KATHMANDU, March 3: Nepal Rastra Bank (NRB) has introduced ‘Payment System Oversight Framework’ as part of its objectives to ensure sound legal foundation of payment systems and enhance their risk management and control.
According to the framework unveiled by NRB’s Payment Systems Department last week, the central bank will extend its oversight activities over payment systems, payment service providers, and instruments that they issue including cards, mobile banking, internet banking and e-money, among others.
The major tools that the framework would use include: regulations, incentives, sanctions, monitoring, onsite and off-site inspection, assessment and analysis, policy dialogue, enforcement and remedies.
“Overseeing a payment system ensures that the infrastructural component and the markets for the provision of payment systems work smoothly, efficiently and fairly for all participants,” read the document.
The framework comes in the wake of rising risks of an unsafe payment system that may stifle the stability and potential of an economy. Experts say that the payment system failure can result in inefficient use of financial resources, inequitable risk-sharing among the agents, actual loss for participants and loss of confidence in the financial system threatening financial stability.
“This will ensure that the payment systems in the country are of world class standard and also meet domestic and regional payment system requirements,” read the document.
“The effective oversight of the payment system infrastructure would ensure the safety, security and reliability of financial transactions, which are vital to monetary and financial stability,” it added.