RBI introduces new channel for card-on-file tokenisation, extends PIDF scheme

The Reserve Bank today announced two key decisions in the area of payments systems in the country – the extension of the payments infrastructure development fund (PIDF) scheme by two years and the inclusion of PM Vishwakarma Scheme beneficiaries, and the introduction of new channels for card-on-file tokenisation.

The PIDF Scheme was operationalised in January 2021 for three years to boost the deployment of payment acceptance infrastructure such as physical point of sale (PoS), and quick response (QR) codes in tier-3 to tier-6 centres, northeastern states, and UT of Jammu & Kashmir and Ladakh. The beneficiaries of the PM SVANidhi Scheme in Tier-1 and 2 centres were later included in August 2021.

As of August 2023, over 2.66 crore new touchpoints have been deployed under the scheme. The RBI says the decision to expand the targeted beneficiaries under the PIDF scheme will provide a fillip to its efforts to promote digital transactions at the grassroots level.

On introducing new channels for card-on-file tokenisation, the apex bank says it’ll enhance convenience for cardholders to get tokens created and linked to their existing accounts.

The RBI introduced card-on-file tokenisation (CoFT) in September 2021 and began implementation on October 1, 2022. So far, over 56 crore tokens have been created with value worth over ₹5 lakh crore.

The RBI says the tokenisation has improved transaction security and transaction approval rate.

In addition to this, the RBI also took key decisions in the area of regulations, including proposing a prudential framework for income recognition, asset classification and provisioning pertaining to advances. This is being done to to strengthen the existing regulatory framework on the project finance and to harmonise the instructions across all regulated entities.

The central bank has also decided to permit NBFCs in the middle layer and base layer to offset exposures with eligible credit risk transfer instruments. So far, the guidelines do not have any such mechanism for middle and base-layer NBFCs.

The RBI has also increased the monetary ceiling of gold loans under the bullet repayment scheme from ₹2 lakh to ₹4 lakh for the urban cooperative banks (UCBs) that met the overall PSL target and sub-targets as of March 31, 2023. This is being done to incentivise UCBs that have met the prescribed PSL targets as of March 31, 2023. These banks will be required to continue to meet the targets and sub-targets thereafter.

In view of the potential role of self-regulatory organisations (SROs) in strengthening compliance culture among their members and also providing a consultative platform for policymaking, the RBI has decided to issue a framework for recognising SROs for REs. The framework will prescribe the broad objectives, functions, eligibility criteria, governance standards, which will be common for all SROs, irrespective of the sector.

In the area of consumer protection, the RBI has issued master direction on internal ombudsman mechanism in regulated entities. The RBI, in 2015, introduced an internal ombudsman mechanism in select scheduled commercial banks to strengthen their internal grievance redress system. The framework has also been extended to non-bank system participants, select NBFCs and credit information firms.