RBI to introduce online dispute resolution mechanism for digital payments

Reserve Bank of India (RBI) Governor Shaktikanta Das

The Reserve Bank of India (RBI)’s Governor Shaktikanta Das on August 6 announced introduction of an online dispute resolution (ODR) mechanism for digital payments.

In a statement following the Monetary Policy Committee (MPC) meeting, Das said, "A scheme of retail payments in offline mode using cards and mobile devices, and a system of on online dispute resolution (ODR) mechanism for digital payments will also be introduced."

In its statement on developmental and regulatory policies issued on August 6, the RBI said that “there is a concomitant increase in the number of disputes and grievances” as the number of digital transactions have significantly.

“Recourse to technology-driven redressal mechanisms that are rule-based, transparent and involve minimum (or no) manual intervention is necessary to deal with them in a timely and effective manner,” the statement read.

The central bank said Payment System Operators (PSOs) will be required to establish an ODR system. However, this is to be done in a phased manned.

In the first phase, authorised PSOs will be required to implement ODR systems for failed transactions in their respective payment systems. The ODR arrangements will be extended to other types of disputes and grievances based on the experience gained from this phase. Instructions for the same would be issued later.

In 2019, an RBI-appointed committee headed by non-executive chairman of Infosys, Nandan Nilekani, suggested a host of measures to boost digital payments in the country, including an online dispute resolution systems to handle complaints. Other suggestions were elimination of charges, round the clock RTGS and NEFT facility and duty-free import of point-of-sales machines.

Das also said that the central bank had cleared a scheme for retail payments in offline mode using cards and mobile devices.

On August 6, RBI’s MPC kept the repo rate unchanged at 4 percent and maintained the stance as accommodative. Repo rate is the rate at which RBI lends funds to commercial banks when needed. The reverse repo rate was also kept unchanged at 3.35 percent.

The committee voted unanimously in favour of the status quo.

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MPC also said it expects headline inflation to remain elevated in the second quarter of 2021.

RBI Governor Shaktikanta Das said domestic food inflation remains elevated across most economies since the novel coronavirus outbreak.

Inflation pressures were evident across all sub-groups in June and a more favourable food inflation outlook could emerge on good farm produce, Das said.

Additionally, the central bank's governor said that India's real Gross Domestic Product (GDP) growth will remain in the negative zone in the first half and overall FY21.

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