Monthly Archives: June 2016

RBI Would Constitute A Group Of Experts To Study Blockchain Technology In India

RBI Would Constitute A  Group Of Experts To Study Blockchain Technology In IndiaReserve Bank of India (RBI) has recently released the Payment and Settlement Systems in India: Vision-2018 document. Among other things, the vision document intends to introduce a responsive regulatory framework for online payment industry of India and a customer liability framework to help resolve cyber fraud. The vision document has also expressed an intention to ensure contemporary and technology driven regulations in India. Perry4Law Organisation (P4LO) welcomes these positive steps on the part of RBI.

In order to ensure that regulations keep pace with the developments in technology impacting the payment space, the global level developments in technology such as distributed ledgers, blockchain etc. will be monitored, and regulatory framework, as required, will be put in place by the RBI.

Further, the payments eco-system is dynamically evolving with the advancements and innovations taking place, particularly in the area of FinTechs. In order to provide a platform for innovators to showcase their models to the industry, particularly in the areas of interest to payment systems and services, the Reserve Bank has organised an innovation contest through the Institute for Development and Research in Banking Technology (IDRBT). Learnings from such interfaces will also be used as inputs for policy adaptations.

RBI’s Deputy Governor H.R. Khan has recently informed that a group of experts will be constituted to study blockchain technology from a perspective of a evolving a more decentralised financial system and promoting cashless economy. The group would be small and draw its members from RBI, the Hyderabad-based Institute for Development and Research in Banking Technology and outside.

The legality of Bitcoin in India is a “grey area” and dealing in Bitcoin may be legal or illegal depending upon the way they are handled by the concerned individual or organisation. India is still discussing the legality or illegality of Bitcoin as RBI has to come up with a conclusive regulatory framework in this regard. The crucial question is whether Bitcoin use, websites and businesses are legal in India? There is no conclusive answer to this question as on date and the safest bet is to ensure techno legal compliances for Bitcoin businesses in India. The prominent of these compliances is the cyber law due diligence (pdf) that most of the e-commerce businesses and Bitcoin websites are not complying with.

Perry4Law Organisation (P4LO) wishes all the best to RBI and is committed to extend its techno legal expertise to help studying and implementation of Bitcoin and Blockchain technologies and other forms of online payment mechanisms in India.

Source: P4LO Blog.

RBI To Formulate A Customer Liability Framework To Help Resolve Cyber Fraud And Cyber Crime Cases

RBI To Formulate A Customer Liability Framework To Help Resolve Cyber Fraud And Cyber Crime CasesCyber crimes have significantly increased in India and many of them pertain to banking frauds and financial crimes. The cyber law developments in India 2015 by Perry4Law Organisation (P4LO) have also reiterated this position. Even Reserve Bank of India (RBI) is aware of these developments and it has released a document titled Payment and Settlement Systems in India: Vision-2018 in this regard. One of the main objectives of the vision document is to ensure a responsive regulatory framework for online payment industry of India. Perry4Law Organisation (P4LO) has already shared its suggestions and viewpoint in this regard though this post.

The vision document has also outlined the commitment of RBI to ensure a framework to limit customer liability for unauthorised electronic transactions. In this regard, RBI would encourage payment system providers to adopt best practices for protecting customer interest by putting in place robust fraud and risk monitoring systems. In addition, a regulatory framework to limit customer liability in case of unauthorised transactions would be put in place by RBI. This is in addition to the cyber security framework for Indian banks that has been recently mandated by RBI.

The increasing growth of electronic payments, especially online payments, riding the growth of e-commerce and m-commerce transactions, has brought to the fore the increasing role and importance of entities that facilitate such online payments such as payment gateway providers and payment aggregators. However, a dominant majority of payment gateway and POS terminal service providers are not complying with cyber law due diligence (pdf) requirements of Information Technology Act, 2000. Now these non compliances would be things of the past and punishable in the near future.

Although there are provisions that come to the rescue of a bank’s customer in case of a cyber fraud yet banks in India are not complying with the same. The Code of Bank’s Commitment to Customers by Banking Codes and Standards Board of India (BCSBI) (pdf) is one such framework that has been formulated for protecting the interests of bank’s customers in cases of cyber frauds. The real problem seems to be non implementation of various laws and provisions by RBI against the defaulting banks in India. Implementation of existing and new provisions must be the priority of RBI from now onwards to shed its image of a non regulator.

Perry4Law Organisation (P4LO) wishes RBI all the best and commits its techno legal expertise to make Indian banks more secure and responsive to the regulatory requirements.