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Most G20 members back RBI’s views on crypto

New Delhi, May 24 (ANI): Reserve Bank of India (RBI) Governor Shaktikanta Das calls on Union Finance Minister Nirmala Sitharaman, in New Delhi on Tuesday. (ANI Photo)

Cryptocurrencies have financial and macroeconomic risks that will be appropriately evaluated by experts along with their recommendations to mitigate them before the G20 will finally consider the matter, a second person said…reports Asian Lite News

A majority of G20 members are now in sync with the view of India’s central bank that cryptocurrencies could pose huge risks to the stability of the financial system, people aware of the development said adding that these countries may work to institutionalise an internationally-accepted regulatory framework for crypto-assets while allowing individual jurisdictions to impose stricter regulations beyond that minimum threshold, even a complete ban.

The initial enthusiasm shown by some countries with regard to cryptocurrencies has now waned as most of them have realised the macroeconomic risks and other challenges associated with them, at least three persons with direct knowledge of the matter said requesting anonymity, sharing insights from and details of discussions at the third meeting of the G20 Finance Ministers and Central Bank Governors (FMCBG) held last week in Gandhinagar.

“Many countries are also concerned about the recent collapse of crypto exchanges and risks of cryptos being used for drug trafficking, terror funding and money laundering,” one of them said. In November 2022, FTX, the second largest cryptocurrency exchange of the world collapsed, affecting over 1 million investors.

Cryptocurrencies have financial and macroeconomic risks that will be appropriately evaluated by experts along with their recommendations to mitigate them before the G20 will finally consider the matter, a second person said. Crypto-related issues are being analysed by the International Monetary Fund (IMF) and the Financial Stability Board (FSB) which will submit a “synthesis paper” on this matter later this year, he added. The synthesis approach will cover two broad aspects – crypto regulations and financial stability.

There is a marked shift in the thinking of several countries vis-à-vis cryptocurrencies, the first person said. “Now most of them concur with RBI’s [Reserve Bank of India] concerns related to financial and other risks associated with cryptos. The third G20 FMCBG meeting did discuss this matter in great detail,” he said.

The matter found mention in the outcome document and chair summery of the third G20 FMCBG meeting on July 18: “We look forward to receiving the IMF-FSB Synthesis Paper, including a Roadmap, before the Leaders’ Summit in September 2023, to support a coordinated and comprehensive policy and regulatory framework taking into account the full range of risks, and risks specific to the emerging market and developing economies (EMDEs) and ongoing global implementation of FATF standards to address money laundering and terrorism financing risks.”

According to the people mentioned above, two latest reports on cryptocurrencies placed before the G20 FMCBG in its July meeting – one by FSB and the other by the Bank for International Settlements (BIS) – underscored the need to evolve a robust regulatory mechanism that would also address macroeconomic risks.

At the meeting, members endorsed FSB’s high-level recommendations for the regulation, supervision and oversight of crypto-assets activities , the first person said. “It did not go into risks associated with crypto-assets,” he said. The recommendations “do not comprehensively cover all specific risk categories related to crypto-asset activities, such as: AML/CFT [anti money laundering/combating the financial terrorism]; data privacy; cyber security; consumer and investor protection; market integrity; competition policy; taxation; monetary policy; monetary sovereignty and other macroeconomic concerns,” FSB said.

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RBI Governor meets World Bank President during G20 meet

Talking about private sector investment, Banga said that there is no easy answer to private sector capital…reports Asian Lite News

Reserve Bank of India Governor Shaktikanta Das met World Bank President Ajay Banga during the G20 Summit in Gandhinagar, Gujarat and discussed various issues.

Taking to Twitter, the Reserve Bank of India said, “Governor @DasShaktikanta and Ajay Banga, President, @WorldBank met at #Gandhinagar during the #G20summit and held discussions on a range of issues.” Indian-American Ajay Banga, who is in Gandhinagar in Gujarat to attend the third G20 Finance Ministers and Central Bank Governors Meeting, had earlier spoken with ANI on Monday and said that he is more optimistic today about India economically than he has been for a long time and lauded the government’s initiatives towards digitization of infrastructure.

The World Bank President referred to IMF and World Bank predictions about the world getting a little challenging for a year or so and asserted that a forecast is not destiny.

In an interview on the sidelines of the meeting, Banga said digitisation has made it easier for people to access services and he is a “big fan” of it.

“You can’t just do digitization of lending without digitizing the infrastructure. What India has done over the last 15-20 years, is digitising the infrastructure. And that is enabling all these terrific applications to be built, which makes it easier for people to access services online. So I’m a big fan of it,” he said.

“I am more optimistic today about India as a whole, economically, than I have been for a long time,” he added.

Banga is the first person of Indian origin to head either the World Bank or the International Monetary Fund.

“The fact is that the world economy is in a difficult place. It has outperformed what everybody thought. But it does not mean it won’t be more challenging. The IMF forecast, the World Bank forecast is that the world will get a little challenging for a year or so but as I said in my speech this morning, the forecast is not equal to destiny. We can change destiny. And that’s what you should think about,” he added.

The World Bank President also stated that India has enormous opportunities for financing for cities. “…Nobody has ever done enough on everything,” Banga added.

Talking about private sector investment, Banga said that there is no easy answer to private sector capital.

“What I’m trying to do is to set up a private sector investment Lab,” he said.

The Lab is headed by Mark Carney and Shriti Vadera and 15 CEOs have agreed to become a part of it.  The investment lab is co-Chaired by Mark Carney, UN Special Envoy on Climate Action and Finance and Co-Chair of GFANZ, and Shriti Vadera, Chair of Prudential plc.

The Lab will meet regularly and report directly to Ajay Banga and World Bank Group leadership.

Banga said they will meet every month and “they will give us some ideas to help reduce the friction for the private sector to invest in the emerging markets”.

“So I don’t have the answers for you yet. But over the next few months, we will learn more.”

The World Bank last week named 15 Chief Executive Officers and Chairs who will make up the Private Sector Investment Lab.

“The World Bank is on a mission to create a world free of poverty – but on a livable planet. Achieving this vision demands that we build a better bank, but also reimagine partnerships and pull in the private sector to confront – and beat – intertwined development challenges like poverty, climate, and fragility, Banga had said.

“The business leaders who are lending their time, talents, and expertise to this work are a crucial piece of the puzzle, and I am beyond grateful to have them onboard. Results won’t come overnight, but if successful this group has the potential to unlock significant investment that will deliver jobs and better quality of life for people living throughout the Global South – the surest way to drive a nail into the coffin of poverty.”

Banga, a finance and development expert,  took over as World Bank President last month. (ANI)

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RBI hails India’s strong recovery

Reserve Bank of India.

The central bank noted that the overall domestic financial resource balance continued to improve, turning marginally positive at 0.3 per cent of GDP in 2020-21…reports Asian Lite News

Even as global growth is set to slow down or even enter a recession in 2023, as global financial markets wager, India has emerged from the pandemic years stronger than initially thought, with a steady gathering of momentum since the second quarter of the current financial year, as per a RBI report.

The “State of the Economy” chapter of Reserve Bank of India’s (RBI) monthly bulletin for March 2023, released on Tuesday, noted that “on the supply side, agriculture is into a seasonal uptick, industry is emerging out of contraction and services have maintained momentum. Consumer price inflation remains high and core inflation continues to defy the distinct softening of input costs”.

In another chapter titled “Financial Stocks and Flow of Funds of the Indian Economy 2020-21”, the central bank noted that the overall domestic financial resource balance – measured by the net acquisition of financial assets less net increase in liabilities – continued to improve, turning marginally positive at 0.3 per cent of GDP in 2020-21.

Further, the household financial savings spiked significantly during 2020-21 from its long-term trend reflecting an elevated stock of both currency and deposits and increased savings in insurance products.

The balance sheet of the RBI expanded in 2020-21 with a rise in financial assets reflecting unconventional monetary measures to mitigate the impact of the pandemic and to ensure adequate liquidity for smooth functioning of the economy. Other financial corporations with excess inflows from households, and in view of reduced demand for bank credit in the pandemic year, increased investment in government securities.

The non-financial corporations deleveraged their balance sheets in 2020-21; as a result, their net financial wealth improved after years of successive deterioration.

With a relatively reduced dependence on external financing, particularly by the Indian corporates, the growth in both financial assets and liabilities of the rest of the world decelerated in 2020-21, the chapter said.

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‘India has well-regulated and well-supervised banking sector’

Reserve Bank of India (RBI) Governor Shaktikanta Das

Hormis was the founder of the Kerala-headquartered Federal Bank….reports Asian Lite News

Reserve Bank of India Governor Shaktikanta Das on Friday gave a thumbs up to the country’s banking system, while stressing how recent developments in the US have brought to the fore the criticality of banking sector regulation and supervision.

“What we have in India today is a well-regulated and well-supervised banking sector. The same would apply to the NBFCs sector and other financial entities under the RBI’s domain,” he said while delivering the K.P. Hormis Commemorative Lecture here.

Hormis was the founder of the Kerala-headquartered Federal Bank.

Das pointed out that the focus is now more on identifying the root cause of vulnerabilities, rather than dealing with the symptoms alone.

“We have also issued revised guidelines on oversight and assurance functions of financial entities. Use of advanced data analytics is supplementing our supervisory process. To strengthen cyber resilience, a comprehensive cyber security framework for banks together with Digital Payment Security Control Guidelines have been issued. We have also established the college of supervisors and augmented the staff strength significantly in recent years,” he said.

Das focussed on how the recent developments in the US banking system have brought to the fore the criticality of banking sector regulation and supervision.

“These are areas which have significant impact on preserving financial stability of every country. More specifically, these developments in the US drive home the importance of ensuring prudent asset liability management, robust risk management, and sustainable growth in liabilities and assets; undertaking periodic stress tests; and building up capital buffers for any unanticipated future stress.

“They also bring out that crypto currencies/assets or the like, can be a real danger to banks, whether directly or indirectly,” he said.

“The Reserve Bank has taken necessary steps in all these areas. The regulation and supervision of the financial sector and the regulated entities have been suitably strengthened. The regulatory steps include, among other things, the implementation of leverage ratio (June 2019), large exposures framework (June 2019), guidelines on governance in commercial banks (April 2021), guidelines on securitisation of standard assets (September 2021), scale-based regulatory (SBR) framework for NBFCs (October 2021), revised regulatory framework for microfinance (April 2022), Revised regulatory framework (July 2022) for Urban Cooperative Banks (UCBs) and guidelines on digital lending (September 2022),” Das added.

On India’s G20 presidency, Das pointed out that this has come at a time when the country has once again emerged as the fastest growing major economy in the world.

“International confidence on India’s capacity to contribute constructively to reshape the global economic order is rising. The risk of a hard landing has dissipated world over, even as the pace of disinflation remains less than desirable. Before the cascading effects of geo-economic fragmentation further dampen the global outlook, rebuilding trust through cooperation and recommitting to multilateral frameworks for addressing critical global challenges has become essential,” he said.

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CBUAE, RBI sign MoU to promote innovation

Central Bank of the UAE, CBUAE

Under the MoU, the two central banks will collaborate on various emerging areas of FinTech …reports Asian Lite News

The Central Bank of the United Arab Emirates (CBUAE) and the Reserve Bank of India (RBI) signed a Memorandum of Understanding (MoU) in Abu Dhabi, to enhance cooperation and jointly enable innovation in financial products and services.

Under the MoU, the two central banks will collaborate on various emerging areas of FinTech especially Central Bank Digital Currencies (CBDCs) and explore interoperability between the CBDCs of CBUAE and RBI.

CBUAE and RBI will jointly conduct proof-of-concept (PoC) and pilot(s) of bilateral CBDC bridge to facilitate cross-border CBDC transactions of remittances and trade. The MoU also includes technical collaboration and knowledge sharing on matters related to Fintech and financial products and services, such as emerging trends, regulations and policies.

The MoU is expected to foster joint experimentation with regard to CBDCs and facilitate other digital innovation initiatives between the CBUAE and the RBI. This bilateral engagement of testing cross-border use case of CBDCs is expected to reduce costs, increase efficiency of cross border transactions and further the economic ties between India and UAE.

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RBI extends UPI for inbound travellers from G20 nations

Travellers or non-resident Indians visiting India can now experience the convenience of UPI payments at over five crore merchant outlets across India, that accept QR Code-based UPI payments…reports Asian Lite News

The Reserve Bank of India (RBI) announced on Tuesday that it had extended Unified Payments Interface (UPI) for in-bound travellers from G20 nations to make local payments using while they are in India. This facility is made available from today.

RBI said in a release, “To start with, it is available to travelers from G20 countries, at select international airports (Bengaluru, Mumbai and New Delhi).” Eligible travellers would be issued prepaid payment instruments (PPI) wallets linked to UPI for making payments at merchant outlets.

Delegates from G20 countries can also avail this facility at various meeting venues. To begin with, ICICI Bank, IDFC First Bank and two non-bank PPI issuers, Pine Labs Private Limited and Transcorp International Limited will issue UPI linked wallets.

Earlier, on February 8, the apex bank announced a facility to enable all inbound travellers visiting India to make local payments using UPI while they are in India.

Travellers or non-resident Indians visiting India can now experience the convenience of UPI payments at over five crore merchant outlets across India, that accept QR Code-based UPI payments.

Prepaid payment instruments’ examples include smart cards, online accounts, online wallets, stripe cards, paper vouchers, etc. The primary objective of these instruments is to get access to the amount already prepaid. (ANI)

Kashmir gets road upgradation before G20 meet

The Divisional Commissioner of Kashmir, Vijay Kumar Bidhuri, on Tuesday reviewed the status of the degradation work of main roads from the Srinagar Airport to Foreshore Road in the Union Territory and stressed on the officers to speed up developmental work to enhance road facade.

Addressing a meeting, the Divisional Commissioner encouraged the officers to speed up the developmental work to enhance road facade by macadamization [a type of road construction], repairing footpaths, removing debris, landscape development of road medians with green trees, and by removing wires and painting at the flyovers amongst others as an attempt of the preparation to host G20 summit. In the meeting, which was also attended by the CEO of the Srinagar Smart City Ltd, Chief Engineer SSCL, SE R&B, and other officers, Bidhuri also reviewed the beautification of IG road, redevelopment of Convent road and Residency road, besides the upgradation of Ghanta Ghar, Moulana Azad Road, Gupkar Junction and the construction of footpath from Dalgate to Nishat etc.

“On the occasion, he also directed officers to initiate the tendering process of pending undertaken projects so that the work shall be completed in a stipulated time,” an official statement said further directing the concerned R&B officers to mobilise men and machinery to continue working through the night hours to meet deadlines.

Notably, the central government’s conduct of one of the G20 meetings in J-K’s Srinagar in 2023 would advocate for the return of peace and security in the Union Territory.

India assumed the G20 presidency on December 1. During its presidency, India will host more than 200 meetings in more than 50 cities across 32 different workstreams. The G20 is an intergovernmental forum of the world’s 20 major developed and developing economies, making it the premier forum for international economic cooperation.

The top event of the G20 leader’s summit is slated to be held in the national capital on September 9 and 10, 2023, while 200 other events will take place in different parts of the country.

It is pertinent to mention that where the scheduled G20 meeting in Srinagar is a big victory for India, it is a major setback for Pakistan as G20 comprises the world’s largest advanced and emerging economies, representing about two-thirds of the world’s population, 85 per cent of global gross domestic product, 80 per cent of global investment and over 75 per cent of global trade.

Pakistan had reacted sharply to the announcement of the G20 meet in Srinagar, which was eventually ignored by the participants.

The delegates would then visit various tourists destination here, including the Dal Lake, Nishat Bagh, Shalimar Bagh, Pahalgam and Gulmarg, and would also experience the culinary delights of the Himalayan range.

The objective of the meeting is to ensure that the visiting delegates experience the “Real Kashmir” that has emerged as one of the fastest-growing regions of the country in three years.

The Higher Education Department will conduct seminars on G20 in the universities and educational institutions across Jammu & Kashmir to make the students aware of the summit’s importance. (ANI)

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RBI hikes repo rate by 25 bps

Reserve Bank Of India

As expected, there was a split in the rate hike decision with four members voting for and two against…reports Asian Lite News

The Reserve Bank of India’s (RBI) Monetary Policy Committee (MPC) on Wednesday hiked the repo rate by 25 basis points to 6.50 per cent.

Wednesday’s MPC meeting is the last one for this fiscal.

The repo rate is the rate at which the RBI lends to the banks.

Announcing the hike, RBI Governor Shaktikanta Das said the MPC decided to hike the policy rate by 25 bps to 6.5 per cent. The MPC also decided to remain focused on withdrawal of accommodation to ensure that inflation remains within the target going forward, while supporting growth.

As expected, there was a split in the rate hike decision with four members voting for and two against.

Dr. Shashanka Bhide, Dr. Rajiv Ranjan, Dr. Michael Debabrata Patra and Das voted in favour of rate hike while Dr. Ashima Goyal and Prof. Jayanth R. Varma voted against.

Similarly, Bhide, Ranjan, Patra and Das voted to remain focused on withdrawal of accommodation to ensure that inflation remains within the target going forward, while Goyal and Varma voted against this part of the resolution.

Das said the 25 bps hike was considered correct at this juncture. It also provides an elbow room to look at the incoming data.

According to Das, after the repo rate hike the standing deposit facility (SDF) rate stands adjusted to 6.25 per cent, and the marginal standing facility (MSF) rate and the Bank Rate to 6.75 per cent.

He said the MPC also decided to keep a vigil on the inflation rate and it remains within the band.

According to him, the outlook for inflation is mixed.

“While prospects for the rabi crop have improved, especially for wheat and oilseeds, risks from adverse weather events remain. The global commodity price outlook, including crude oil, is subject to uncertainties on demand prospects as well as from risks of supply disruptions due to geopolitical tensions. Commodity prices are expected to face upward pressures with the easing of Covid-related mobility restrictions in some parts of the world,” Das said.

The ongoing pass-through of input costs to output prices, especially in services, could continue to exert pressures on core inflation, he added.

With RBI’s survey point to some softening of input cost and output price pressures in manufacturing and considering an average crude oil price (Indian basket) of US$ 95 per barrel, Das said the inflation for the current fiscal 2022-23 will be at 6.5 per cent and for Q4 at 5.7 per cent.

As regards the CPI inflation for next fiscal, that is, 2023-24, assuming a normal monsoon, it is projected at 5.3 per cent

with Q1 at 5 per cent, Q2 5.4 per cent, Q3 5.4 per cent and Q4 5.6 per cent.

Das said the easing of inflation in the last two months was driven by strong deflation in vegetables, which may dissipate with the summer season uptick.

“Headline inflation excluding vegetables has been rising well above the upper tolerance band and may remain elevated, especially with high core inflation pressures. Inflation, therefore, remains a major risk to the outlook,” he added.

On the growth front, Das said the gross domestic product (GDP) is expected to grow at 6.4 per cent during 2023-24 with Q1 growth rate at 7.8 per cent, Q2-6.2 per cent, Q3 6 per cent and Q4 5.8 per cent and the risks are evenly balanced.

The minutes of the MPC’s meeting will be published on February 22.

The next meeting of the MPC is scheduled during April 3, 5 and 6, 2023.

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RBI can argue its case for not curbing inflation

The RBI may also sound out the Central government as to the course of inflation as well as the reasons as to why it may be at the elevated levels…reports Venkatachari Jagannathan

The Reserve Bank of India (RBI) can argue its case strongly with the Central government as to why the inflation was not controlled at 4 per cent, said experts.

The RBI’s Monetary Policy Committee (MPC) will meet on November 3 to discuss what it would tell the Centre as to why it was not able to restrain the inflation.

The RBI may also sound out the Central government as to the course of inflation as well as the reasons as to why it may be at the elevated levels.

In India, the retail inflation rose to 7.41 per cent in September.

Experts were of the view that a combination of global and local (glocal) factors — geopolitical developments, crop production, reduction in crude oil production and the resulting price increase and depreciating rupee — are expected to heat up the prices.

The RBI on its part is trying to contain the inflation by increasing the repo rate — the rate at which it lends to the banks.

The central bank has increased the repo rate by 190 basis points in recent times and the last one was by 50 basis points last month.

“There is a strong case for the RBI arguing that (a) inflation has primarily been caused by supply side shocks with global commodity prices having an impact (b) rupee depreciation has added to imported inflation (c) the RBI on its part was proactive in raising rates even between two policies as it did in May when it saw things were going out of hand post Ukraine war and (d) there have been some measures like increase in goods and services tax (GST) which has added to inflation that was happening in parallel,” Madan Sabnavis, Chief Economist, Bank of Baroda, told.

“Therefore, there is an explanation as to why inflation was high. But the central bank has been acting to bring it down through the instruments it has like repo and CRR (cash reserve ratio). It has succeeded in lowering surplus liquidity too which can be proved,” Sabnavis added.

“The RBI can say that inflation is due to supply side constraints a nd excess liquidity,” says K. Ramasubramanian, retired General Manager, RBI, and a forex advisor.

“In addition, there was a huge sale of forex almost Rs 3 lakh crore to maintain the exchange rate. Inflation which was more than the target continuously for three quarters is estimated to come around 6 per cent by three more quarters. Interest rates (repo rate) have been increased almost 1.9 per cent. As such the MPC may only be constrained to say that the present steps taken need some more time for having a positive impact to reduce inflation. This is subject to the time inconsistency impact,” he added.

The RBI has scheduled the November 3 meeting of MPC under Section 45ZN of the RBI Act. As per the said Section, when the RBI fails to meet the inflation target, it shall send a report to the central government listing: (a) the reasons for failure to achieve the inflation target; (b) remedial actions proposed to be taken by it; and (c) an estimate of the time-period within which the inflation target shall be achieved pursuant to timely implementation of proposed remedial actions.

As per the RBI Act the MPC shall determine the Policy Rate required to achieve the inflation target.

Further as per the RBI Act, the central bank shall organise at least four meetings of the MPC in a year.

Announcing the credit policy RBI Governor Shaktikanta Das said: “There are also upside risks to food prices. Cereal price pressure is spreading from wheat to rice due to the likely lower kharif paddy production.

“The lower sowing for kharif pulses could also cause some pressures. The delayed withdrawal of monsoon and intense rain spells in various regions have already started to impact vegetable prices, especially tomatoes. These risks to food inflation could have an adverse impact on inflation expectations.”

According to the RBI Governor, the Indian basket crude oil price was around $104 per barrel in H1:2022-23 and expected to be around $100 per barrel in H2: 2022-23.

“Taking into account these factors, the inflation projection is retained at 6.7 per cent in 2022-23, with Q2 at 7.1 per cent; Q3 at 6.5 per cent; and Q4 at 5.8 per cent, with risks evenly balanced. CPI (consumer price index) inflation is projected to further reduce to 5.0 per cent in Q1:2023-24,” Das said.

However, one has to see the RBI’s prediction as to crude oil prices ($100 per barrel) as the oil producing countries have announced a cut in their production and the international prices going up.

Economists and common man have a different take on the RBI’s expectations on inflation.

“Presently inflation does appear unlikely that it will move downwards for two sets of factors. The increase in oil price and rupee depreciation has potential to increase imported inflation,” Sabnavis had told IANS earlier.

“Second, there have been some shortfalls in kharif production which will mean an increase in prices. Also the late withdrawal of rain has affected vegetable crops and also adversely affected the harvest of rice and oilseeds in some regions.”

The reduction in sown area for rice and pulses during Kharif season is expected to feed inflation in the coming months.

The overall sown acreage for the Kharif season has declined by 0.8 per cent at the end of September 30, 2022 as compared to last year, the Bank of Baroda said in a recent report.

“The inflation rate will be 6.5-7 per cent in FY23 and 5.5-6 per cent in FY24,” Sabnavis had remarked.

The RBI Governor had said the communication with the central government is a privileged one and it will not made public by the Bank.

Das also said there no legal stipulation on the frequency of the communication between RBI and the government.

He had earlier said the inflation rate is expected to come down to four per cent in two years time. There are many uncertainties.

The RBI has pegged the inflation rate at 6.7 per cent for FY23

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RBI to soon release digital currency

The digital currency will be freely convertible against commercial bank money and cash. It will be a fungible legal tender for which holders need not have a bank account…reports Asian Lite News

The apex bank of India — Reserve Bank of India (RBI) — said it will soon commence pilot launch of digital version of Indian currency Rupee for specific use cases.

It has also released a concept note on Central Bank Digital Currency (CBDC) that aims to create awareness about such currencies in general and the planned features of the Digital Rupee in particular, the RBI said in an official communication.

The RBI concept note states that the central bank digital currency is a sovereign currency issued by the central banks in alignment with the monetary policy. It will appear as a liability on the central bank’s balance sheet.

“The concept note also discusses key considerations such as technology and design choices, possible uses of the digital rupee, and issuance mechanisms, among others,” the RBI said in a statement.

According to the concept note, the digital currency must be accepted as a medium of payment, legal tender and a safe store of value by all citizens, enterprises and government agencies.

The digital currency will be freely convertible against commercial bank money and cash. It will be a fungible legal tender for which holders need not have a bank account.

In the Union Budget for 2022-23, the finance minister had said the RBI would roll out a digital equivalent to the rupee in the current financial year.

As the extent and scope of such pilot launches expand, the RBI will continue to communicate about the specific features and benefits of digital rupee, from time to time, it said in a statement.

The Digital Rupee is expected to lower the cost of issuance of money and transactions. Faced by a dwindling usage of paper currency, the central banks are now seeking to popularise a more acceptable electronic form of currency.

The central bank’s digital currency will be supported by the state-of-art payment systems of India that are affordable, accessible, convenient, safe and secure. The apex bank’s concept note stated that the e-rupee will bolster India’s digital economy, enhance financial inclusion and make the monetary and payment systems more efficient.

“The e-rupee will provide an additional option to the currently available forms of money. It is substantially not different from banknotes, but being digital it is likely to be easier, faster and cheaper. It also has all the transactional benefits of other forms of digital money,” the RBI said in the statement.

The concept note stated that digital currency should be developed as a platform which is highly scaleable to support very high volume and rate of transactions without performance degradation. It should be robust to ensure stability of financial ecosystem and have tamper-proof access control protocols and cryptography for safety of data among other features.

The central bank digital currency is expected to generate huge sets of data in real time. “After factoring in the concerns related to anonymity, appropriate analytics of Big Data generated from CBDC can assist in evidence-based policy making. It may also become a rich data source for service providers for financial product insights,” the concept note stated.

Stressing on consumer protection, RBI calls it an important pillar of financial stability. The central bank has called for a consumer protection framework which should consider the variations in the digital literacy of the consumers and ways to increase consumer understanding and transparency.

The RBI called for a seamless access to digital currency by consumers. It also emphasised on an effective and efficient resolution of customer grievances through a robust mechanism.

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Fintech, a force multiplier: RBI Guv

This is the third edition of the Global Fintech Fest, and the first one where domain experts are participating from across the globe in-person and virtually…reports Asian Lite News

RBI Governor Shaktikanta Das in his address to the Global Fintech Fest (GFF) 2022 marked the theme of his talk as Fintech as a Force Multiplier.

“Technology, innovation and fintech are working in tandem and contributing to the dynamism of the sector. In our journey towards higher level of sustainable development and financial inclusion, these forces morphed into force multipliers,” Das said.

“We see lot of opportunities not only for enhancing the scope and depth of all that is happening in the fintech sector, but also the way it can deepen financial inclusion and enhance its footprint in the journey of our country towards 2047. I think there is a lot of potential and if the regulator and the fintech players work together, we can create several milestones in our journey towards India at 2047,” he explained.

“The next decade of finance will be more focused on two central themes – sustainable development and technology-led innovations transforming the lives of the common people,” Das added.

“The total number of broadband internet users in India stood at 80.7 crore at the end of July 2022. Similarly, with more than 46.5 crore Jan Dhan accounts and 120 crore mobile connections, new opportunities are opening up for implementing innovative ways of integration and development. This is reflected in the emergence of 100 unicorns in the country, with a record of 44 unicorns established only during the last year,” he underlined while talking about the exponential growth India has witnessed in recent years.

The RBI Governor was joined by Kris Gopalakrishnan, Chairman, GFF 2022 Advisory Board, Chairman, Axilor Ventures, and Co-founder, Infosys.

Organised and presented by the Department of Economic Affairs, Reserve Bank of India, International Financial Services Centres Authority (IFSCA), National Payments Council of India, and Fintech Convergence Council (FCC), the Global Fintech Fest aims to demonstrate India’s fintech ecosystem to the world, creating solutions for six billion global consumers and driving financial inclusion adoption for the 1.4 billion unbanked adults at an even higher pace.

This is the third edition of the Global Fintech Fest, and the first one where domain experts are participating from across the globe in-person and virtually.

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