Reserve Bank Innovation Hub (RBIH)

Context:

Reserve Bank of India (RBI) governor Shaktikanta Das  inaugurated the Reserve Bank Innovation Hub (RBIH) in Bengaluru recently.

About Reserve Bank Innovation Hub

• It has been set up as a Section 8 company under the Companies Act, 2013 with an initial capital contribution of Rs. 100 crore.
• It is a wholly owned subsidiary of the RBI.
• It would create internal capabilities by building applied research and expertise in the latest technology. 
• It will collaborate with financial sector institutions, policy bodies, the technology industry, and academic institutions and coordinate efforts for exchange of ideas and development of prototypes related to financial innovations.
• It plans to identify and mentor start-ups having maximum potential.
• Aims and objectives:
  • It aims to create an ecosystem that focuses on promoting access to financial services and products for the low-income population in the country.
  • It aims  to bring world-class innovation to the financial sector in India, coupled with the underlying theme of financial inclusion.
• The Hub has an independent Board with Shri Senapathy (Kris) Gopalakrishnan as the Chairman and other eminent persons from industry and academia as members. 
• The Hub would bring convergence among various stakeholders (BFSI Sector, Start-up ecosystem, Regulators & Academia) in the financial innovation space.

Regulatory Sandbox

1. Meanwhile, in another development, RBI on 17 November 2020 said two entities of the six selected for the first cohort under the regulatory sandbox structure with retail payments as its theme, have started testing of their products this week while the remaining four are expected to start their testing shortly.
2. The central bank received applications from 32 entities for the first cohort. The delay in testing by the six entities selected out of the 32 that put forth their applications was due to the covid-19 situation.
3. The two entities that have started testing are Natural Support Consultancy Services, Jaipur, and Nucleus Software Exports, New Delhi.
4. Natural Support Consultancy is testing its product “eRupaya”, which is a set of a Near-Field Communication (NFC) based prepaid card and NFC enabled Point of Sale (PoS) device, to facilitate offline Person-to-Merchant (P2M) transactions and offline digital payments in remote locations.
5. Nucleus Software, on the other hand, is testing its product “PaySe”, which is an offline digital cash product that will help connect with rural areas for e-payments. 
6. The product proposes to help in digitisation of payments in rural areas, starting with Self Help Groups (SHG), through an offline payment solution and a digitised SHG-centered ecosystem.
7. The central bank had announced the opening of the first cohort under regulatory sandbox last November. 
8. The RBI had said mobile payments including feature phone based payment services, offline payment solutions, and contactless payment would be considered under sandbox structure. 
9. The idea is to spur innovation in digital payments space and help in offering payment services to the unserved and underserved segment of the population.

What is RBI?

RBI is an institution of national importance and the pillar of the surging Indian economy. It is a member of the International Monetary Fund (IMF). 

• The concept of Reserve Bank of India was based on the strategies formulated by Dr. Ambedkar in his book named “The Problem of the Rupee – Its origin and its solution”.
• This central banking institution was established based on the suggestions of the “Royal Commission on Indian Currency & Finance” in 1926. This commission was also known as Hilton Young Commission.
• In 1949, the Reserve Bank of India was nationalized and became a member bank of the Asian Clearing Union.
• RBI regulates the credit and currency system in India.
• The chief objectives of the RBI are to sustain the confidence of the public in the system, protect the interests of the depositors, and offer cost-effective banking services like cooperative banking and commercial banking to the people.

What are the other Initiatives for Financial Inclusion?

• Pradhan Mantri Jan Dhan Yojana (PMJDY)
• Atal Pension Yojana (APY)
• Stand Up India Scheme
• Pradhan Mantri Mudra Yojana (PMMY)

Source: The Hindu

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