South Asian central bankers emphasised on the need to promote integration of domestic payment systems of the member countries first before developing an intra-regional payment and settlement system.
Central bankers of the South Asia also underlined the need to strengthen the existing payment and settlement system in the SAARC region.
They also underlined the need to bring about comprehensive reforms in domestic as well as cross-border payment and settlement system through close coordination and cooperation.
Central bank governor Dr Yubaraj Khatiwada, addressing the inauguration of the 15th SAARC Payments Council meeting here today, also attributed cross-border payments inefficiency to the lack of a single ubiquitous global payment system. “It is because most payment systems are based on local laws and practices within existing domestic banking and financial structures,” he said, adding that lack of common global standard and variations between systems have reduced the ability of both banks and corporate treasury and enterprise systems to seamlessly pass data between each other.
Khatiwada – who is currently the chairman of SAARC Finance that is a network of central bank governors and finance secretaries of the SAARC region – 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.
However, we need to develop concrete milestones to meet objectives of common payment and settlement systems to improve legal and regulatory infrastructure, and improve cross-border payment and settlement systems,” he added.
SAARC Payments Initiative that was formed in October 2007 with the vision of introducing a benchmark for efficient and safe electronic payment and settlement system infrastructure. It is aimed at catering to the emerging needs of the region and has been guiding the efforts of member countries in modernising their national payment systems, assisting in setting up appropriate technological links with others in the region and bringing their payment systems at par with international standards.
SAARC Payments Initiative also intends to design a coordinated regional approach for cross-border payments. It is taking into consideration the implications for trade, investment, central bank policy, and foreign exchange positions.
However, Khatiwada also informed the absence of national payment system in Nepal, as most financial transactions are cash based, followed by bank cheques. But Nepal is preparing National Payment System Strategy, Khatiwada said that the strategy will help develop an oversight authority for an efficient payment system for the financial market infrastructure for payments and settlement, he added.
Chairman of SAARC Payments Council and deputy governor of State Bank of Pakistan Kazi Abdul Muktadir, on the occasion, said that there is a need for a technologically advanced payment and settlement system in the region against the backdrop of expanding mutual trade.
Likewise, deputy governor of Reserve Bank of India HR Khanna 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,” he said, adding that technological advancement of the payment and settlement system helps on moving toward cash-less society.
Deputy governor of Nepal Rastra Bank Maha Prasad Adhikari 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.
The deputy governors – from South Asian central banks – who aretaking part in the two-day event will also discuss payment and settlement issues during the first SAARC Payments Council (SPC) seminar.