to be rectified at the earliest. at the same time, we also have to contend with a set of people who try to defraud the same system using uniquely indian approaches – forcibly holding on to a few pieces of notes in atm machines that has cash retraction system – ( i. e. cash getting sucked back by the bis central bankers ’ speeches machine, if not removed within a specified time, often seconds ), and then claiming non receipt of cash. we have now agreed to the proposal of npci to remove this functionality from all machines after a pilot proved extremely effective in curbing such misuse. of course due notice will be given to all customers. so remember hereafter if you are careless to walk away from an atm forgetting to collect your cash, it is lottery for the next user! pricing payment products let me flag a related customer service issue – pricing of payment products which has been engaging our attention. one of the dilemmas that a central bank like rbi faces is whether it should play an active role in pricing of payment products. the banks may argue that pricing should be market driven and left to the banks. the public may expect the regulator to ensure a fair pricing structure. the difficulty for the regulator is in balancing the expectations. rbi as a policy does not usually intervene in pricing of payment products and expects the banks to self regulate and ensure a fair price structure. however, our intervention becomes necessary when the industry behaves in a manner where the public policy objectives of affordability and accessibility to modern electronic payments are not being served. our intervention is necessary when customers shy away from using payment products on account of arbitrary fixation of charges. the rationalisation of service charges for paper and electronic products by the reserve bank was accordingly an attempt in this direction. notwithstanding the above, anomalies in pricing structure continue to be present. there have been instances where the fees for intra - bank fund transfers have been higher than inter - bank fund transfers using neft and rtgs. the dichotomy is more baffling when on one hand banks encourage their customers to use net - banking and other new channels but on the other hand discourage them by pricing the intra - bank charges higher than the inter - bank charges. banks have also found innovative means for levying additional fees such as charging additional fees for cheques collected under speed clearing. the banks should introspect on their pricing strategies for payment products especially so in a technology driven system keeping the objective of

no incentive to introduce new innovative payment products. however, it does not mean that every innovation would be embraced by the public, providing the innovation with a critical mass and sustainability that would make it a standard practice. it is often the case that the success of innovation depends on factors such as : ( i ) how eager are the consumers to use the new technology – this has definite relation to the feeling of “ safety ” ( ii ) the “ ease ” factor – the perception in the mind of the customer on the easy to use factor ; ( iii ) the associated cost vis - a - vis existing products ; ( iv ) the convenience in terms of using the product “ any time ”, “ any where ”. given the above, it must be said that introduction of new and innovative payment systems is a long - haul as these have an associated large cost and long gestation periods to achieve bis central bankers ’ speeches “ network ” effects. as in any new entrepreneurial venture, there is an element of financial risk associated with new payment systems, as it may not achieve the desired public acceptability of the new product. the last few years have seen the unveiling of a plethora of innovative retail payment products ( both paper and electronic ) in the market, driven primarily by technological developments, consumer demands and changing habits and complimented by policy initiatives / interventions of / by public authorities. if we review our own payments system landscape, the introduction of new payment products and methods during the previous decades could be termed as supply driven such as micr technology, electronic payment systems viz. ecs, eft, neft, nfs, cts, various type of plastic cards etc. these supply driven innovations for both paper - based and electronic payments have gained wide acceptance over a period of time. all these innovations and new payment methods have been driven by the regulator. the products were rolled out and banks were encouraged to make use of these products to render better, faster, safer and secure services to their customers. all these payment products have stood the test of time and have been success stories. this illustration proves that the supply driven approach used by the regulator has resulted in providing the indian consumer with new payment systems and products. is it therefore the case that only the above approach would result in consumers using new payment products and not otherwise? the answer to this again is perhaps not very clear. while it would be true that in the case of an emerging market country like india, the regulator has to be pro