SAARC central bankers for stronger payment and settlement system

KATHMANDU, May 11:

Central bankers of the South Asian countries have underlined the need to strengthen the existing payment and settlement system (PSS) in the SAARC region.

A payment and settlement system refers to system of transfer of a payer´s monetary claim on a party acceptable to the payee. Typically, claims take the form of banknotes or deposit balances held at a financial institution or at a central bank.

Speaking at the inaugural ceremony of 15th SAARC Payment Council (SPC) Meeting and 1st SPC Seminar that kicked off in capital here on Friday, the central bankers have underlined the need to bring about comprehensive reforms in domestic as well as cross-border payment and settlement system through close coordination and cooperation.

Nepal Rastra Bank (NRB) Governor Dr Yuba Raj Khatiwada attributed cross-border payments inefficiency to the lack of a single ubiquitous global payment system. “This is because most payment systems are based on local laws and practices within existing domestic banking and financial structures. Lack of common global standard and variations between systems have reduced the ability of both banks and corporate treasury/enterprise systems to seamlessly pass data between each other,” said Dr Khatiwada.

Payments are subject to domestic regulations and such regulations keep on changing which compound the challenges of cross-border payments because of varying rules between an originating and receiving country, he added.

He also said greater coordination of payment system among SAARC members is necessary to streamline the long journey of fuller economic integration as expressed in the aim for attaining South Asian Economic Union.

Chairman of SPC and Deputy Governor of State Bank of Pakistan, Kazi Abdul Muktadir, said that was a need for a technologically advanced payment and settlement system in the region against the backdrop of expanding mutual trade.

HR Khanna, deputy governor of Reserve Bank of India, said that the robust payment and settlement system would enhance the accessibility, assurance, efficiency and affordability of the banking system. “Most of the South Asian countries are cash-based economy. Technological advancement of the payment and settlement system helps on moving toward cash-less society,” he added.

Maha Prasad Adhikari, deputy governor of NRB, said the seminar would help SAARC member countries to better understand each other and to bring their payment systems, electronic mechanisms, instruments and settlement mechanisms on par with the international level.

Source: Republica