On Thursday, Reserve Bank of India (RBI) governor Shaktikanta Das proposed the idea of connecting the fast payment platforms of India and Japan to facilitate seamless cross-border transfers.
Highlighting the significant advancements spurred by India’s UPI (unified payments interface), Das expressed the ongoing efforts to link the UPI with the fast payment systems of other nations. Speaking at the Symposium on Indian Economy 2023 in Tokyo, he suggested exploring the linkage of India and Japan’s fast payment systems to harness fintech’s capabilities, aiming to enhance the efficiency and reduce the cost of cross-border payments.
In March, Japan’s digital minister, Kono Taro, had indicated to Mint that Japan would consider such linkages if the country adopts UPI. A footnote in the text of Das’s speech, uploaded by RBI, mentioned the launch of the UPI-PayNow linkage for cross-border remittances between India and Singapore in February 2023, with ongoing efforts for similar linkages with several other countries.
The speech also highlighted that although remittances from Japan constitute only 0.2% of India’s total inward remittance receipts, the cost of sending remittances from Japan to India through banks exceeds the United Nations Sustainable Development Goals (UN-SDG) target of 3%, as per the World Bank’s Remittance Prices Worldwide database.
Das emphasized the transformative impact of fintech on traditional financial services, making them faster, more cost-effective, and accessible. India currently boasts the world’s third-largest fintech ecosystem in terms of the number of fintechs operating, projected to generate around $200 billion in revenue by 2030, contributing approximately 13% to the global fintech industry’s total revenue.
He highlighted the Indian model of digitization, where the government and the public sector lead in building infrastructure, complemented by innovative products from private sector fintech firms and startups.
Das lauded the role of UPI in India’s fintech revolution, with transaction volumes surpassing 10 billion, standing at 10.6 billion in September, according to data from the National Payments Corporation of India (NPCI). While acknowledging the positive impact of financial innovation on payment ease and cost reduction, Das cautioned about the associated risks and challenges to the financial system, emphasizing RBI’s dual role as a promoter of innovation and a regulator focused on ensuring a well-regulated ecosystem addressing systemic risks and challenges.