duvvuri subbarao : retail payments – perspectives and way forward valedictory address by dr duvvuri subbarao, governor of the reserve bank of india, at the regional seminar on payment and settlement systems, organised jointly by the reserve bank of india and the bank for international settlements, mamallapuram, chennai, 19 march 2009. * * * introduction it is a great delight for me to be here at the conclusion of this seminar on payment and settlement systems aimed at improving our understanding of the way forward on this vital segment of central bank infrastructure. here, at the reserve bank of india ( rbi ), we have traversed a steep learning curve over the last several years, and come a long way in implementing an efficient and effective payment system. i am deeply conscious of the fact that we still have a long way to go. on the way forward, we are challenged by the fact that the unknown unknowns are larger than the known unknowns, which in turn are larger than the known knowns. our task on the way forward really is to learn from the international best practices and adapt them to the indian context. seminars such as this are, therefore, very rewarding learning experiences for us. i hope, the foreign participants too found this seminar useful, rewarding and, may i add, enjoyable. i am told you covered many important topics over the last three days, and i gather, there is greater clarity on various issues such as the growing importance of retail payment systems, the relative roles of banks and non - banks in the payment systems, the main principles governing oversight, prepaid cards, aspects relating to cross - border remittance services and even issues pertaining to branchless banking. i want to use the opportunity of this valedictory address to share with you the significant changes in the payment systems in india, the reserve bank ’ s role in this area and to look ahead at some of the challenges going forward. but first allow me a small digression. i hope you have all had some time off for going round and enjoying the sights and heritage of this famed part of india. mamallapuram bears testimony to the rich, ancient culture of this region, which was long forgotten, thanks to rapid developments in its vicinity, leaving this once - upon - a - time great trading port almost at the brink of extinction. nature too, played a role in the erosion of this piece of history. the great shore temple that we see is believed to be

large. the rbi also brings out special publications and monographs from time to time dealing with issues such as the problems of agricultural finance, company finances, balance of payments, etc., which have a unique place in the economic information system in the country. available evidence on international comparisons of level of transparency as well as quality and timeliness of information clearly shows that rbi comes out well in the top league. professional standards and credibility of rbi are ranked very high. in fact, several of the speeches of governor and deputy governors of rbi are circulated to other central banks as part of the bank for international settlements review, basel, switzerland. india is also amongst the first few signatories to the special data dissemination standards ( sdds ) as defined by the international monetary fund for the purpose of releasing data and the rbi contributes to sdds in a significant manner. there has been an ongoing and steady improvement in the collection, compilation, coverage and publications of various economic and monetary statistics. conclusion in the context of deregulation and liberalisation of financial markets, it is well recognised that wider dissemination of information by all economic agents and transparency of policy formulation and operations on part of the government and other regulatory authorities contribute significantly to efficient markets. further, timely and relevant information is vital for efficient policy making and stabilising expectations. while opaqueness will lead to inefficiency, asymmetric information would cause segmented market behaviour and imperfections. rbi believes that information dissemination leads to minimisation of uncertainties about policy intentions and contributes to market stability. rbi, therefore, lays a great emphasis upon transparency and public availability of information. agencies like reuters have a significant role in providing on - line information to market participants. in fact, not merely the financial market participants use such services and no doubt derive benefit out of it, but the rbi itself utilises such services and is by and large pleased with the benefits derived. in a very important sense, therefore, rbi is not only a supplier of information and analysis but also an attentive consumer of media - services such as that of reuters. in this background, dissemination of information should be authentic, properly classified, and should have sufficient details so that it is understood in a homogenous manner by all participants including central banks. in that sense, while information per se is neutral, if it is understood differently and interpreted with any element of bias, the purpose of information dissemination may get distorted leading to destabilising influence and panic reactions in the