banks and indeed foreign capital in banks, which leads them to impose a variety of forms of restrictions depending on the circumstances of each country. there are several ways in which restrictions are imposed on foreign ownership in the banking sector, whether through limiting the foreign investment in the domestic banks or the presence of foreign banks. presence of a foreign bank is usually in one of the three recognized forms ( viz., a branch, subsidiary or a wholly owned subsidiary ) and only a particular form of organisation may be permitted usually with no choice to the foreign bank. there are some restraints on the type of business permitted to a foreign bank ( such as being restricted to foreign currency operations or non - acceptance of retail deposits or other specified operations ) as also stipulations in regard to the minimum capital requirement for a branch or a subsidiary of a foreign bank. there can also be practices amongst countries in regard to the aggregate foreign investment permitted in a local bank as also on the maximum holdings by an individual or a corporate entity or an entity controlled by foreign financial institutions in a local bank. similarly, the regulations in some countries, consistent with the overall plan of financial integration, place an absolute limitation on the size of the total assets or capital of a foreign bank ( which would indirectly restrict its total assets ). it needs being borne in mind that certain policies in regard to the entry of foreign investors or a foreign bank in a country may be triggered due to extraordinary circumstances such as a financial crisis or as a part of a structured crisis management package. there are instances where as a part of response to banking crises, a higher level of initial foreign ownership have been permitted but with stipulations for dilution subsequently. furthermore, certain countries which, ab initio, did not have any private sector banking might welcome the presence of foreign banks. similarly, expectations of joining a regional bloc, say european union, might result in welcoming of a larger presence of foreign banks. hirano eiji, 2004,'policy issues concerning financial sector fdi in asia : a global financial system perspective ', cgfs workshop, ( mimeo ), seoul. the extent of foreign investment, the nature of such investment, the appropriate form of presence and the profile of actual players in the banking sector are usually prescribed by the supervisors taking into account the multiple challenges faced in a given country context including the extent of financial integration sought to be achieved. in brief, each country picks up an appropriate package that is necessitated by the circumstances, which ensures

in paper mode, is the industry geared up for such changes? is there a specific plan to go paperless by these service providers? interoperability also pre - supposes a central infrastructure for clearing and settlement. we have already permitted transfer of funds from a fully kyc compliant ppi issued by a non - bank authorised entity to a bank account through the sponsor bank route riding over the banks membership with nfs, npci. why is such a fund transfer not picking up? in our vision document we have discussed about the need for collaboration and co - operation between payment system operators. what is level of co - operation amongst the ppis issuers? have there been any efforts to collaborate at least on boarding of merchants? is there any effort to standardize the merchant code and enable all the ppi issuers once approved under the pss act, to have access to all the merchants? has the industry deliberated how collaboration and co - operation could be achieved in the three party model to increase the scale and volume of transactions? arriving at a consensus on these issues will increase the acceptability amongst the customers as they will have a wider choice of ppis and will help achieve the objective of increasing the cashless transactions. kyc related issues several requests for liberalisation of kyc requirements have been received from the industry. several schemes in other countries which are operating in a relaxed and liberalized kyc environment have been cited. we are also aware of the use of ppis for disbursement of government benefits in some countries. before sharing with you what we are reviewing, let me sound a word of caution. how many of you have read ravi subramaniam? more bis central bankers ’ speeches specifically, how many of you have read his book “ the incredible banker ”? can we draw comfort that, what ravi describes is mere fiction? the underlying message is clear. competition cannot degenerate into the race to the bottom! relaxation cannot be confused with abdication. if you are allowed to travel fast on a newly laid road, it does not mean that you have unbridled freedom to close your eyes and drive! now let me turn to what we are trying to review. in our vision document, we have committed that the ppi guidelines would be reviewed to provide further impetus to the industry. but it needs to be appreciated that closer the ppi gets to a bank account, the greater the need to apply the same set of kcy / aml regulations which