The ICFI Monthly Newsletter Is Back!
With the Parliament closed for the lockdown, the Central Government has been promulgating ordinances to keep governance going. On 27th June, the President notified the Ordinance amending the Banking Regulation Act (1949) to bring cooperative banks under the supervision of the Reserve Bank of India. This has been long overdue for financial stability and particularly for inclusion, with these banks playing a critical role in last mile delivery of financial services. The funds of 8.6 crore depositors will now be relatively safe from frauds and lax governance. However, there are still two caveats – one, the RBI’s supervisory capacity and capability will need to be significantly enhanced, there have already been lapses in monitoring SCBs, and two, the amendment covers only cooperative banks numbering 1, 540 and does not apply to the 96,248 Primary Agricultural Credit Societies (PACS) in rural areas. As payments get more integrated nationally, we need a different playbook in monitoring and supervision. In this digital world, on-site supervision can be replaced by tech-based real-time monitoring, it is time for an RBI upgrade!
This month the RBI moved from monthly to a daily release of data on select payments systems. This is an important step ahead in real-time monitoring of economic activity. While the growth forecasts have been suspended, high-frequency credible data on payments can provide a good snapshot into the state of the economy. From ICFI, we have been recommending the use of granular data on payments and banking to align financial inclusion targets with reality (Monitoring the Progress of Financial Inclusion in India; ICFI Policy Brief).
Some Other Highlights
Sai Krishna Kumaraswamy and Daniel Waldron write on Financial Services for Health, June 24, 2020
From three billion transactions in a month, India is targeting a billion digital transactions daily, says Amitabh Kant, CEO, Niti Aayog, June 13, 2020
Guy Standing & Renana Jhabvala make the case for a Universal Basic Income for India, June 27, 2020
The Reserve Bank of India released a Discussion paper on Governance in Commercial Banks in India June 11, 2020
Karthik Muralidharan writes on a post-Covid-19 social protection architecture for India, June 11, 2020