Last month, the RBI released a Discussion Paper on Wholesale & Long-Term Finance Banks. Yet, even as innovative banking models are being discussed, regulation is slow to adapt to the changing landscape. For instance, the Internal Working Group on Rationalisation of Branch Authorisation Policy submitted its report last October, but decisions are pending on crucial recommendations i.e. moving away from the emphasis on brick-and-mortar branches, expanding the definition of a banking outlet and redefining an unbanked rural area. Meanwhile Small Finance Banks report finding it difficult to fulfil the mandate of setting up 25% of their branches in unbanked rural areas in the first year. See Small finance banks seek relaxed norms to meet financial inclusion goals.
Regulators have to learn to be nimbler, and the RBI has to prepare itself to meet evolving technology. So far, apart from issuing a warning to the public regarding risks of virtual currency, there has been no word from the RBI on the possibility of regulating cryptocurrencies in the future. The Watal Committee on Digital Payments had recommended evaluating the possibility of RBI issued digital currency and testing a proof of concept. The time has come for more open discussion to gear India up to emerging opportunities. Read Casey Hynes on How Cryptocurrencies & Blockchain Could Solve Asia's Financial Inclusion Issue.
All eyes are on Wednesday 10th May when the Supreme Court’s judgement on the constitutional validiity of Section 139AA of the Income Tax Act is due – while the government’s decision to link Aadhaar to the PAN has been passed by Parliament, petitioners have contested this raising issues of privacy and data sharing. What the Supreme Court says may have implications restricting the current spate of authorities and private parties using Aadhaar. See Govt’s stand on Aadhaar for PAN could ‘dilute civil liberties’: Supreme Court told.