Banks can save Rs300 crore annually by switching over to RuPay: NPCI

“Adoption of the RuPay Card will help banks save Rs250-Rs300 crore annually as our interchange charge is cheaper by up to 40% than what banks pay to foreign cards like Visa and MasterCard,” NPCI managing director and chief executive officer AP Hota said

Mumbai: A switchover to RuPay Card, the Indian version of Visa or MasterCard, can help domestic banks save as much Rs300 crore annually in transaction fees, reports PTI quoting the National Payments Corporation of India (NPCI), which launched the card last week.

“Adoption of the RuPay Card will help banks save Rs250-Rs300 crore annually as our interchange charge is cheaper by up to 40% than what banks pay to foreign cards like Visa and MasterCard,” NPCI managing director and chief executive officer AP Hota told PTI.

After years of preparation and soft launch, NPCI commercially launched RuPay Card on 26th March with major banks such as SBI, BoB, UBI, BoI, Corporation Bank and Axis Bank launching their domestic debit cards on the RuPay platform.

This makes the country second after China to have an indigenous electronic payment card.

Typically, banks pay around 1.8% of the transaction value in interchange charges. This is shared between the payment gateway operators like Visa and MasterCard, the card issuing bank, and the merchant.

While the card-issuing bank charges around 0.25%-0.30% of this, an equal amount is taken in by the merchant too, with the rest being retained by the card company such as Visa.

But Mr Hota said NCPI will retain only up to 60% of this around 1.2% going by the current fee structure.

According to the banks, foreign cards charge around $30,000-$50,000 as one-time fee and around $10,000-$30,000 quarterly.

In FY09-10, according to the Reserve Bank of India (RBI), domestic banks coughed out Rs490 crore in interchange charges to Visa and MasterCard.

For RuPay, there will be no one-time joining fee, and other charges would be around 40% less.

All the major banks are likely to be on the RuPay network in six months, Mr Hota said, adding that there was no compulsion to switch to the RuPay. “Our low cost should be reason enough for them to adopt our card. By March 2015, I expect at least half the market under the RuPay.”

His optimism comes from the low penetration among the regional rural banks, co-operative banks and small commercial banks due to high cost of joining foreign card payment system.

Another advantage, he said, is that as the transaction happens domestically, it will lead to lower cost of clearing and settlement, apart from the facility of paying in rupee.

Being a not-for profit company also helps us lower the cost, Mr Hota said.

He also said the RuPay would make debit cards safer by incorporating the pin number with each transaction. At present, only MasterCard requires the user to furnish the pin number every time the card is used.

RuPay will be accepted at all the 91,000 ATMs and over 6 lakh points of sale terminals in the country and in due course, it will be accepted on the Internet and also at ATMs/PoS terminals abroad. NPCI has finalised an arrangement with payment gateway Discover for international acceptance.

According to RBI data, there are nearly 27 crore debit cards in the country today.

SBI managing director and chief financial officer Diwakar Gupta said that though there is no compulsion, it makes business sense for banks to adopt RuPay.

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FII inflows into Indian stocks touch $9 billion

During March, FIIs were gross buyers of shares worth Rs63,795.10 crore, while they sold equities amounting to Rs55,413.80 crore, translating into a net investment of Rs8,381.10 crore, as per data available with SEBI

Mumbai: Overseas investors have pumped in about Rs8,381.10 crore ($1.68 billion) in the Indian equity market in the month of March, taking the calendar year to date total to a whopping Rs43,950.70 crore ($8.89 billion), reports PTI.

During March, Foreign Institutional Investors (FIIs) were gross buyers of shares worth Rs63,795.10 crore, while they sold equities amounting to Rs55,413.80 crore, translating into a net investment of Rs8,381.10 crore, as per data available with the Securities and Exchange Board of India (SEBI).

With FIIs having already poured nearly $9 billion so far this year, inflows from the investors are likely to touch $10 billion in the next few weeks, analysts believe.

“Their investment in the first quarter of this year is one of the highest investments in any quarter in the last 10-12 years. FII inflows are likely to cross $10 billion mark in the next few weeks,” Religare Securities executive vice president & head (retail research) Rajesh Jain said.

Mr Jain said the quantum of FII inflows goes to show that they still have confidence in the Indian economy.

Regarding the P-notes, he said the finance minister has given a positive statement and that was the reason behind the rally in the market on Friday (30th March).

Participatory Notes (P-Notes) are instruments that allow foreign institutional investors (FIIs), which are not registered with market regulator SEBI, to invest in the Indian equity market.

Meanwhile, the foreign fund houses have sold Rs6,588.60 crore ($1.29 billion) in the debt market last month. This takes their overall net investments into debt markets to Rs4,157.30 crore ($812.80 million) this year.

FIIs had mostly stayed away from Indian equities in 2011 pulling out Rs2,812 crore and instead, flocked towards the debt market with a net investment of Rs20,293 crore.

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SEBI unveils norms to check systemic risk of algo trading

“Based on recommendations of technical advisory committee (TAC) and secondary market advisory committee (SMAC), it has been decided to put in place broad guidelines for algorithmic trading in the securities market,” SEBI has said in a notification

New Delhi: Capital market regulator Securities and Exchange Board of India (SEBI) has put in place rules for the use of sophisticated automated software to prevent systemic risks caused by algorithmic trading used by brokers, reports PTI.

“Based on recommendations of technical advisory committee (TAC) and secondary market advisory committee (SMAC), it has been decided to put in place broad guidelines for algorithmic trading in the securities market,” SEBI has said in a notification.

It said the adoption of technology for trading in financial instruments has been on the rise over the past few years. Stock brokers as well as their clients are now making increased use of algo trading.

Algorithmic trading refers to orders on bourses that are generated using high-frequency, automated execution logic.

The capital market regulator said exchanges should ensure that all algorithmic orders, software driven automated order execution engines, are routed through broker servers located in India and have appropriate risk-control mechanism emanating from algorithmic orders and trades.

“The minimum order-level risk controls should include a price and quantity limit check. The price quoted by the order shall not violate the price bands defined by the exchange for the security,” SEBI said.

Further, in exigency, the stock exchange should be in a position to shut down the broker’s terminal, it said.

“Terminals of the stock broker that are disabled upon exhaustion of collaterals shall be enabled manually by the stock exchange in accordance with its risk management procedures,” it added.

The stock exchanges, SEBI said, may seek details of strategies used by algo traders for inquiry, surveillance, investigation and the like. The stock exchange shall also include a report on algorithmic trading on the stock exchange in the monthly development report.

“For securities that do not have price bands, dummy filters shall be brought into effective use to serve as an early warning system to detect sudden surge in prices,” it said.

SEBI further said that stock exchanges shall subject the systems of the stock broker to initial conformance tests to ensure that the checks mentioned below are in place and that the stock broker’s system facilitate orderly trading and integrity of the securities market.

“The quantity quoted in the order shall not violate the maximum permissible quantity per order as defined by the exchange for the security.

“The stock exchange shall suitably schedule such conformance tests and thereafter, convey the outcome of the test to the stock broker. For brokers already providing algo trading, the stock exchange should ensure the risk controls specified in this circular are implemented by the stock broker,” SEBI added.

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