Tag: boost

AU Small Finance Bank signs pact with NABARD to boost rural development projects in Rajasthan

Banking & Finance

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Private sector AU Small Finance Bank on Wednesday signed a pact with the National Bank for Rural and Development (NABARD) to boost ongoing rural development initiatives in Rajasthan.

According to a statement issued by the bank here, the Memorandum of Understanding (MoU) was signed in the presence of NABARD Chairman G R Chintala, Jaideep Srivastava, Chief General Manager, Rajasthan, and Sanjay Agarwal, Managing Director, AU Small Finance Bank.

Joint initiative

The memorandum envisages a joint initiative to benefit farmers, Farmer Producer Organisations (FPOs), Self Help Groups (SHGs), rural artisans, agri-entrepreneurs, and agri-startups in the State.

“This MoU between NABARD and AU Bank will provide institutional credit support to the ongoing development schemes in the State, which will lead to further prosperity in the rural areas.

“This tie-up will give a boost to the process of lending in the state, especially in areas related to agriculture and rural development,” Agarwal said.

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Central bank digital currency can boost innovation in cross-border payments: RBI Deputy Governor

Banking & Finance

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A central bank digital currency (CBDC) can boost innovation in cross-border payments, making these transactions instantaneous and help overcome key challenges relating to time zone and exchange rate differences, according to Reserve Bank of India (RBI) Deputy Governor, T Rabi Sankar.

A CBDC is the legal tender issued by a central bank in a digital form. It is the same as a fiat currency and is exchangeable one-to-one with the fiat currency. Only its form is different.

Speaking at IAMAI’s Global Fintech Fest 2021, Sankar observed that the frictions relating to time zone and exchange rate differences as also varying legal and regulatory requirements across jurisdictions can be solved through platform-based solutions.

These solutions can make real-time price discovery possible even for retail-sized transactions.

Sankar said settlement of cross-border payments in CBDC can happen without the settlement system of either of the countries or both countries being open.

Costly transactions

A July 2021 BIS report noted that cross-border payments suffer from long transaction delays and can be particularly costly due to the involvement of a high number of intermediaries across different time zones along the correspondent banking process.

The report said CBDCs can be open 24/7, eliminating any mismatch of operating hours. It could settle instantly, reducing the need for status updates

In a speech in July 2021, Sankar said going forward, after studying the impact of CBDC models, launch of general purpose CBDCs will be evaluated.

“The RBI is currently working towards a phased implementation strategy and examining use cases which could be implemented with little or no disruption,” he added.

Some key issues under RBI’s examination include the scope of CBDCs, whether they should be used in retail payments or also in wholesale payments, the underlying technology – whether it should be a distributed ledger or a centralised ledger, for instance, and whether the choice of technology should vary according to use cases, the validation mechanism – whether token based or account based, degree of anonymity etc.

However, conducting pilots in wholesale and retail segments may be a possibility in near future, Sankar said.

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