With the expansion of point of sales (PoS) machines not keeping pace with the number of cards in the market, the Reserve Bank of India may limit the issuance of cards by banks.
RBI Deputy Governor HR Khan on Tuesday raised concerns, saying that there is “huge number of cards but where is the payments ecosystem to use them”? He said card acceptance infrastructure needs to be created.
“Banks have to take some lead...We are looking at the possibility of opening White Label PoS machines like White Label ATMs and that any further issuance of cards will be linked to the setting up of the machines.
“It is not a final view but just a thought,” said Khan, adding that this is required particularly in rural and semi-urban areas where more Kisan Credit Cards are becoming plastic.
According to him, India has just 1.1 million PoS terminals and that only few banks are putting up these machines.
Some PoS terminals do not accept certain kinds of cards and this is not acceptable, he added.
Speaking on rising cases of unhedged forex exposures by corporates, Khan said, “One thing we have said is that the unhedged exposure has to be factored in the credit risk assessment of the banks….we have asked (corporates) to see how this will affect their balance sheets in case of turbulence and volatility….”
“Secondly, we have been telling corporates that they should hedge when the times are good. You should not go for insurance when you are sick but when you are healthy so that you pay less premium,” Khan added.
Further, “Since there is a mismatch between revenue, which is in local currency, and your repayment obligation is in foreign currency, so we have a controlled regime for borrowing abroad. We don’t allow unlimited borrowing and we have a ceiling and there are restrictions,” Khan explained.
He added that India is at lesser risk compared to other countries but still there are quite a few corporates which are exposed to foreign currency volatility.
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