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Vol. 17 No. 5 September 2018 `75 Pages 40 Gramin Bank of Aryavart Bank of India open banking Bahrain’s fund of funds Voice is new digital www.bankingfrontiers.com Banking on 9 pillars for target half trillion biz Editor’s Blog N. Mohan Mobile : 9322895820 Email : [email protected] September 2018 - Vol. 17 No. 5 Group Publisher : Babu Nair Making of a ‘cashless society’ Group Editor : Manoj Agrawal weden is set to become a totally cashless society in March 2023 - 24 March 2023 Editor : N. Mohan Sto be precise. Jonas Hedman, who is an associate professor at the department of Editorial digitalization at the Copenhagen Business Mehul Dani, Ravi Lalwani, V. Raghuraman School, who did a study on the prospects of Research Editors the country becoming cashless, says he and Prof Venugopal Iyengar, V. Babu, his team arrived at this precise date after a Ratnakar Deole, W.A. Wijewardena, survey of some 750 retailers and their cash Sanchit Gogia, K.C. Shashidhar, management costs and the decline of cash Dr. L.S. Subramanian, Ajay Kumar in circulation in the country. He explains that when cash transactions fall below 7% of the Advisor-Alliances total payment transactions, it becomes costlier to manage cash than the marginal profit on Ateeq Siddique cash sales. When this happens, an economically rational retail management should stop Marketing accepting cash, says he. He also clarifies that what is meant by cashless society is a society Leena Rawke, Preshit Deshmukh, where cash is not a generally accepted means of payment. There might still be bank notes Kailash Purohit and coins, but you would not be able to use them in a practical sense. One thing interesting about Swedish laws is that contract laws have a higher precedence Events & Operations Gautam Magare, Shirish Joshi, over banking and payment laws. For example, if an establishment puts up a sign that it does Stalin Saldhana, Pramod Jadhav, not accept cash, then the customer who enters the store is entering into a contract or an Amit Gupta, Bharat Solanki, agreement with that store that it does not accept cash. In most of the countries, payment Shweta Kadam, Durgesh Nadkarni, laws are above contract laws. Hedman says this is one of the key reasons why Sweden is Ashish Verma, Wilhelm Singh, more cashless than other countries. Sneha Agrawal Sweden has seen widespread use of payment cards from way back in the 1950s. Bank accounts were digitized starting the 1960s and internet came in the 1990s. The central Design bank also declared that it did not see cash as its core business and outsourced printing Somnath Roy Choudhury and distribution of currencies. A move towards cash free society was also initiated by Published By the ordinary people like bus drivers, cab drivers, bank employees, etc, who came to be Glocal Strategies & Services affected by robberies in the country. During 2015-2017, the country replaced its existing D-312, Twin Arcade, Military Road, Marol, notes and coins with new ones. When this happened, citizens deposited cash into bank Andheri (E), Mumbai 400059, India. accounts but all of it was not taken out. Today, most of the bank branches are cash-free Tel: +91-22-29250166 / 29255569 and it is difficult to find a bank that accepts cash. Only ATM machines - they are rare too - Fax: +91-22-29207563 accept and dispense cash. Printed & Published by Babu Nair on Sweden’s central bank is also planning to launch a digital currency, which will mean that behalf of Glocal Strategies & Services and people will have to depend less on banks. Printed at Indigo Presss (India) Pvt Ltd., Surprisingly, there is some muted opposition in the country towards cashless society. There Plot No. 1C/716, Off Dadoji Konddeo Cross is what is described as Kontantupproret (cash rebellion), the protagonists of which say Road, Between Sussex and Retiwala Indl. they are concerned about identity theft, rising consumer debt and cyber attacks. More Estate, Byculla (E), Mumbai 400027. surprisingly, the movement is led by a former head of police and retired people are the activists. However, it is seen as a concern of the elderly people, who want to know what Editor: N. Mohan (Responsible for selection could be done in case there is a breakdown of the internet or there is disruption of the of news under PRB Act) electricity supply. As India makes its push towards digital, Sweden is indeed a worthwhile case study. Banking Frontiers September 2018 3 N E W S Regulator RBI buys 8.46 tonne of gold Saudi Arabia bans The Reserve Bank of India has bought 8.46 tonne of cryptocurrency trading gold in FY 2017-18, the first Saudi Arabia’s financial watchdog, the purchase of the commodity Standing Committee for awareness on by the apex bank in almost dealing in unauthorized securities, has 9 years. The central bank said cryptocurrency trading is illegal in the has been holding 566.23 kingdom. The standing committee said it tonne of gold as on 30 June in a statement it is warning citizens and 2018, compared with 557.77 residents of the kingdom that it is against tonne as on 30 June 2017, the law for citizens and residents of the according to RBI’s latest kingdom to engage in bitcoin trading as annual report for 2017-18. well as trading of digital currencies. It Last time the apex bank pointed to the volatile nature of the digital purchased gold was in November 2009, when it had bought 200 tonne of the yellow assets, security risks and lack of adequate metal from the International Monetary Fund. Of the 566.23 tonne of gold reserves, government regulation as reasons for 292.3 tonne is held as backing for notes the central bankhas issued and is shown as an the ban. asset of the Issue Department, and the balance 273.93 tonne is treated as an asset of the Banking Department. Carney may continue as Bank of England governor Bank of England is expected to have Mark Carney continue as governor and help manage the consequences of Brexit in March 2019. Carney confirmed he had discussed with the government how he could help the country transition out of the European Union and establish itself as a standalone economy. Carney is the first foreigner to serve as Bank of England governor. When he was appointed in 2013, he indicated he Mobile banking would serve until 2018 but later extended that deadline to June 2019. He told a UK overtakes internet parliamentary committee he is recognizing that during this critical period, everyone does everything they can to help with the transition to exiting the European Union banking and he wants to his bit in this exercise as well. Carney, a Harvard-educated economist The Brazilian and former Goldman Sachs banker, was governor of the Bank of Canada before his Central Bank said UK appointment. the mobile channel has surpassed Malaysia liberalizes forex policy internet banking The new governor of Central Bank of Malaysia Nor Shamsiah Mohd Yunus has for the first time initiated action to liberalize the country’s foreign exchange policy and signaled a more in the country. It conciliatory approach to regulating overseas insurance companies. This is seen as a said some 24.5 major shift away from the previous administration’s tough stance on international billion banking financial institutions. These actions are likely to reassure those international investors transactions were who have been impacted by Malaysia’s aggressive pushback against Chinese investment carried out using and those who fear the government will sacrifice market liberalism for more nationalistic smartphones and policies it wants to adopt. Under the new framework, Malaysian exporters will no tablets in 2017, longer be required to convert foreign exchange to the Malaysian currency of ringgit up 46.7% when and back again as part of honoring obligations in international currency. Overseas compared to companies will now be able to trade in ringgit-denominated interest rate derivatives the 16.7 billion while Malaysian residents will have more options to hedge foreign currency exposures. transactions in the prior year. Internet banking transactions, at 20.6 billion, had Pakistan central bank says no plan for new notes a minor increase in relation to 2016, when Reports about possible change in currency notes in Pakistan have been denied by the 20.3 billion transactions via that channel State Bank of Pakistan. There have been reports that country is changing its currency were recorded. Transactions carried out notes. The regulator said there are no plans to change the banknotes in the country. In at the branch dropped to 8.1 billion from a statement, it said the designs and images of proposed currency notes, which have been 8.9 billion in 2016. Increased number circulating on social media, were fake. Social media had carried reports suggesting that of smartphones and provision of 4G are the newly appointed finance minister Asad Umar had decided to discontinue Rs 5000 said to be the contributing factors for the banknotes. The new government was also reported to be keen to change banknotes increased acceptance of mobile banking in worth Rs 50 to Rs 1000. the country. Banking Frontiers September 2018 5 Project Pipeline Union Bank to undertake business transformation SBI to implement EA Union Bank of India is looking for a management consultant tool, ELAM portal to help it undertake a major State Bank of India is proposing to set business transformation up enterprise architecture (EA) tools project to strengthen its and Enterprise Architecture Lifecycle business by proactive outreach Management (EALM) Portal and has to customers, developing sought proposals from experienced service relationship-banking concept, providers.

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