In a recent meeting, RBI Governor Shaktikanta Das proposed exciting changes to boost digital payments in Bharat. The Reserve Bank of India (RBI) is considering allowing third-party UPI apps to enable payments and cash deposits at Cash Deposit Machines (CDMs) using the Unified Payments Interface (UPI). This move aims to simplify the cash deposit process and improve customer convenience.
Das highlighted the success of cardless cash withdrawal using UPI at ATMs and suggested extending this feature to cash deposits at CDMs. By leveraging UPI for cash deposits, customers can enjoy a smoother experience, and banks can streamline their currency-handling operations.
Implications for Digital Wallets
Shivaji Thapliyal, Head of Research at Yes Securities, noted that this announcement could impact the digital wallet market. Currently, Paytm dominates with a GMV of USD 19.1 billion in FY23, while other players like Mobikwik trail behind. Thapliyal suggests that allowing third-party UPI apps to access other PPI wallets, including Paytm, could reshape the digital payments landscape. However, the commercial implications and merchant adoption remain key factors to monitor.
Growth Forecasts and Economic Outlook
The RBI also provided insights into Bharat’s economic growth trajectory. Despite maintaining the real GDP growth forecast for the current fiscal year at 7%, slight adjustments were made for specific quarters. The growth target for Q1 FY25 was revised to 7.1%, while Q2 FY25 saw an increase to 6.9%.
Bharat’s GDP growth rate surpassed expectations in the quarter ending December 2023, reaching 8.4%. This robust growth reinforces Bharat’s position as the fastest-growing major economy globally. The National Statistical Office (NSO) projects a growth rate of 7.6% for FY24, up from 7.3% in FY23.
Monetary Policy and Interest Rates
Following a three-day meeting, the RBI opted to maintain its benchmark interest rate (repo rate) at 6.5%. This decision marks the seventh consecutive occasion where the RBI has chosen to keep interest rates stable. This move aims to support economic stability and maintain favorable conditions for growth.
Overall, the RBI’s proposed measures to enhance digital payments, coupled with steady economic growth forecasts and monetary policy decisions, reflect a concerted effort to strengthen Bharat’s financial ecosystem and drive inclusive development.
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