MUMBAI: Reserve Bank of India (RBI) Governor Shaktikanta Das on Thursday suggested linking the fast payment platforms of India and Japan for easy cross-border transfers.
India’s UPI (unified payments interface) has spurred the development of new payment-related products and services, Das said, adding that linking UPI with other countries’ fast payment systems is underway.
“A link between India’s and Japan’s fast payment systems can also be explored to leverage the power of fintech and make cross-border payments more efficient and cheaper,” he said at the 2023 Indian Economy Symposium in Tokyo.
In March, Japan’s digital minister Kono Taro told Mint that Japan would eventually consider linking systems if his country adopts UPI. The UPI-PayNow link for cross-border remittances between India and Singapore was launched in February 2023 and other similar links with several countries are in the works, said a footnote in the text of his speech uploaded by RBI.
Another footnote said that while remittances from Japan make up only a small fraction — 0.2% — of India’s total remittance receipts, the cost of remittances from Japan to India through banks is much higher than the Sustainable Development Goals of United Nations (UN) -SDG) target of 3%. These estimates, he said, are based on the World Bank’s Global Mail Prices database.
Das said the advent of fintech has changed the landscape of traditional financial services, improving the delivery of financial services by making them faster, cheaper, more efficient and more accessible.
India, he said, is currently the third largest fintech ecosystem in the world in terms of the number of fintechs operating in India, growing at a robust pace and projected to generate around $200 billion in revenue by 2030 .It will contribute to around 13% of the total revenue of the global fintech industry in 2030.
“The defining feature of India’s digitization model is the leadership taken by the government and the public sector in building infrastructure, on top of which innovative products are created by private sector fintech firms and startups,” said Das.
Speaking to UPI, Das said that he played a great role in the fintech revolution in India and his success story has become an international model. Transaction volumes on UPI reached 10 billion and stood at 10.6 billion in September, data from the National Payments Corporation of India (NPCI) showed.
“Its ability to instantly transfer money between bank accounts through mobile applications has revolutionized the way people conduct digital transactions. UPI’s interoperability across banks and payments systems has created a unified payment ecosystem,” he said.
However, Das warned that while financial innovation improves the ease of payment and lowers the cost, it creates risks and challenges for the financial system, affecting overall financial stability and market integrity.
According to Das, RBI plans to play a dual role as a promoter of innovation as well as a regulator.
“In promoting innovation, we focus on ensuring a well-regulated ecosystem that addresses systemic risks and challenges,” he said.
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Updated: 09 November 2023, 01:16 PM IST
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