Business Daily from THE HINDU group of publications
Saturday, Sep 22, 2007
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Business Daily from THE HINDU group of publications Saturday, Sep 22, 2007 ePaper |
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Financial Services Money & Banking - RBI & Other Central Banks RBI tightens norms for clearing houses
Only licensed banks with CRAR of 9%, no SLR, CRR defaults eligible. Unlicensed banks must be sub-members to access payment system. A member can sponsor up to 10 banks as sub-members, not any number as of now. Co-op banks can be allowed to join RTGS, with certain criteria. Our Bureau Mumbai, Sept. 21 In order to protect clearing houses from systemic risks, the Reserve Bank of India has suggested guidelines for membership to clearing houses and payment systems. In its draft guidelines released today, the RBI’s internal working group has recommended that only financially sound entities should be permitted as members at clearing houses, instead of considering norms such as licensing criteria or scheduled status. The report said: “In order to ensure the safety, security and integrity of payment services, access to the payment system should ordinarily be restricted to entities regulated by the central bank.” The group has recommended that unlicensed banks may be permitted access to payment systems only as sub-members. However, exemption may be made for unlicensed State Co-operative Banks or District Central Co-operative Banks (DCCBs) because of their special position in the co-operative banking sector, it added. Membership normsAs the volume of instruments and value of transactions at MICR (Magnetic Ink Character Recognition) centres are huge, more stringent access norms should be applied for membership to these centres, the report said. It also said that membership should be confined to licensed banks that fulfil the following criteria: CRAR of nine per cent, net NPA of less than 10 per cent, no default in maintenance of CRR and SLR during the past one year and net profit in at least one of the preceding two years. The group has waived these criteria for State Co-operative Banks and relaxed the norms for DCCBs and Regional Rural Banks. Currently, there is no limit on the number of banks that a member can sponsor as sub-members. But as there are instances of some banks sponsoring as many as 50 sub-members, which may create a systemic risk. Therefore, the group has recommended that a member can sponsor a maximum of 10 banks as sub-members. The group has also recommended that membership of RTGS (Real Time Gross Settlement) should be opened to co-operative banks, but with certain criteria. National Electronic Funds Transfer (NEFT) membership would be linked to RTGS and the list of NEFT members would be a sub-set of the list of RTGS members. The only exception is the Post Office Savings Bank, which is the only non-banking entity that can be a member of the NEFT system, as it offers a nationwide remittance system, the report added. More Stories on : Financial Services | RBI & Other Central Banks
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