RBI issues Statement on Developmental and Regulatory Policies relating to financial markets, payment and settlement systems, currency management etc

The Reserve Bank of India (“RBI”) has issued Statement on Developmental and Regulatory Policies relating to the following:

• Financial Markets;
• Regulation;
• Payment and Settlement Systems and
• Currency Management.

 Key Takeaways:

 The guidelines on Trade Receivables Discounting System (TReDS) were issued in December 2014 with the objective of facilitating the financing of trade receivables of MSMEs. Subsequently, three entities started operating TReDS platforms and two more entities have been granted in-principle authorisation. These entities process about ₹60,000 crore worth of transactions annually.

To provide further impetus to TReDS platforms, their scope of activity is proposed to be expanded as stated below. These measures will help in further improving the cash flows of MSMEs.

• Insurance facility will now be permitted on TReDS. This will encourage financing / discounting of payables of buyers irrespective of their credit ratings. Accordingly, insurance companies will be permitted to participate as a “fourth participant” on TReDS, apart from the MSME sellers, buyers and financiers.
• All entities / institutions eligible to undertake factoring business under the Factoring Regulation Act will be permitted to participate as financiers in TReDS.
• Secondary market operations will now be enabled on TReDS platforms. This would allow financiers to offload their existing portfolio to other financiers within the same TReDS platform, if required.

Extending UPI for Inbound Travellers to India:

Unified Payments Interface (UPI) has become a ubiquitous payment instrument for retail electronic payments in India. An enhancement has recently been made to provide UPI access to non-resident Indians who have international mobile numbers linked to their NRE / NRO accounts. It is now proposed to permit all inbound travelers to India also to access UPI for their merchant payments (P2M) while they are in the country. To start with, this facility will be extended to travelers from the G-20 countries, arriving at select international airports. Going forward, this facility will be enabled across all other entry points in the country. Necessary operational instructions will be issued shortly.

For a detailed read of the Press Release, please contact us.

Source: Reserve Bank of India