Diwali Shoppers Break UPI Records
October saw Indians take to digital payments like never before – UPI transactions surged to a record with 7.3 billion transactions worth INR 2.11 trillion and as Dilip Asbe, MD CEO of NPCI highlighted, payments at merchant outlets accounted for more than half transactions for the first time, and QR codes have reached the smallest of Indian towns with less than 5000 population. Clearly people are making a behavioural shift in payments away from cash, and the latest SBI EcoWrap showed that for the first time in 20 years, currency in circulation declined during the Diwali week. While the phenomenal growth in digital payments has come because of government push, policy still favours free UPI transactions. Meanwhile, a study by Ashish Das (IIT Bombay) shows that banks are limiting the number of free UPI debits from savings accounts, with per transaction charges kicking in over the free limit, in a bid to recover operational costs on infrastructure. Vatsala Shreeti (BIS) and Mansi Kedia (ICRIER) have set out the issues at stake in an op-ed and given the example of Brazil where there is no price regulation and charges on PIX, a system comparable to UPI, are relatively low; they advocate comprehensive data on costing and user preferences including analysis of competition in the sector to determine the right way forward.
Last month the Prime Minister dedicated 75 Digital Banking Units across 75 districts to the nation. In an interview to BQPrime, Sumita Kale (ICFI) noted that this is a great initiative in terms of its direction and the statement it makes, yet these units might not work for all types of customers in India. Expanding financial inclusion further is likely to require a more granular understanding of impediments and a further strengthening of the business correspondent network. In this context, the Department of Financial Services’ pilot Financial Inclusion campaign at Gram Panchayat Level will be more critical to plug the remaining gaps on the ground.
The landscape for digital payments is changing rapidly in India. The RBI released a concept note on Central Bank Digital Currency (CBDC) last month and announced the operationalisation of CBDC-Wholesale pilot. The launch of the wholesale pilot has gone smoothly and a pilot for retail is set to be operationalised within a month amongst a closed user groups in select locations. As Tamal Bandopadhyay noted, CBDC is not set to make for a cashless economy, but what it will do is reduce significantly the costs of the banking system on printing money, its distribution and cleaning up soiled notes. The cost of remittances will also get considerably cheaper in cross-border transactions. All in all, India is moving rapidly towards a more efficient payments system.
There is some good news on the gender front as Finance Ministry is moving to increase the share of women business correspondents from the current 8-10% to at least 30%. Also as India takes on the G20 Presidency in December, womens’ economic empowerment and entrepreneurship have been identified as a key focus area. Debosmita Sarkar and Sunaina Kumar identify priorities for India in their paper that analyses the impact of the Jan Dhan Yojana and the MUDRA Yojana on women’s financial inclusion.
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M. Rajeshwar Rao, Deputy Governor, Reserve Bank of India spoke on November 04, 2022 at the launch of MFIN’s India Microfinance Review, reiterating that customer protection lies at the core of microfinance regulation.
Abhishek Sharma interviewed Hardika Shah, Founder CEO Kinara Capital on the credit gap for women-led MSMEs.
Insurance Regulatory and Development Authority of India Chairman Debasish Panda announced that Bima Sugam, a one-stop shop for policy sales, renewals, and claims settlements is on the cards.
Priyadarshini Ganesan, Sowmini G Prasad and Misha Sharma from Dvara Research summarised the results from a study conducted to understand if information disclosures can influence life insurance purchase decisions for low-income households.
Leora Klapper and Pia Roman Tayag, CFI Accion, have examined what can be done to improve the financial resilience and well-being of adults in developing economies.
Shreya Garg and Shehnaz Ahmed from Vidhi Centre for Legal Policy have written a paper assessing the impact of PMGKY cash transfers and use of financial services by women during the pandemic.
Eric Duflos and Juan Carlos Izaguirre from CGAP looked at the results of the Global Findex 2021 through a customer protection lens.
Indradeep Ghosh, Dvara Research wrote in ThePrint, making a crucial point on changing the narrative in finance in India.
As part of the Financial Inclusion Week 2022 organised by Centre for Financial Inclusion Accion, listen into the recording of the panel discussion on Last Mile Sustainability: Deepening Financial Inclusion in India". Sumita Kale of Indicus Centre for Financial Inclusion (ICFI), Abhinav Sinha from EKO Financial Services and Sunil Kulkarni from Business Correspondent Federation of India, (BCFI). The discussion was moderated by Varun Aggarwal, Chalo Network.
Abhishek Ray from JSA wrote a comprehensive piece on the RBI regulation of fintech with an interesting framework and timeline of the regulatory landscape.
Alok Misra and Vinay Kumar Singh, Microfinance Institutions Network (MFIN) have written on the lessons that microfinance digitalization have for digital lending to low income customers, by deploying an optimum mix of technology and human touch.
Emilio Hernandez-Hernandez and Xavier Faz, CGAP have written a comprehensive essay on two “stubbornly unresolved debates” on microfinance.
Chetan Thathoo has a piece in Inc42 Media on National Payments Corporation Of India (NPCI)'s latest initiative - NPCI Partner Program (NPP), a collaborative initiative to scale up strategic partnerships with payments-oriented fintech players.
Pension Fund Regulatory and Development Authority (PFRDA) permitted Central Record Keeping Agency (CRA) to share NPS data of subscribers with Account Aggregators (AA).