RBI zeros in on digital finance

 

The RBI in a document titled Payment Mission 2025 (affordable and safer payments systems)  outlined its vision for the architecture of digital finance.

 

They include regulations for BigTechs and fintech ( dominant role in payments ecosystem)in payments guidelines on payments involving “Buy Now Pay Later” (BNPL) services introducing the central bank digital currency (CBDC) and linking credit cards and credit components of banking products to the Unified Payments Interface (UPI).

 

These goal posts have 47 initiatives through which the central bank aims to achieve 10 outcomes, including increasing the number of digital payment transactions three times, the UPI registering 50 per cent annualized growth, Immediate Payment Service (IMPS) and National Electronic Fund Transfer (NEFT) registering 20 per cent growth, and debit card usage surpassing credit card usage.

The central bank expects an increase in the payment transactions turnover vis-à-vis GDP to 8 per cent; an increase in debit card transactions at point-of-sale terminals (PoS) by 20 per cent; an increase in prepaid instruments (PPI) transactions by 150 per cent, etc. As far as the digital currency is concerned, the RBI said it was working towards introducing it in India and various use cases would be studied to bring in greater efficiencies. The RBI will also support the increase in the market trading and settlement hours. Currently, the money markets and capital markets operate at fixed hours but the RTGS and NEFT payment systems, which enable settlements in these markets, operate 24x7, an extension of trading hours of these markets to enable longer market availability for trading and settlement shall be facilitated, in conjunction with the concerned market departments of the Reserve Bank. This shall enhance efficiency and further price discovery in these markets.

 

The RBI will seek to create a payment system for processing online merchant payments using internet/mobile banking. All merchant payment transactions done using internet / mobile banking are presently processed through payment gateways/payment aggregators, and a framework to be introduced to regulate the payments.