 Hi folks, my name is Anand and I'm a research fellow at the reduction life experience. I am being trained as an economist, I'm a master of economics and now I'm doing, continue to do research in economics plus I teach for some of our flagship courses. So today I mean, we've been talking about this for a while now. Even I don't know how many of you were there at 15th year and how many of you followed up with the bookie dog and so on. There's something that we've kind of written about previously and briefly about, you know, what's the kind of competition in the payment industry and especially, given that the government is getting itself involved so much in the industry. So what kind of implications does that have? And that's briefly what I wanted to talk about. But just before that I just want to get a sense, anyone from a non-tape background here, I know generally has the intention to talk to people from the tech industry. What have you done? Just a lot of people. Yeah, I guess. Yeah, an advertising. Yeah. So I mean, where I come from is obviously more from an economic perspective, right? And I just want to first start off with kind of putting some context in the whole thing. So there'll be a lot of people shouting that, you know, now the payment industry is not really competitive because, you know, NVCI basically rules over everyone else, right? And they also have the fact that we've got claiming that, you know, there's too much government in the currency in the payment industry and so on. So we have to set that in context. I mean, if we don't think of this as an aberration that something that doesn't happen usually. But to start off with, I would just like to say that banking has always been a knowledge book, right? This particular space has always suffered from concentration of market power, from excessive government interference, especially in India. I mean, and this is true for most of the world, but I think it's a bit more prams in India, especially because of nationalization and so on. So if you look at how, I mean, how do you judge how free and open a particular space is, right? So first you look at how easy it is to enter that space and how easy it is to exit. So in terms of entry, the Indian banking industry is quite there. I mean, you have to get an RBI license to start off with. And then getting that license is definitely not easy. You have to show that you have enough pay or capital that you can really meet all sorts of capital adequacy ratios you can meet, potential requirements, etc. So there's a whole list of things that you'll have to kind of prove to them that you're capable of being the bank. And even there, it's a matter of quantity. So I mean, one kind of pointer towards this as to how tough it is to get into the payments industry or rather the banking industry as a whole is that between 2000 and 2014, this is the time when we saw rapid growth, right? Between 2000, especially after 2004, we saw at least three or four years of 9% growth. And even otherwise, we were right up there, I mean, 8%. Even during the financial crisis, we knew about 8% or 7.8% and so on. So at a time when there was rapid and accelerating growth, we didn't see any new banks open up. So we were still stuck with our age-old SPI and the entrenched players, the players who had already been in the market. So I think that was something that... And as a whole, I don't think there was really a lot of changes in that banking industry, in terms of even regulation, easing of regulations or making it easy for the existing players even. Forget about new players entering into the system, but what about existing players who didn't make it easy for them to open up new branches or to innovate and to make new products and so on. So I don't think there was really a lot of changes on any of these fronts. And you could say of course that the governors at that point of time and RBI in general were tackling bigger things like the 2007 and 2008 financial crisis and then what did the government do as a response to that? That really sucked off a lot of the energy of RBI at that point of time. So 2014 was in that sense a landmark here in terms of a lot of things got pushed too. So 2014 saw 22 new licenses that they gave, out of which I think there was 11 payment bank licenses, including Payday and May, India Post and Intel Money, all of these got provisional OKs from the RBI and then it kind of played out over the years. And all the next two. These licenses, they're only for five years. For all payments, so you need a payment bank license to kind of function in the payment industry. So at the minimum money, of course you need a full bank license, there's about three to four different kinds of licenses that are there. So at the top you have a full bank license such as your SBI, your RBI and so on. And the next is a payment bank license. So there you can accept deposits but you can't really lend that big scale and so on. And then you have a small scale in this small scale banks kind of thing. So these are your typical rural banks, cooperative banks, etc. and then there are so many others. The wallet is part of, I mean you need a license from the RBI to operate. But to truly work in the way that Paytm has in terms of interoperability to some extent you need a payment bank license which is what Paytm did. And we'll get to how, what Paytm did it, it's actually quite interesting. Is it by the same category that it's making right now? Is it by the same category that it's making right now? Is it by the same category that it's making right now? Is it by the same category that it's making right now? No, it doesn't have a full payment bank license. So in OLA, for example, I mean it's just making payment right now. OLA can't accept deposits. And you can use OLA money in other, for example, service. You can, yeah, I mean you can use OLA money but it's just again making payment and probably receiving payments. But you can't, I mean the one point about banking is about accepting deposits. Unless you ask for refunds, you can't go. I don't have any money in the bank. Paytm can use the money in deposits. Now that they've bought the payment bank license, now they can really expand into other categories of, I mean slightly going into traditional banking. Okay, so as a general rule you can stop me anytime at any point. These are just a few pointers that I have. So if you think all of this is too banal, I just want to give a bit of background. So if all of this sounds too trivial, you can stop me and just tell me to move on to the main point. Or you can tell me to expand on that. So you have completely, like this is an open house. I don't want to make it like the top. Okay. You still need to understand the difference between the OLA money and OLA money. Both of them you can, exactly, you can pay for something. Yeah. What is the thing that you can do using a payment bank more than what you can do? Payment bank, you can start accepting deposits, essentially. Right? And then what you can also do, sorry. Yeah. And then pay interest on that. And then what Paytm can do in the future is that they can use that money to, also about interoperability. Right? So now there are percent aspects to that. No. Not just between OLA, between OLA and traditional bank accounts, between OLA and OLA. OLA, I don't think right now has that thing yet. You can use OLA money and other services but that's about it. Yeah. So you can transfer money from the traditional bank account onto your OLA money. But you can't do it the other way around. So I mean, using my OLA money I can't transfer to your bank account. No. I think that's what I understand. It's like a coupon system, right? It's like a coupon system. I try to policy. Why you pay money to OLA? You can use that. No. But who wants to start this? Look, they can go to payment bank in 2014. But no. They didn't start the payment bank actually. They started it just now. Yeah, sir. OLA also gives you transfer money to other people with Paytm, right? Other people, yeah. But now if you use bank account, they can transfer to their Paytm, they can transfer to their OLA account. Yeah. But then there is still a difference. Yeah. And that doesn't, in the largest scheme of things, it does matter for our bank, for regulation and so on. Yeah. Interoperability, yes. I don't know. OLA still allows transfers between two individuals. I don't do OLA money personally so I wouldn't know. Okay. I... I... But you have to be one of OLA people. Yeah. You can transfer outside. Yeah. Can you transfer people? We have to go first. Yeah. We can transfer. You can transfer to another wallet. Okay. I mean another wallet of the same company. So OLA money can only pay to OLA money. OLA money can't pay to Paytm, right? So there are all these kinds of restrictions on what kind of payments you can make. And that's why it's at that small scale, right? A wallet is something that's not system. But a payment bank can do a lot more. And then, of course, a traditional bank has to arrange the functions that it can. Okay. And the banking industry has always been heavily, heavily regulated. In terms of what it can do and what it cannot do, RBI puts severe restrictions on every bank. Not just restrictions, but it also detaches many of its policies. So you start off with, you know, having, you know, your NPA exit which we spoke about, but it also controls their day-to-day operations. So for example, I mean, if the RBI detaches how much money you have to keep as reserves, I mean, I'm not denying, I'm not saying any of this is bad or good right now. I'm just saying how it's regulated, right? Because there's a lot of talk about how payment industry should be completely freed up and so on. Again, you just have to think that it's coming from the banking sector. So it can't or won't be radically different. Again, I'm not making any value judgments at this point, I'm just saying how things are. So I make a note of the day-to-day operations. So it tells them how much reserves they have to keep, how much, what are the potential norms and so on. And then what kind of, who do you lend to? RBI has a big say in who the banks lend to. They don't have complete freedom. So for example, it's the priority sector lending piece. They have some things on priority sector lending. So every bank is forced to lend a certain percentage of the deposits to farmers, to rural households, to something else. Every bank is forced to set up an X number of branches in rural areas. Branches are also told to do a lot of other things, right? I mean, according to RBI, it's meeting its basically social development goals. So if you look at the mandate of RBI, let's settle back what it was supposed to do. Only now has it changed the pure inflation targeting and basically price stability as its core function. But if you look back, just even a couple of years back before it was changed, before the Monetary Policy Committee was formed and so on, the mandate of RBI was extremely large. It said growth, it said employment generation, it said so many other things, right? About making financial inclusion and so on. All of that has been removed now. It's just inflation targeting. But it went up till that point, RBI used commercial banks to achieve all of these objectives. So we have to understand that, you know, it's how it was done. The biggest change was that RBI also controlled what the savings bank made was. So you're not going to have to deal with that much and so on. Banks had this thing, but your savings bank would not rate your normal transaction account, bank account. The interest rate that commercial banks would give to you was always within a bank which was specified by the RBI. So, I mean that again, regulating that was a big thing. Now they have deregulated it. And this is the biggest thing. Commercial banks have always suffered from heavy government intervention. This is apart from RBI, it has always suffered from heavy government intervention. Into things that probably me and you would think that the government has absolutely no business in. So look at, the biggest thing of course was the bank nationalization. It was done in Durand in 1969. Again, I'm not boring you with all the history and so on. One was the bank nationalization in 1969 where 14 major banks were national aspect. And then again, about 6 or so in 1980. So about 21 banks were nationalized and then two were merged. Which meant that, essentially what it meant was that RBI, sorry, the central government, the government entities controlled up to 91 percent of the banking sector in 1980s. So obviously there has been a wave of liberalization in 1990s. Now the public sector banks have been privatized. But it only meant that more private sector banks have been allowed to come in and foreign banks have also come in which meant that their overall share of the banking sector has reduced. But it still holds a significant percentage of the state. And then, of course, so this is something I don't know if I want to get into this much detail, but you said something called the SLR, which is a statutory liquidity ratio that basically means that all commercial banks have to keep a certain percentage of their deposits as government securities or government approved banks. So one thing is called the CRR which is the cash reserve ratio. So they keep a certain percentage of their deposits as cash with RBI. So this meant for liquidity purpose. So basically, we understand how banks work. If all of us deposit there and it works on, let's say half of this room deposits there. It works in the principle that not everyone in this room would withdraw money at the same time. Which means it keeps just a part of it as reserves and the rest of it, it lends to let's say that's how traditional banking works. So the required potential that those are what we call as risk capital or potential this thing. So the ideal number that is varies across different countries but the risk capital should not be more than 7%. Whereas in India it is 20 plus, I mean it was as high as 30 but let's say currently it is 20.5 as SLR and 6% or 4% as CRR. So that's 25% that banks have to keep a certain amount of money to private shares. What is SLR and CRR? These are potential now. So basically the amount of the percentage of the Sanfos CRR is cash transfer ratio. So that's how much cash can we keep it up and SLR is statutory liquidity ratio. So this is the SLR is what you keep it yourself and CRR is what you keep it up. SLR, you keep it with yourself but only in government approved securities. So basically what that translates to is that the government is arm-crusting banks to lend it to the government itself. SLR norms do not seem to arm-crusting since the government is the maintainer of the currency. So I think it is the maker of the country. So if they are making SLR norms to limit the liquidity in the market I don't need to see that as a form of arm-crusting into lending for government. Indirectly if the government was short on cash they would just spend more currency. But that leads to inflation massively. Exactly, so instead of doing that they would just spend money on it. But they are doing it via my and your savings and what that means is that it is not public funded. Regardless of that so what a government is supposed to do if you want to get into this is it's supposed to raise revenue and then spend it basically rob people's savings and then use it for even if it is development. You may agree with it I may not agree with it. See government bond is a sign of trust that the government is valuable right that should be a supply and demand. If I trust it and buy it you can't force the banks to say okay you take a bond if you go down the currency itself you also have trust in the government. Yeah it's a trust. See this is a pedantic part I don't want to agree with it but I think saying that they are armquisting if they don't have armquisting they still need their political slash spending objectives. I'm kind of important right which means that if you don't armquist banks and I'm sorry I am using this word if you don't really armquist banks then that means that the government is physically responsible so it will not spend as much as it does and secondly it is also forced into raising its revenues which means widen its tax base it won't do stupid things like farm loan waivers it will not give away money for free it will not give free washing machines and sewing machines and what not right I guess what I am saying is that armquisting means their budget if they don't use that then they are either they should be doing because that means they have to borrow from the government sorry they have to borrow from markets the only other way is to borrow from markets the market is not able to meet their needs either they become responsible which is the right thing to do or instead of armquisting they will do the other bad thing which is inflating you can't really government I mean the central government does not have complete powers to raise money because that is a function of the Armquisting actually armquisting is also in the Armquisting the Armquisting is also in the Armquisting sure but this is much more this is much more direct printing money is a much more direct way the government treasury bonds are all done through the Armquisting Armquisting is the one that only yeah of course it is but this is still considered as a market transaction where governments I mean banks still are purchasing it even though they are armquisting but printing money is something that no one will listen to so for example if your great rating agencies if they know that the government is printing money in that sense you will have a downgrade immediately but this doesn't lead to a downgrade so you need to do it in a slightly indirect fashion just to hide it this is a really better practice than that absolutely not but it just hides the fact that's good you know the argument that the government actually can print money to the extent that they can be audited even beyond that whatever they need is something that they so it varies in the region the deficit financing whatever the money that they want to whatever extent they can be audited even beyond that see before 1994 inflation for a while yeah but that inflation I mean there are many other the only point I am trying to make is SLR is also by the government and printing currency is also by the government they have thrown an SLR in the room which is better than printing currency to me that is a deficit not having deficits is obviously a month okay fine I get your point but this is just saying that hacking two of your limbs is better than killing you but neither is really a that analogy is okay according to me it is not having deficit obviously but if you are going to have that then how do you meet it either through SLR or through inflation so what you are failing to understand is if you take away this very easy source and understand that printing money is not easy okay it is not easy and the government cannot just print money let me just come which means that if you remove this SLR practice then the government will be forced to adhere to market discipline it will be forced and that is what happens the world over I don't see why India should be an exception anywhere in the world because you don't have SLR the maximum person that you will ever see is about 7% and this is according to basically norms which is actually called LCR the government keeps over 6.5% in trusted securities and even that they have an option of buying any securities in the world so for example I don't know if I am going too deep into this but Indian banks are forced to buy only government approved securities which means government securities but under the recently norms the Kender Bank can buy securities of New Zealand government treasury bills in that sense New Zealand's bond is rated triple A so why you it is almost in that sense anyway let's carry this one I don't want to so how is it going to work with the comments from the government I mean they the regulation that different countries join it is I cannot give a strong I mean bank and answer at all but let's say the federal reserve the license are given much more easier obviously and most of the countries now let's say the European countries and so on all of them adhere to something called the basin 3 norms which is a part of self regulation and so on in fact I mean if you want to get a very quick answer the whole 2007-8 crisis was a result of absolute lack of education that it was left far too free because some of the prudential norms that the banks are supposed to follow were completely left then they came up with the basin 3 norms and you know that the basin is actually came up with these set of norms as to how much they should keep us safety like and so on and that was done much later on just to avoid something like the 2007-8 crisis so if you look at that way I mean some of these what we think as rat case regulations did help us but I think it is just too much I mean it's a matter of numbers again 20.5 as SLR is far too high whereas something like 6-7% is more than enough as a risk capital whereas in the US at that point of time it was less than 2% which is what led to the crisis and then of course I don't want to get into the 7-8 crisis so that is one problem and then you have schemes such as Udaya and so on which is the state discons which had taken massive loans that they need loans to basically even operate on a day to day basis because they can't raise money and then pricing that electricity I mean the kind of electricity pricing that is existing in India right now India pays the cheapest pays the least for electricity anywhere in the world that is that only means that discons and other power generation capacities don't have any money and there is bad loans and that loans are ridden off periodically from the banks so again that is government basically and then finally you have the power which was just again are these loans taken for bank banks also like LHCF? mostly from national banks mostly from national banks but it does not mean that so okay here's how it works the discons still have to go to the banks for the loan and more often than not the private banks just do not give them and the national banks do not want to give them either but then the government shares and shares so is there a solution for it? yeah again I mean a couple of things one, you have to stop subsidizing electricity to this extent you have to raise electricity prices so that discons are not in absolute bank of state and then from there you take it on anyway that's quite a big issue but that's the same problem with all of our public services we don't have access to electricity none of this is railways none of this is ever charged at the price that it's supposed to be charged which means government subsidizes and if government subsidizes it where does that money come from ultimately the tax pay is one way or the other either they do it through direct tax collection or indirect tax collection or basically by stealing and depositing one way or the other such that we don't get the required interest rates that market would have otherwise so oh Uber does the same thing it's lucy money subsidize our taxi bank lucy money so okay so yeah and then the final kind of things that banks have control over I mean sorry government has control over banks by the appointment of MDs basically banks have control over who is appointed as the MD of each bank and so on such that if you get a player if you get right at the top if you get your people in then that means there would be a lot of debt to take to the government's cost so that means that you can then tell these commercial banks to give you money when you want it so that's the good circle of how the statement is coming to payments more specifically I'll just carry on while they do that right so so as I said 2014 was when things started changing a lot there had been some kind of movements from 2008 on which for example the NPCI was set up in 2008 but it really got a big boost in its kind of activities only after 2014 where a lot of things were started single pay for example was in 2012 but it started kicking off only much later right so 2014 was really according to me this thing and especially because you had a governor who understood the importance of the fintech space and understood the digital payment and so on and he was extremely sympathetic towards that cost so it made a lot of changes one I said the biggest change was granting all those new licenses but apart from that they made a lot of the RBI policies which came out was in favour of digital payment and digital and the fintech space so I mean just to give you some random figures I think in 2013 alone there was sorry 2015 there was about 750 new fintech companies that were established and that's the largest that India has ever seen these were out of which a lot of them were in the payment space and so on but that also just shows that RBI opened up for new companies to come in so small startups to start doing so on just making the banking sector easier so they would take up like one small role of the big banks and then you kind of just ease that and infuse technology to make it right I think so I have written about it somewhere but I don't exactly know I guess he was the one that he was not really a lot of the startups I mean they started close but it just meant that it was like details no one had about it so there were not really people who weren't coming to tell you but they were probably getting something else but it just meant that at least entrance to the space was now slightly opening that's about it a lot of them died I mean it's kind of open and I mean you know start and die the success rate and the actual longevity of startups is quite good I think that this space was now opened up for new entrance into the system so the NPCI and it's kind of important to understand where NPCI is and what it does so the NPCI was again it was started in 2008 it is basically a not for profit that's what they say private organization no it is not for profit I don't think it is not for profit or anything and which is owned by consortium of banks and this is the important thing it's not just because it's regulated by the RBI and it's not approved by the RBI it does not mean it's a government organization I think a lot of people make that mistake I will not presume that any of you do but I just want to make it clear NPCI is a private organization under any kind of thinking that it is not a government organization it's not national in the sense of that it's a government organization so what they do is basically it's a government organization there's been a lot of debate on that if you can't have republic then can you have national if I use a national national national it's been plotted a lot of times but according to the distinguishing the words republic national is a thing that you cannot use you cannot even use the random you must have government to do it so they were forced to change from India to international and that's what we have got they are not knowing how can you say the international should be nationalism what is nationalism nobody likes international I think India only requires a certain market capital, paid-up capital has to be insubordinated. See, as far as I know and please do not quote me on this, the word national you can, there is a kind of restriction on using that word in the constitution itself or one of the, if I'm not mistaken. So it says you can't use this, it's partly this thing, but again I'm not really sure I'll get back. So one thing is that nobody's clear whether national something is legal or not, national is illegal. So just like, yes, so like, you don't forbid me. That's it, you just have to read the ad. Yeah, yeah. I'm not sure, at any point if I'm not wrong, PCI can convert it from a sex to 25, to a fully private. It can be listed in public, I think that would be a long-term plan considering if they want to make payments in industry, they would make this an absolute. Could be, I mean that's a possibility which is definitely open, which is then purely defy all of the competition things that you're going to talk about. Oh no, there is monopoly in the way that controls all of the banks and all of the top interest in the OILPS. And if they were a for-profit, because they're a monopoly, they could jack up the prices to 2% of all time. They are going to make work for them to for-profit. So that's why there are no for-profits, so they are in a position in order to do that. No, no, what this point is, what if it becomes, you can convert yourself into a for-profit organization from section 25 into a whatever complex company, and then what? That says, okay. So in MPCI, basically the, no, even for the banks, I'll show you the thing. MPCI is shareholding, if you want to show it in the next slide. But MPCI, basic requirement to be part of MPCI is that you have to be part of the Indian Michael Association. And even there, not everyone gets to be part of the MPCI. So what MPCI does, I think most of you know, it does various kind of payment systems. Basically one of its biggest things before was EIMS. But the only difference between EIMS and what now you see as UPI and so on is that EIMS didn't have the facility to request payment, which UPI does. So UPI is nothing but it's a platform which is built on EIMS, on top of EIMS. So EIMS is immediate payment systems. And that kind of support you had next and so on where the clearing would take an hour or two or four hours previously. Now EIMS was something which was immediate, the minute we said money, it would happen. UPI is just built on the EIMS platform. And MPCI owns all of this. It was built, developed all of this. What is Aadha Payment Bridge? Aadha Payment Bridge is, I mean, this was something which was in between what you now have as Aadha Pay and Aadha Renewal Pay. So I don't know what exactly it did. Honestly, I really don't. It was actually for direct payment transfers. It was meant for that, which is now kind of, oh yeah, I feel. Aadha Payment Bridge, I mean, the bridge, this thing was for GBT. For the government to track for money through this thing. Now it's taken over by other payment systems. So they now want to use UPI itself across the board. And then you have the other pay which, what is that? You can use Aadha Renewal Payment System where you can use with just standard, without the smartphone itself. Aadha Pay. We've actually incorporated and followed the other payment, initially thought of. So that is what using the SSID system. So you need to look at PIM as an app and ABS as a protocol. PIM is just an app. Just an app and a protocol. So anybody can build their PIM. And now what's happening is from what I was told today, they're going to duplicate or rather merge ABS and UPI. To use UPI, you're going to be as biometric as soon. Once your phones are going to start supporting, I'm going to get back to you. When I checked the victim's action, there are symbols that basically says, in the list of what we need to do. Any payment is going to suggest or we can clearly suggest one. The privilege of the government of India or the government of the state or two, connection with any local authority or any corporation or body constituted by the government or any law for the time being enforced. So it does not mention the words national authority. It basically says, it sounds like the government is in the government. It is subject to a particular person. There is nothing about national authority. There's also a national productivity council. There's also a national productivity council of India in P.C. Yeah. There is nothing about the reputation of the government in India. It's not about Auroville. It's not saying jobs. I'm just wondering, what influence do you have? Just on the expertise. Yeah. But just the curious thing with the P.C.A. is that the government has enforced an So even if people think that it sounds like a government thing, they are absolutely fine with it. I mean the government of India has no problem with it. In fact, the government of India wants people to think of NPCI as the government organization. And I'll show you how that does it. I have an interesting one. Okay, so this is just the NPCI generally pattern. I've not put this one, but this is from MediaNama. What does the media report? What does the media report? But I saw, I looked it from MediaNama. So just the important thing to see here is that the top 10 or 11 banks right up front all about 75% of the shares. It's just easy, despite the important banks are in the top. So the rest of it, I mean it gets really diluted towards the share only. How is this classification going? Like on what basis is the share decided to do it? I don't know. I really don't know. It's between market cap or something, but it's not about me for that level. Mention that. In fact, I mean the Water Committee report specifically said that the NPCI, now that it's taking on what you call as critical infrastructure, right? That is national payments. That it has to dilute, not dilute. What do you say? Spread the shareholding across the banks more evenly and should not be left in the top 10. But the top 10, whatever the first bracket is the same people who also own the majority distinctly in the idea that there is a union market association. So you see that very nicely in the next step. Now I'm making this sound like the fastest. So some of the problems with, this is for NPCI, UPI and market power, right? So some of the problems with the NPCI as this thing is that initially when the talks were about NPCI, when even the governor and so on said that it was going to be a completely open and decentralized platform. So it was just that they were going to build the platform and then open it up for everyone. It was going to be nearly open source. This is what they initially said. And then the typical, I don't remember where I read it, but someone said that if two college students can build the app and then they'd be free to use the, you pay a platform to build an app for things. So right now we did that while they were promoting it at the sandbox. Before they made it commercial like they had a test set of a place which they gave access to everybody in the world including private companies like WhatsApp, Facebook, all of them. Now they are kind of restricting it once it went live. Now basically you have to be one of the big partner banks there or if it's a private company who wants to build something on UPA, you have to partner and collaborate with one of those banks. So for example, your phone pay is a flip-cut product, but they have to partner with ESPN because they have the API. So the API is not given out to anybody. Now if I request for an API to build an UPA app, I will definitely not be given unless I partner with someone. So when you say UPA app, what does it actually mean? I'm not a bank but I'm not able to UPA app, what will it have? So basically all that UPA app does is it uses the platform to just connect two bank accounts, that's about it. So I can build an app which if you give me permission then I take money from his bank account and then we pass it to him. That's about it. So my question is, you know how there was an issue with ICA and CIA and not allowing to pay transactions, right? So how come that happens despite the two banks being at the top of the stock? There is no structure for MPCI or UPA. But UPA comes at the ITC as well, right? Yeah, but UPA doesn't fit. There's also some degree of competition between them. I mean that was the same thing with I think, yeah, ICA and flip-cut, right, that they didn't want phone pay to become part 2. Phone pay was the most popular. I use phone pay. Whereas Citibank earlier used to support the transaction now it doesn't. Yeah, so I mean that's what MPCI doesn't like and that's why they're getting really angry about these things but then you want to try and limit people. So you're trying to tell them that you know, use our app instead, that's about it. So there's some bit of infighting and for me that I'm very happy about. I mean some customers might be inconvenienced at us, you know, in the near future but then in the long run I want there to be competition between different players such that I mean, ideally I would like to see five banks get away from this and build the whole bank. Not that they're allowed to. I think in the back in terms, if a bank doesn't accept payments, they are paying you a UBI check but your bank rejects it. It's not my problem. My bank is trying to give you money when your bank rejects it, it's their penalties. So I know Citibank, Citibank. So the penalties which are not there in UBI current specification which they're going to change at us. So that's what NPCI, not everyone has access to the UBI, I mean to the APS. Next comes to the specific app. So Beam is just an app and it is an app obviously built on the UBI platform and this is built by NVCI itself. So this is not built by a private party or a bank but it's built by NVCI itself. So now obviously you can imagine that there's going to be huge problems with anyone who is a platform as well as a player in the market. It leads to a just a distortion in the market and you can think of the kind of right or whatever the strike is not right. Strikes that we had when Uber and Oda once in their own cars and that's the same principle there that if Uber is a platform, Uber always claims that it's a platform and not a taxi service. It's a cab applicator service which meant that once they launch their own cars which are Uber cars, it was going to be distorting. So everyone is going to claim that Uber will obviously prefer their own Uber cars other than your third party drivers or what they call as partners. So it's the same problem with the NVCI. Now NVCI can say that because Beam app is their own then can they favor the Beam app over others? Can NVCI do it now? Government is doing it and I'll come to that slightly later on. And this is the same problem with other things which are built by the NVCI which is this Baruch QR, other element payment systems, other way and so on. They're all built by the platform itself. So that leads to some, obviously some kind of distortion. I mean in the simplest sense if NVCI is at some point of time forced to choose between Beam and let's say phone way, you know, which would it choose? All these banks are building up their own way. That's very important. I'll come to that. Just a second. So yeah, I'll just come to that. This is one of our steps. So now with Beam, it's not meant to be bad. So how is that allowed? What is the infrastructure needed for NVCI and not for Uber? That's precisely my point. That is precisely my point. And nobody is... No, people have reason. I mean I am just a reason. But the fact is that... Are they legal? It's legal. Because are they legal raised to question that? No. No, because that's... NVCI is finally taking over. Yeah. See, that was the point of NVCI being there in the first place. I mean the UPI platform was exactly that. Anyone who are not banks can build an app which will make payments easy. So the problem is not that Beam is there, but the problem is that others are not allowing others. So that's the problem. I mean personally, if NVCI has an app called Beam, I have no problem with it. I mean, I have a problem in the sense that they are, you know, the platform and the player. But otherwise, it's okay, right? But the problem is that others cannot do it. Everyone else has to partner with the bank, but being the... Yeah. So yeah, this is the thing to find you. What about the government? So, you know, I'm trying to take it to the same thing that we spoke about back in the industry, right? So there's regulation, there's problems, anti-competitive and etc. And finally, you know, the government and the parents into the payment systems. So this is for me... Firstly, the first problem for me is that the government preferred UPI as the preferred, you know, in its big push towards digital payment. And we know how the government went about doing it. So in its big push towards digital payment, it specifically chose UPI to be whatever, Messiah and its tool of delivering Nibbana. So it said that UPI and especially other things built by NTCI is going to be a main tool. So they promoted it exclusively. Now, I have a fundamental problem with the government promoting and endorsing a private product which is built by a private organization. It is unfair. Now, is this the only place where it happens? No. But again, this is a begin of kind of deviation from your standard market competition and tools. So I personally have a very big problem in this. So for example, I mean, look at the B-Map when it was launched. It was firstly launched by the Prime Minister himself. Why is the Prime Minister launching a private product? I mean, do you see that? Probably anywhere else, you don't really. They go and launch bridges in port which people have built, but not really a private product. So that's a problem. And this is, again, one of these things where he's openly promoting. This is a big problem. And there was this, this is of course not from the most reliable source, but it tells you this from Swarajya Mac. I will not comment anything about the publication, but it says Prime Minister's B-Map makes more than 17 million dollars. I don't know what kind of world record that is. No one can explain to me because I seriously don't know what kind of world record that is. It's the Prime Minister's B-Map. Yeah, that's the one I wanted to point out. And the Prime Minister has not been like that. Actually, Prime Minister's B-Map. Because it's so previous, like, from 16.90 years. I'm not sure if there's a question around here, but government employees in the studio are actually compliant by certain acts where you're not supposed to be favoring any private entity. So technically, we can sue the Prime Minister. I also don't know what the legality of it, but in terms of, I know the Civil Service Court specifies this, definitely. In terms of ministers, I don't know. Honestly, I have not done the legal groundwork, but I'm sure the government, whether it's legally possible or not, I think it is just extremely problematic if the government starts acknowledging a private product. I mean, can you think of the Prime Minister posing with a bottle of Coca-Cola and saying, I prefer this to Pepsi? We can't imagine that. And we would think of that as outrageous. But why are we okay with this? Yeah, if they didn't do that, right? What are shoes? They didn't do that, but I don't know what kind of concept was taken. They know the concept. They have 500 to keep fighting. Yeah, 5000 to keep fighting. I'm sure Peh, Vijay and Shankar can't afford that. The lot was bad. Yeah. Peh is a troupe. Peh is a troupe. I had a doubt. Yeah. I just want to say that your project for Vijay is a sort of bad or kind of controversial kind of thing. But is it? Has it done anything bad? Sort of. I don't think so. Probably it's not bad. You've got windows, right? But you can answer that yourself when you start pushing others for payments soon. I know you don't want to get into that aspect of it, but there's this thing, India Stack, and then you have this and, you know, making other companies. India Stack is also a private effort. India Stack is a private effort, which is also part of... India Stack builds the APIs for... I mean, it's just really twisted there, okay? But I would kind of urge you to read up on this. Yeah. If you start with... So basically there was this thing called Stack Up or whatever. I did a thing that told the government how to run these organizations. Right, okay. So it was this idea that all these companies should be set up in such a way that government ownership is being removed. So there's no oversight from the government. So typically if the government has set up all these organizations, there would have been a lot of oversight, CAG audits, all of that. Yeah, and... So GST and the similarly, the government only owns 49 points, 9%... The kind of beautiful space that these guys operate in. There are like five different projects which have been built this way. The other ones are not so much in the public, right? But they must have to be doing similar scams. Which is... No, no, no. Because you can start basically... You can start with... It's other... It is... Advisor to this, Advisor to that, volunteer at this. I'm sorry. Also, private thing, something extra for whatever... So... You know, it's a big, it's just family, right? So... You have the idea, right? So they have these guidelines. They recruited all of these people as volunteers. But they had... They had... Again, it's contracts with that. Under which, they had certain courts of conducts. You can find all of these documents online where if they are recruiting a volunteer, how they are going to do it? What sort of rules and regulations this volunteer follows? But I find for an idea to get these contracts that your idea has with its employees, they kind of directed it to the legal team to find out the person's right whether to disclose it or not here, as of now, okay? So, but they do have all of these in place. Legally speaking, they're covered. Yeah. Yeah, the potential to... Yeah. See, a lot of it is... A lot of it is... Of course, they're having things that have already gone wrong. But a lot of the fear is about what can go wrong in the future. And it is not absurd, but I think there is a tension. There isn't a problem. Okay, so finally, I'll just cover what happened in the budget. 2017 budget, so again, there was an entire section of this legally speech and later the budget document purely devoted to the app. And so it said that it basically proposed two schemes for the promotion of beam, which is a referral bonus scheme and a cashback scheme for budget. So, okay. First of all, it's the second leg of this, which they're going to be planning any other sort of scheme. And second, you guys have a vision of plans coming together and then the main application which is going to be there. And when you say that it's unfair to be other payment systems, which means it's a big problem. Okay, sir. Okay, so the problem is that what you're essentially doing here is just fitting the kind and number of other payment systems that can come together. Okay, so the problem is that what you're essentially doing here is just fitting the kind and number of other payment systems that can come together. No, that's okay. I'm just going to cover that up. Firstly, that is hardly not true. Most of them don't have at least only about 40% of Indians have an active account. No, that's serious. That's like saying that okay, we have enough telecom operator. Why get geo in the market? So it's not our style. It's not if you're offering a better service. Yeah, but are you allowing for newer services to come? How will you allow? That is the point. I mean, I have no problem if UPI is the most favorite one because it's good service and so on. But as long as it's allowing all other kinds of competition to come in. Okay, by the way, I'll just give you a little bit of this thing on this. So, UPI has built a platform for UPI. Now, no one else can build another platform such as UPI. Even remotely close as UPI is built on India side. No, no, no, no. It's an exclusive array. India's tag doesn't build anything. India's tag isn't? No, no, no. India's tag is my term for them is paid mercenary. They're not going to use it. So, no, it's not going to use it. If a government department wants something built, a government department, I think like a government pseudo-government thing like UIDI or ACCI wants something built. And just that, people will go build it for them. It is not like a Linux kernel that they're building. It's not an open source thing that anyone can use. These are specifically and exclusively built for their partners. So, all I'm saying and from the RBI and regulation side, let's say I have the technology and this thing to build another big payment platform to rival UPI. I cannot do that. By law, I'm not allowed to do that. That is why it is an anti-movement. I have a related question. If somebody reverse-influences and publishes it, no, no, it doesn't do that. I don't know if it's public. Everyone comes to know about it, but by law, you're not allowed to do that because it's got pretty bad influence on you. You need permission from the RBI and RBI will not give you permission to develop another payment system. But you cannot use it. You cannot use it. You can know. The definition of openness is question of the left. Yeah. Why are you talking about openness? You cannot... So, I mean... Honestly, the other thing is that honestly, I am just kind of telling you that the whole thing about MPCI and so on is quite shrouded in this field. I try to look at the Indian Bankers' Associations, their charter and so on. Can any other bank join? Can other non-banking institutions join the MPCI and so on? It's frankly quite shrouded and requires a lot of... I mean, it requires a legal mind to look at it. Honestly, I'm an economist. But as far as I've understood that you can't just build another any sort of platform like this and neither can you even join MPCI now and say, okay, fine, can you open a gate to me if charter needs to be built? So, yeah, the project explicitly used taxpayers' money to promote PIM. So, that's the next level, right? It said whatever these little schemes, I mean, they might not amount to much, but in principle, at least, if you're saying I'm going to give you money to use a particular private product, that again, I don't know, exists. So, as I think, Ken from the... I mean, Rohan from Kansas, he used taxpayers'... taxpayers would pay other taxpayers to route transactions through a app owned by an organization that was exclusively for price. It just kind of sums up this particular aspect of what I'm trying to say. And then, finally, on the budget. Yes, sir. If the dormant built your system like this and it was made exclusive, you would have a problem. If it was made exclusive, I would definitely have a problem. But the dormant already has so many exclusive things, right? And I have a problem with all of them. Yeah, I mean... Government has electricity distribution, for example, is a property for government in most parts of India, except, I think, Mumbai, which has two or three electricity companies and good government. The rest of it is purely government-owned, I mean, Toronto is government-owned. I have a problem with that. The Indian Railways is government-owned and it's exclusive. I can't open up a railway track and use my own. I have a problem with that. So, yes, but here, because it was soon new, right? It's a legacy of, I don't know what, but because the payment industry was new, I had some hope that it could be open and they promised to open this. So, finally, in the budget, they also said that, you know, beam could be made compulsory and mandated across all kinds of government services, which again, obviously, I have a problem with. So, basically, you know, you're handing over virtual monopoly status to NPC and that's it. Well, I mean... So, okay, I'm done with this. I think, okay, so what's the problem with this, sorry. We discussed this in part everywhere else, but essentially now with, I think we talked about what's the problem with beam offers, right? So now, government is subsidizing UPI transactions. Okay? Because remember that all transactions basically have a transaction cost. So, if you're using a debit card, it uses, I mean, debit or credit cards cost from 2% to 4%. Depends on which is a lot more, whereas something else is 2% and so on. Paytm, if you're going to ship money from your Paytm wallet back to your bank account, that's a transaction cost. Which means that there is a transaction cost for all other transactions. You have to think about it because there's a limit on how much money you can give in a Paytm wallet. Then, I mean, except cash, every other forms of payment systems have a transaction fee to it even within the other pay, for example, that if you use the other thing, SSID, then that also has a transaction cost for it. Now, government is essentially right now because of its digital India push or whatever, it's subsidizing these things through the MPCI. Now, my problem is I don't know for how long. They initially said that UPI would have a transaction cost from April or May onwards. They have to wait and watch. I'm not really up to date on this, but they said that it will have a transaction cost for it. Now, my big problem with this is now if the government is subsidizing it, and they're subsidizing it from our tax-based money, and they're subsidizing your private product, they're getting the benefit now, but that also means that you're not allowing other industries to come up because you're killing the competition there. I mean, can you imagine a new wallet player now? Because UPI is there, I don't think it's a dead-end thing that you're trying to get. Why would you want a wallet? Because the present problem is if you're using Paytm, you can't transfer money from Paytm to any other wallet. Sure, but let people decide. I mean, I'm just saying if someone wanted to open a new wallet, this thing, you have to kill that space. One of the wallets which I want is a wallet through which I can pay my transit cost by straining everything, there's none. And it's a monopoly there. They have a standard for payments in transport which nobody is implementing because there's no push-unlike demandization with these things. The mobility card also. Nobody implemented it. Nobody uses it, they use Paytm, they use wallets, but as a standard it exists. Yeah, it's sort of deli-mental, I'm not mistaken. If the platform is open, if the space is open, people might have demands and to meet that demand other things will come up and then competition will ensure that the costs are lowest. I mean, this is equal to 101, but you've effectively killed that competition space. So even within my ideal scenario is why should you have just MPCI and the UTI? Someone can probably come up with a better system. I don't know, but it is in the realm of possibility. Someone can come up with a better system with cheaper transaction costs that need not be subsidized by the government. Why should you kill that because of the way to end everything? It's not even a government combination. It's the organization that is built for the party. Yeah, yeah, yeah. It's subsidized by the government. When the government is seen, right now obviously the control is needed by the prime minister. No. It's a party problem. You feel the government is controlling this? Allowing themselves to be controlled right now. They can always say that we can't do this. So there is actually a tough part happening between the charge 2% from tomorrow. They can say that. That's the biggest thing right now. They can't really. See, this is one thing. The government has to nationalize it. But out of the 10 banks, they have nationalized it because of the state banks. They are doing it by taking damage. They are doing it by taking damage. They have state or banks and then there is city bank and then just VC bank. Sure, but even the state or banks just because an entity is just because an entity is state owned in that sense doesn't mean that they are not moving properly. It does not mean that they are to give charity. But they can at that point the government can also say we try but the banks say no. There is basically nothing stopping them. In principle, there is nothing stopping them from raising the transaction. They have to listen to what RBI says. Not necessarily. They came up with 3 more doesn't it? They have to listen. See, this is ideally. Because RBI controls the currency. Yeah, they control the currency. But they have to deal with the border. Can I connect please? Ideally, the RBI, the central bank cannot and should not and will not just buy banks. Even if it is national it matters. So for example, interest rates are completely and wholly decided by banks. Which means that if the interest rate is that way, I don't see why transaction costs. All other transaction costs, by the way if SBI has a card, it is they decide how much transaction costs to pay. RBI does not have it. So I don't see why UPI suddenly RBI can come in and say you can't charge any transaction costs. So apart from the enforcement by the government entities problem if a bunch of companies come together come up the platform that they want to make exclusive even themselves. I don't really see how that is a problem. It is a monopoly, it is an oligopoly whatever you call it. The premium and pre-charge, one is buying the other out. But the premium comes in and says that we have a private API for it. First of all, there are competition laws that you can find there. First of all, there are competition laws that you can find there. No, there are. Today, Olaman will be used I think in one of the payment portals also. And they made an agreement on themselves. I don't see why anybody outside should say Olaman needs to make everybody accessable but the government endorsing BINA which is wrong but as long as we do not add to the equity of the private entity I would even think that is too wrong. I understand the technicality of our Prime Minister endorsing a product which is not a private company or that is correct. But the government is not being so wrong. It is not making money. But it might be money and it starts making money. It becomes a sort of slicing where even if they want to charge 0.1% of a foreign transaction and everyone moves to digital then you have a trillion dollar economy where you want to get 0.1% of the billion dollar economy to themselves. That is like a billion dollar going to them straight out for doing nothing. I will tell you what the problem is. I understand your question. I am saying if we leave that I understand your question. So if these guys have come up and they have done this payment system among themselves and actually hired as one of them yes, they try to pick up a problem as you are saying but the only thing is are you allowed to build something else like that? If the answer is yes, then fine let someone else come up and build a competition. If you are allowed to build an association with the government, I am saying that. No, that is a point but you cannot build an association with the government. If you are allowed to buy the definition of critical goods you have that kind of action. You don't need to go back to this point. If you have the money and you are popular enough you come up with that. You come up with that. There is something about network effect. No. When Jio comes into the market they are able to survive because they can connect with the network. If the banks are going to say they want to start their own they want to connect to you. That is why you can call drops can be regulated by government. Otherwise the government can get into the values of paying, asking companies to pay that call drop. That is my point. Private companies are coming together and building more private companies. What is the problem? Firstly, you are not allowed to listen. Firstly, the number of banks in India are actually limited as we saw. If all these banks are together in one of these things actually a new bank comes in you can't enter into this private club because of the way that the bank is position and the investing is limited. Secondly, if there is another payment system which does come up again that is not being allowed by the RTM. For example, as he rightly pointed out SPF which is an international thing for payments. I wanted to enter into the payment system but it was not allowed. So you have problems of what is allowed and what is not. Ideally everything is allowed and you have one big player that is still all right. Secondly, there are competition laws which any sort of such association if you form it, there is nothing but a cartel. Let's never forget that. It is a problem because it's a cartel and cartel according to any sort of competition laws are dead wrong. I mean it wouldn't be, if this was in any other industry which is not government kind of blessed the competition commission would have come down and then with a ton of picks. This is what happened to the cement cartels. They are disallowed. They are disallowed. They are. They are. They are. That's my point. If there is a new bank that is not you can't enter into that NPC. It's not only on the CCR part but it is not. No. If you look at how this thing is built unless you become part of the corporation then corporate they can't get into it. Now the issues they can't do are differences in licenses. So what? If it is just an app. If it is just an app. Then you buy a bank but not corporate to buy. Why not corporate to buy? Corporate banks won't go through the same regulatory and audit processes. If they have specifically a collective you have certain amount of deposits. You have certain amount of deposits. They do have to make them prudential norms. If that is the case I don't see why. I think the question will be I think what would be an idea right now government has built something using a specific way something like a private body and then still using the controls somehow indirectly through the cartels and all of that. What is the rationale through building instead of doing this government could have said NPC as a government and being the government sponsored app and being the expert there. Would that have been an idea? If that was not an idea what would be the idea? So according to me the idea was the APIs are open and then government created one app and then said we can also go ahead and create an idea. For me the second scenario is far more ideal than the first. According to me the ideal scenario is if NPCI is meant to be a national in that sense payment corporation then the APIs should be open to anyone that not I mean I can understand anything in terms of products right that you should just basically protect the consumers against retail thing that tries to build an app and takes money from one person but does not cost it all. But these are regulatory hurdles and which can very easily be taken care of you don't need any sort of this kind of entry restrictions there so open up the That is the most ideal if it were not the ideal one given we know the culture of the government because they like to make everything monopoly I mean they make the power distribution monopoly water distribution monopoly you want to make the banks monopoly as well and given the culture if it were a government entity and then still made excluded only to government would it be slightly less than but would it be entirely no I don't think so I really don't think so government monopoly I mean you might not have actually can I continue to that question there's one example where this is actually happening in the idea in this field so when you're talking about all the e-governance projects right so they have set up this institution called center for good done which is like a monopoly to supply all the tech products tech related stuff to government entities only for government I don't think they're doing any private because nobody buys from them but there exists such a case where what he's referring to I mean I don't know how legal it is but they have this like any government IT project it'll come to CGT and Infosys or DCS will be considered only as a secondary to get it done is that ideal I would say that's an ideal but even a different question I won't ask that you can answer both even a better question even another different question is that what is the rationale in funding a structure such as that it's a private entity but still kind of government influence and everything won't work out is it that when the government uses also these people continue to we know the both I think there's a lot of people doing norms government needs to follow certain things they don't have to go they want to pass that so the answer is the government sincerely believes but this is the only way for the government to work in terms of the versions are actually stated as a record this is only the government that's what this tag up was I think a advisory group for unique projects five projects UIDA or the first one five other projects where the government is not going to control them even though it is they want to bypass the normal government processes they speak very frankly about this in public forums they say they are working except the government you can't do anything then so the kind of sweet spot that they have found themselves in this also means the government changes these same people for a part of this because the idea was moated in 2009 the government doesn't control it GSTN is not in government control GSTN has not even come I think even more than we can't do anything then they are part of the modulating package put in certain so the kind of sweet spot that presently the MPCF finds itself in is that has no government oversight or the rules and accountability that traditionally it has to follow if it was a pure government thing yet it enjoys the blessing and this thing by the government and many people do consider it as a government organization national and that trust is there because I don't know for what they are in the best of both worlds so the first question about the government that first question if the government were to we held to a certain standard for all its projects and in this case if they bypassed this to be a government organization because they wanted to avoid the bureaucracy of the government who is going to ensure the bureaucracy it's the government that is going to enforce that they need to follow certain policies although they are not the following once they have a government you can't have selective room following the government's projects there are overracking rules as to how things should be done and there's got to be all of those and you have to open yourself to certain reports auditing and independent all of those things yeah, RTI for example I don't think you have to be under that any of those things that's my first question just for the first part but it's like I'm reading from an IMF report the first is the honorable and entertaining governor of K-Punk and the bank for India as a representative of the fund of the IMF and the bank for India the world bank and the world bank for India and the constituency of Bangladesh in terms of India actually I didn't know it seems interesting but in that it's interesting I see a person with a visa are you from India? ok so are you from India? not a representative I can't I can see you know that's also one of the the example so RUPE RUPE has in India RUPE has lowered the transaction cost for this thing so RUPE's transaction fee is I think half of Mastercard RUPE it is significantly lesser the only reason being for Mastercard and visa the switch is outside India so just that it has to be routed through there makes it more costly whereas RUPE the switch is the best so what would it take to create something like Mastercard? I mean something like which is solely monopolized the regulations and this one is required to Mastercard for example by which we should understand that it is not for profit organization and it is built by a consortium for banks it is not for company what's our traditional one second hi anyone of you is interested in the crypto party there are downstairs in the ground floor what's a crypto party it's just a meeting where we discuss about secure competition or cryptography in general but it's for anyone technical and non-technical if you want to learn about what you want to securely complete or if you want to learn about whatever is needed for your own business are you going to be doing signing off? yes so can I just 15 for the interest level so we can decide staying early good, okay we'll stay we'll be downstairs so just for a moment if we were to be in their position because in order to get things done through bureaucracy would be really hard making this a private player was nevertheless essential for them to do and if having made this private there are certain things so that is not something they were complaining about I mean they needed to do AI and beam because they could not even have this influence with their motivation under the existence of AI they could take over I mean bureaucracy would be too hard to get that no you were you were you were you were you were