The availability of reliable communication network is an important prerequisite for facilitating electronic modes of payments. A paper was prepared by Prof.U.R.Rao, a member of the Board for Regulation and Supervision of the Payment and Settlement Systems (BPSS), Reserve Bank of India on the use of satellite communication technology to facilitate penetration of payment services to the rural areas which are denied these facilities due to non availability of reliable communication links. A Technical Group constituted by the Reserve Bank of India examined the proposal made by Prof. Rao and recommended that use of satellite connectivity would facilitate integration of the rural branches with their core banking solution and help providing funds transfer facility to their customers. The Group's recommendation was further examined and it was felt that there is a need for incentivising the banks by way of the Reserve Bank of India itself paying a part of the leased rentals if banks connect their branches in the North Eastern States and underbanked districts in the rest of the country.

The Reserve Bank of India has today placed on its website, a discussion paper on this scheme for public comments. Comments may be sent up to June 30, 2008 to the Chief General Manager, Department of Payment and Settlement Systems, Reserve Bank of India, Central Office, 14th floor, Central Office Building, Shahid Bhagat Singh Marg, Mumbai-400001 or faxed to 022- 22659566. Comments can also be e-mailed.

Alpana Killawala
Chief General Manager

Press Release : 2007-2008/1587