Financial Daily from THE HINDU group of publications
Tuesday, Aug 06, 2002
Financial Daily from THE HINDU group of publications Tuesday, Aug 06, 2002 |
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Money & Banking
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RBI & Other Central Banks Info-Tech - E-Commerce & E-Business RBI group okays e-money Our Bureau
MUMBAI, Aug. 5 The RBI Working Group on electronic money has said that e-money could 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. Chaired by Mr Zarir Cama, CEO, HSBC, India, the Working Group was set up by RBI to examine the use of e-money in India. The group has said that issuance of e-money on a credit basis should be strictly regulated and closely monitored. "E-money could have a profound impact on compilation of monetary statistics and money supply unless regulated prudently. Since e-money are the close substitutes of central bank money, these should be explicitly accounted for in monetary statistics,'' the group said in its report. It has recommended that multi-purpose 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 multi-purpose 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 multi-purpose 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 RBI should also periodically review issues relating to legal framework and if any, technical security and the clearing and settlement arrangements of different e-money and the practices of various e-money schemes, both in India and abroad for preserving the integrity of the financial market.
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