Growth of prepaid payment instruments (PPIs) continues to be sluggish though non-bank entities also can issue them, said G. Padmanabhan, Executive Director, Reserve Bank of India......
The payment system should be improved in such a way that it should gradually lead to elimination of corruption, black money and high denomination notes of Rs 500 and 1000.Prepaid instruments should be made compulsory in high value transaction areas like bullion and other commodity markets, whole sale markets in vegetables and fruits, scrap dealings, etc. Trails of transactions should not be the immediate objective although it may be the end result,as it may discourage many to switch over to PPIs. The efficiency of the Payment System should be one of the yard sticks to assess the inherent strength of the economy. This will also make Financial and banking inclusion a reality over a period. The economy will definitely get a boost if payment system is improved with all safety,speed and accuracy. With improved IT system, the efficiency of the Payment system can easily be targeted and achieved. Many of the present ills of the economy, the Payment system will prove to be a solution.
- Dr.T.V.Gopalakrishnan
RBI ED's optimism along with the comments of Dr T V Gopalakrishnan give some hope about some changes and improvement in the payment system. Perhaps RBI and GOI could consider introducing new and innovative PPIs. Gold-backed Debit Cards could be one option. If a depositor agrees to maintain an average balance of a pre-decided amount, his account should be credited with gold of equivalent value.He should be in a position to withdraw cash, make payments and buy things using the card, but his balances in the account will vary with the price of gold any day. This is just an example. Similar instruments against commodities and services could be thought of.The present position of major portion of PPIs in sort of cash certificates is not very encouraging. As Dr TVG hints, PPIs should also become instruments for bringing transactions which will not otherwise get through formal channels get into banking system.
- M G WARRIER
