RBI backs e-commerce and banking partnerships in India

The Reserve Bank of India is open to banks and e-commerce companies forming joint ventures, and allowing ecommerce firms to act as banking correspondents.

RBI deputy governor HR Khan spoke at the launch of the Suvidhaa pre-paid card, issued by Axis Bank in partnership with Suvidhaa Infoserve.

“Banks will have to take cognizance of e-commerce the way it is galloping,” he said.

Indian telecoms companies have strengthened their relationship with the company’s banks, with some even applying for payment bank licences as part of a government-backed to expand India’s financial services industry and increase financial inclusion.

Such partnerships have allowed customers to transact through mobile banking.

“Banks will see there is competition and opportunity for cooperation as well with e-commerce firms,” Khan said.“We will have to see how we provide a platform between e-commerce and banks.”

Khan added that the RBI is considering a proposal that would allow pre-paid card issuers to issue rupee cards over the current limit of Rs 2 lakh to NRIs and people travelling to India, the Economic Times reported. The central bank has also approached the Telecom Regulatory Authority of India to give banking transactions priority over other messages.

The RBI may even consider relaxing the country’s current two-factor authentication protocol when it comes to small-value transactions, but ruled out removing it completely.

“Even Uber has tied up with a pre-paid card issuing company for two-factor authentication,” he said. “We are ahead of other advance countries on twofactor authentication, so we should not slip back.”

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