The budgetary proposal for a national payment platform (NPP) without Central Bank supervision contravenes the financial regulations and payment and settlement acts, IT and financial specialists say.
Noting that payment settlements directly impact the financial system stability of a country, they stress that all payments and settlements should be done with CB supervision and no outside system can be established without CB permission, as per the payment and settlement act no. 28 of 2005.
The CB should plan, supervise and give guidance for all payment settlements.
Therefore, the law does not permit such a proposal despite its having cabinet approval, they say, expressing surprise that such a dangerous proposal has been included in the budget.
CB governor keeps silent
They urge CB governor Dr. Indrajit Coomaraswamy to pay immediate attention to the matter and prevent a breach of public confidence in the payment and settlement system.
However, it is unfortunate he keeps silent so far, according to them.
They also cast suspicion over the finance ministry’s having submitted the related cabinet paper, although ICTA comes under the telecommunications and digital infrastructure ministry.
Muhunthan first made the proposal
This proposal was first made by ICTA’s CEO Muhunthan Canagey and it has now come to the fore through Ravi Karunanayake’s budget, IT and financial experts say.
Canagey is using his political connections with the UNP to get this implemented, they charge, adding that a NPP will pave the way for massive financial irregularities.
Meanwhile, the joint opposition MP Bandula Gunawardena says this proposal will be challenged in the Supreme Court.
NPP is a new and innovative concept developed by ICTA is an open standard and open connectivity plat form being designed for the benefit of enhancing electronic commerce in Sri Lanka and no tenders called for its development.
According to the Central Bank, a nation-wide common platform for electronic payments is of great importance in achieving cost-effectiveness in the national payment system through sharing payment infrastructure in the country.
In November 2010, LankaClear (Private) Limited (LCPL), with the approval of the Monetary Board of the Central Bank, initiated the establishment of a Common Card and Payment Switch (CCAPS) to provide a common platform for electronic retail payments in Sri Lanka.
The Monetary Board in August 2011 designated CCAPS as the National Payment Switch in Sri Lanka.
The first phase of CCAPS was the Common ATM Switch which offers inter-linked service across all the ATM machines of commercial banks who are the members of CCAPS.
There was also a plan to make technological arrangements for Point of Sale transactions, mobile payments and other electronic retail payments.
Finance Ministry in association with ICTA is duplicating the Central Bank’s LankaClear payment plat form which is aimed at clearing cheques and facilitating online payments, legal experts said.