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RBI BATS FOR CBDC, REGULATION OF FINTECHS

UPSC CURRENT AFFAIRS | RBI BATS FOR CBDC, REGULATION OF FINTECHS | 20TH JUNE | BUSINESS STANDARD

SYLLABUS SECTION: GS II (ECONOMY)

WHY IN THE NEWS?

Recently, the Bank of India (RBI) unveiled the Payment Vision 2025 document which proposes a host of innovative payment systems and regulation of Fintechs, BigTechs, Buy-now-pay-later (BNPL)systems, and the introduction of a central bank digital currency (CBDC), among others.

KEY HIGHLIGHTS:         

  • The Payments Vision 2025 has the core theme of E-payments for everyone, everywhere, every time(4Es) and aims to provide every user with safe, secure, fast, convenient, accessible, and affordable e-payment options.

The Payments Vision 2025 promises to:

  • elevate our payment systems towards a realm of empowering users with affordable payment options accessible anytime and anywhere with convenience.
  • enabling geotagging of digital payment infrastructure and transactions and revisiting guidelines for prepaid payment instruments (PPIs), including closed system PPIs.
  • a framework for the regulation of all significant intermediaries in the payments ecosystem and link credit cards and credit components of banking products to UPI
  • Bringing in enhancements to Cheque Truncation System (CTS), including One Nation One Grid clearing and settlement perspective, and
  • Creating a payment system for processing online merchant payments using the internet and mobile banking.
  • It also proposed regulation of BigTechs and FinTechs in the payments space.

BUY-NOW-PAY-LATER

  • Buy Now Pay Later is a financing option that allows customers to spread their payments over a relatively short period of time instead of paying up front.
  • This channel, facilitated by a few payment aggregators, leverages the existing nodal account (escrow account after authorization) to route payments between a BNPL customer and a merchant.
  • According to the Vision document, the BNPL method should be examined, and the issuance of appropriate guidelines on payments involving BNPL should be explored.
  • BNPL services have developed into a new payment mode alongside the existing payment modes like cards, UPI, and net banking.
  • This channel, facilitated by a few payment aggregators, leverages the existing nodal account (escrow account after authorization) to route payments between a BNPL customer and a merchant.

Read more: UPSC CURRENT AFFAIRS

SOURCE: BUSINESS STANDARD

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