you need to do to mitigate the risk.

It is where algorithmic risk intelligence (ARI) comes in. ARI is a new way of thinking about data risks systematically. It has three considerations:

(1) How significant the potential impact is

(2) what is the probability of occurrence is 

(3) how feasible it would be to prevent or mitigate the risk.

Understanding these three factors will allow you to identify your most critical risks and give you an idea of where to focus your efforts when it comes time to prioritize which risks you need to address.

How can Signzy help?

Fintech companies must safeguard sensitive customer data to reduce data risks. But how can this be accomplished?

You can depend on us to help you in that regard. We at Signzy have a variety of AI-based solutions to digitally identify, verify, and authenticate customers, moreover helping in ensuring complete security. Our solution for onboarding security has been deployed by more than 45 significant and valued clients. These include leading banks, NBFCs, mutual fund managers, P2P lending banks, digital payment solutions, etc. Thus, making it promising and easier to trust us.

Writtern By:

Vaishali Bharadwaj
Vaishali is a machine learning enthusiast. Besides machine learning and data storytelling, she likes contemporary art, traveling, and Ice Skating. Since Vaishali was young, she has always enjoyed solving puzzles. So that’s how she looks at big data sets: to Vaishali, it is one big puzzle she wants to solve. Finding patterns nobody else sees is a challenge to her.

New Norms For Digital Lending- How RBI’s Working Group Will Change The Terrain

RBI’s working group for digital lending is identifying novel methods for safer transactions in the industry. Although the digital lending space grew 12 times between 2017 and 2020, in a recent report, they pointed out that RBI does not regulate many of the new enterprises. Usually, these enterprises and apps partner with banks and NBFCs for services. This is leading to the availability of instant loans at the cost of increased risk. It has also resulted in overleveraging of customers, regulatory arbitrage, and high rates.

The report brings to the spotlight such shortcomings while providing a better framework for the sector. The relevant points from the report are explored below to create a better understanding of the proposal and the effect it can have on the industry.

Distinction Between LSPs and BSLs

There is a clear distinction between Loan Service Providers(LSPs) and Balance Sheet Lenders(BSLs). LSPs can be applications that provide borrowing options for the customers. They certainly need not be directly regulated but do require to partner with only regulated financial entities that can provide the services. BSLs on the other hand, provide loans and securely take credit risks. They are always regulated. This distinction allows LSPs to manage the front-end experience while BSLs manage regulatory compliance and risk.

A Ban On FLDG

First Loss Default Guarantee or FLDG instrument allows unregulated entities to offer loans to customers and take credit risk. The report strongly suggests against this backdoor entry. This is challenging to many new-age lenders as their processes are oriented around shadow lending. Additionally, neo-banking and DeFi(decentralized finance) models are also included in this section for a modal check. Fundamentally, the report directs that only regulated entities should hold taking credit risk options.

Eliminate Regulatory Arbitrage

The report advises to deem all products involved with credit risk as lending products and eliminate regulatory arbitrage. For example, most BNPL(Buy Now Pay Later) providers consider this option, not as a loan, and hence do not have apt KYC processing. They have no relation with the credit bureau.

Safety Of The Customer

In certain cases, the charges and rates can be as high as 100%(The normal being 40-45%). The working group recommends several actions to ensure consumer protection from such practices. These recommendations include:

  • Include all interests and charges as transparent APR(Annual Percentage Rate).
  • STCC(Short Term Consumer Credit)- must follow appropriate guidelines to prevent usurious charge rates.
  • Restrict very short-term loans with no instalments that are high risk.
  • Restrict Refinancing and over-indebtedness.

Regulated entities must also ensure fair treatment of borrowers by the LSPs involved, especially in the collection practices. All coercive behaviour is avoided to ensure confident customers and a healthy ecosystem.

Data Privacy

The consumer and not the entity is the owner of the data. All crucial lending decisions require explicit consent from customers for using their data. This extends to even any e-commerce platform which uses consumer data for underwriting decisions. This helps enhance security and overall data protection while maintaining consumer trust.

SRO And DIGITA

The report advises RBI to create a Self-Regulatory Organization (SRO) to govern activities and frame standards. It also recommends creating DIGITA(Digital Trust of India Agency). DIGITA will determine the minimum requirements and standards to verify compliance. If entities are not approved by DIGITA, they will be deemed non-compliant.

What Does This Mean For The Industry And You?

The initiatives outlined by the working group helps create a balanced framework that encourages innovation while protecting its consumers and minimizing financial risks in the system. This will help improve the dynamics in the ecosystem rendering growth in the industry. There are many venues that require clarifications and dialogue, but this preliminary report is a step in the right direction to achieve a more sustainable and secure environment. This ensures that the future of digital India is now… And it’s happening.

With the blessing of better lending ecosystems and safer financial environments comes the burden of stricter regulations and rigid compliance guidelines. If not careful, your enterprises can get affected and suspended due to bureaucratic complications. You can avoid this by availing reliable service providers for all your regulatory requirements. But how do you choose a good one? Opt one that gives you quick, safe, and customizable solutions. It should have a track record of good services and lots of options. This is why Signzy is the right choice for you. We can handle all your needs ranging from Video KYC to complete Onboarding Processes.

About Signzy

Signzy is a market-leading platform redefining the speed, accuracy, and experience of how financial institutions are onboarding customers and businesses – using the digital medium. The company’s award-winning no-code GO platform delivers seamless, end-to-end, and multi-channel onboarding journeys while offering customizable workflows. In addition, it gives these players access to an aggregated marketplace of 240+ bespoke APIs that can be easily added to any workflow with simple widgets.

Signzy is enabling ten million+ end customer and business onboarding every month at a success rate of 99% while reducing the speed to market from 6 months to 3-4 weeks. It works with over 240+ FIs globally, including the 4 largest banks in India, a Top 3 acquiring Bank in the US, and has a robust global partnership with Mastercard and Microsoft. The company’s product team is based out of Bengaluru and has a strong presence in Mumbai, New York, and Dubai.

Visit www.signzy.com for more information about us.

You can reach out to our team at reachout@signzy.com

Written By:

Mahesh Mohan

A Creative Writer intent on learning and sharing knowledge.

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