set up within the existing rbi infrastructure. the reserve bank, being a statutory corporation, can do only those activities which are permitted by the reserve bank of india act, 1934 or other legislations. in addition to its core central banking functions, the reserve bank also performs certain promotional functions. however, this promotional activity is limited to ‘ financial institution ’ only 10. since no financing activity is contemplated for the proposed pcr, it might be difficult to label pcr as a ‘ financial institution ’. this takes it out of the purview of a promotion under the reserve bank of india act, 1934. another option is to promote an organization for a matter incidental to the functions of the reserve bank 11 – as part of the reserve bank of india act, 1934 or banking regulation act, 1949 or any other enactment. collection of information, including credit information, from its regulated entities is an important aspect of the regulatory and supervisory functions of the reserve bank. one can find many provisions in different enactments which enable the reserve bank to collect such information. if the scope of collection of information for pcr can be deemed to be reasonably incidental to the expressly permitted activities of the reserve bank, a subsidiary or a department for the purpose of setting up and hosting the pcr would be justified. otherwise, the reserve bank of india act, 1934 can be suitably amended conferring the reserve bank powers to conduct the business of pcr. such a specific conferment of power, with clear enumeration of the functions of pcr, would remove the limitations of incidental powers mentioned above. 2. confidentiality constraints : an important issue in connection with the setting up of pcr is the overriding of confidentiality provisions in many enactments, which directly or indirectly bar sharing of information, including credit information, except in manner specifically permitted. as the pcr will have to get information from different sources, the inability of the sources to share such information can be a constraint. to this end, the pcr will have a consent - based architecture. the notice and choice framework to secure an individual ’ s consent is fundamental to data processing practices in a digital economy. it is based on the act of an individual providing consent for certain actions pertaining to his / her data. it is essential that users provide consent to an entity sharing data ( the data provider ) before they share data with an entity requesting access ( the data consumer ). the consent based architecture of the pcr will strengthen privacy

, businesses and even markets ; this has also brought a sea change in bankers ’ attitude towards risk and clearly marked the boundary between retail and wholesale banking. banks have also been investing and recruiting heavily in compliance to meet new regulatory requirements. 14. another offshoot of the stricter enforcement of regulations, is the increasing business and growth of non - banking financial institutions, the shadow banks that are not subjected to the same degree of intense regulation ; they are offering competing services to bank clients, establishing specific funds or offering private equity. 15. thus you will all readily agree that these three trends have clearly redefined banking and banks. banking and banks – redefinition 16. i also said these emerging trends are endangering banks ’ existence. am i echoing bill gates? 17. from the time the concept of money was understood, the concepts of lending and borrowing came into existence. but the concept of banking wasn ’ t there. however, the organized way of lending and borrowing happened when the prototypes of modern banks were established some 700 years ago. banks undertook another service i. e. the remittance service. thus, what the banks did viz., borrowing, lending and remittances, came to be known as banking. banking is what a bank does. or banks are those who do banking. our banking regulation act says so. 18. the mega trends that we discussed have redefined banking and banks. actually it is not redefinition, but de - definition. banking is no longer what a bank does ; it is also what a non - bank does. banks are no longer those entities who do banking exclusively ; now others, the non - banks also do banking. 19. chunking of banking is the norm ; and for undertaking each of these chunks, there are some specialist entities who undertake only those chunks. payment service providers, bis central bankers ’ speeches p2p services, p2b services, ( sme financing ), consumer retail financing, disintermediation, crowd funding, open ended mutual funds, money market mutual funds, deposit alternatives, trade financing, invoice financing, bill discounters, bill collectors, credit referrals, account aggregators, interest free products, syndicators, investment bankers, mfis, co - ops, hfcs and credit raters are some of the entities who chipped away chunk after chunk of banking. is there an element of banking that remains the exclusive privilege of banks? sadly