Cashless economy: RBI to promote card usage in smaller towns

Mumbai: In efforts to move towards a cashless society, the Reserve Bank said it will come out  with a concept paper on promoting electronic payments, especially in smaller towns, by November-end. "With growing financial inclusion, there are concerted efforts to enhance the use of technology and move towards a 'less-cash' society.     

"In order to promote electronic payments and use of cards for transactions, the Reserve Bank will put in the publicdomain a concept paper for proliferation of card acceptance infrastructure in the country, especially in the tier III to tier VI centres, by end-November 2015," it said. In its Fourth Bi-monthly Monetary Policy statement, the RBI also said it has issued Rs 100, Rs 500 and Rs 1,000 denomination banknotes with a new numbering pattern with ascending order of the size of the numbers from left to right. "This is being introduced in a phased manner for all denominations of banknotes," the RBI said. Further, with a view to making identification of  banknotes easier for visually challenged persons, the process  for introduction of additional identification marks has been  initiated and is being introduced in Rs 100, Rs 500 and Rs 1,000 notes.      

In another move, the RBI said exchange traded currency  futures and options will be introduced in three cross-currency  pairs - EUR-USD, GBP-USD and USD-JPY.This is being done with a view to enabling direct hedging of exposures in foreign currencies and to permit execution of cross-currency strategies by market participants.      

The RBI said necessary guidelines will be issued in  consultation with SEBI by end-November 2015. At present, exchange traded currency derivatives include   futures and options in four currency pairs -- USD-INR, EUR-INR, GBP-INR and JPY-INR.     

To provide more flexibility to market participants in  managing their currency risk in the OTC market and for making  hedging easier, the RBI said that it has been decided to  increase the limit for resident entities for hedging their foreign exchange exposure in the OTC market from USD 250,000  to USD one million without the production of any underlying  documents. The Reserve Bank also proposed to comprehensively review the documentation related requirements in the OTC market. The possibility of participation by financially sophisticated investors up to certain limits in currency markets without underlying exposure will also be examined. Revised draft of the existing framework will be issued for public comments by end-December 2015.