This is All India Radio. In the program Spotlight, now we bring you an exclusive interview with T. Rabi Sankar, Deputy Governor RBI on cross-border linkage between India's UPI and Singapore's Pay Now Digital payment systems. Interviewer is Sonu Sood, AIR Correspondent.
Sonu Sood, AIR Correspondent:
Today a cross-border linkage was launched between India's UPI and Singapore's PayNow Digital payment systems. To discuss this Milestone and Global Financial connectivity, we have with us T. Rabi Shankar, Deputy Governor, RBI. Sir, a warm welcome to you from All India Radio.
T. Rabi Sankar, Deputy Governor RBI:
Thank you and thank you for having me.
Sonu Sood, AIR Correspondent:
Can you tell us about the significance of this linkage between UPI and PayNow and its key objectives?
T. Rabi Sankar, Deputy Governor RBI:
Yes. UPI as we know has revolutionized fast payment systems in India. It has increased digitization of transactions, Financial Transactions. It has increased Financial inclusion to a degree that wouldn't have been, you know, imaginable, let's say five years back. Now these benefits, you know, have led to economic efficiency, better productivity. It has led to more economic activity as well. While these benefits have been there, we have been trying to put our focus on two specific areas. One is globalized UPI, in general and Two is, ensure that the UPI benefit also extends to the large Indian diaspora that exists elsewhere. So one of the things we were focusing from the second point of view is to enable remittances with pretty much the same efficiency that UPI provides for domestic transactions.
Therefore, we have been focusing on remittance corridors from where we receive most of the remittance as you would know India's remittances last year was very close to about 100 billion dollars. That's a huge amount. So we are trying to focus on corridors through which these remittances flow mostly, such as the Middle East or you know, US, Europe, Singapore and so on. In this respect, to focus on Singapore, where there are about three and a half lakh Indians which is about nine percent of their population and that is significant. A lot of students are there, a lot of people employed in the financial sector, a lot of businessmen operate in there. In fact, I was told that Singapore has the highest concentration of IIT, IIM graduate of any city in the world. So, so there is a lot of Indian presence you know, they have relatives here, they have friends here, they would like to you know, make transactions. They are making transactions nowadays using the usual banking apps. We want to give them one more facility which would be a Fast Payment Linkage. This fast payment link is therefore, UPI and PayNow linkage, enables that ability for people in India and people in Singapore to make remittances to each other very quickly at cheap prices and safe.
Sonu Sood, AIR Correspondent:
So the government has relentlessly been making efforts to enhance ease of doing the business and ease of living. Especially so for professionals and entrepreneurs not only in India but also persons of Indian origins working abroad. How do you feel you know, this will boost trade between India and Singapore and maybe the other countries when we talk about expanding this initiative?
T. Rabi Sankar, Deputy Governor RBI:
You know, the basic point is ones payments are linked and payment becomes effective or efficient, economic linkages, economic cooperation, economic activities across borders becomes that much of you know, that much easier. You know payment is the essential leg of any economic transaction. This is sort of creating a digital infrastructure which adds immensely to the efficiency of you know, economic productivity in all countries that are linked. A personal remittance, I might like or two person in India might to use this for sending a remittance to son or daughter let's say, studying in Singapore. Similarly a professional giving advice might receive money through this system and the fact that this is fast and this is cheap you know, add efficiency to that particular business. So in addition to ease of living, this also you know, adds to the ease of doing business as well. Going forward in addition to personal remittances, we are also trying to link UPI payments and globalize UPI, so that every other country will have some fast payment system. Either their own or you know, they can use UPI. Many countries are talking to us. If many countries have that then the entire cross-border network of payment can happen on fast payment system. And that progress very well for Global Trade and Global Payments. We believe that there will be benefit generally but they'll definitely be benefit to India and Indians. Apart from the fact that UPI will be Global, it will be a product that others will use. Increased efficiency of you know, economic activity will benefit us.
Sonu Sood, AIR Correspondent:
Can you tell us briefly about the challenges of the overseas remittance ecosystem which necessitated this initiative. And what is the potential and the future roadmap for establishing such cross-border linkages with digital payment systems of other countries across the world?
T. Rabi Sankar, Deputy Governor RBI:
Currently you see, remittances largely, entirely happens to the banking system but you know, through banks. So for example, today if I have to send money to a relative staying somewhere, I have to approach a bank either through the banking software or net banking app or mobile banking app or go to a bank branch and do these transactions. And India is a country which has Capital control. So the bank will have to you know make sure that you're sending it as per capital rules or capital regulations that are in place. All this process involves effort, time and money. Therefore you know, the cost of transactions of international remittances speed of transactions etc, in fact there is you know, globally the effort in G20 is also on how to make cross-border transactions faster and cheaper. There is a study by World Bank I think, which says that you know the average cost of sending a small value transaction is about six percent.
That's very high. The amount of time taken is in days. That's also very high. So, given that, that is the current system and given that, domestically we have fast payment system, which have evolved over the last five to ten years, UPI in India is probably one of the best known examples. But other countries also have them. You know, linking these payment systems gives us the choice of making you know, a transaction which can happen. For example, the UPI, PayNow linkage enables a transaction to happen in less than a minute. And the cost etc will also gradually come notice. It looks cheaper. It is cheaper even now. But as more and more people come in, I'm sure cost efficiencies will also improve. So this global problem of how to ensure that cross-border transactions are cheaper and faster can to a great extent be achieved you know, especially, for small value transactions through such linkages. So that I think is the larger benefit that will accrue to everyone
Sonu Sood, AIR Correspondent:
And Sir, you feel that these linkages enhance transparency in Cross border transactions? And also if you could tell us about the aspect of Safety and Security.
T. Rabi Sankar, Deputy Governor RBI:
Transparency, yes. Safety and Security, one thing you know, about payment systems in general and certainly fast payment systems is that in India we put a lot of emphasis on the fact that transactions must be safe. Users funds must be safe. Incidence of frauds must be minimized. Now towards that and the Reserve Bank has done a lot of things. Two-factor authentication you know and and setting your own limits on cards, many you know, such measures. Very recently, you know, last year we did that Tokenization. All these are measures aimed at ensuring that the customer information data and funds, all of them are safe. Simultaneously, all Financial transactions will have to answer to AML CFT concerns, will have to you know, will have to pass fraud risk management checks and so on. Now we have been focusing on that for all payment systems. All those safety features will also be available since they are available in UPI, they will also be available for cross-border transactions. So in terms of you know, safety, in terms of controlling plots and therefore you know, protecting customers funds, these would be second to no other payment system. They would all be as effective.
Plus, the other point which you raised about transparency, yes, when transactions happen digitally it is the processes are simple, data can be disseminated at almost real time interval, definitely, you know, daily. So people you know, the knowledge, the data that you gained, can be at a much faster frequency compared to other modes of payment. So yes, in terms of transparency as well, this will be such linkages once they become globalized, will play a very significant part.
Sonu Sood, AIR Correspondent:
So on a larger scale, you feel that utilizing a digital transaction histories, they'll be enhanced credit access also, credit access not only for the big entities but also for you know, small business entities.
T. Rabi Sankar, Deputy Governor RBI:
That could very well be there. The normal traditional way of evaluating, if someone can get credit is, understand that person’s finances, understand that person’s standing cash flows and all that. Now to the extent data is available about cash flows, about certain person or a certain business and to the extent that, that data first of all individual data needs to be consent based. It is consent based even in this to the extent that data is available to any lender, the access to credit therefore increases you know, the so-called cash flow based lending and so on. The basic theme here is that the more information that lenders have about a borrower, the less is the information asymmetry and therefore, the more effective will be the flow of credit. So yes, even credit access improved when digital transactions become when data becomes available easily and in a form that can be analyzed.
Sonu Sood, AIR Correspondent:
And Sir, as you mentioned and the Prime Minister also, in his speech, today, said that India has emerged one of the fastest growing Financial Tech ecosystems. UPI in fact has grown by Leaps and Bounds. Its launched 2016. So can you tell us what were the key milestones in this seven year journey of UPI and how has it touched and upgraded the lives of all sections of our society?
T. Rabi Sankar, Deputy Governor RBI:
UPI has made it easy for one to undertake digital transactions to such an extent that people who are otherwise not digital savvy, can use it very easily. All you need to have is a cell phone. So you have vegetable vendors or your milkman or the person who comes and you can actually make payment using UPI. Usual hassle of getting the exact change, all those things are now pretty much a thing of the past. You know, the health is increased digitization and the consequent increase in financial inclusion adds to economic efficiency. Productivity in the system increases. Now, this is the basic UPI protocol that gives you these advantages. Now, given that UPI is an infrastructure, any number of use cases can be built on it and they have been built on it. Those are some of the benefits.
For example, we have recently announced in the policy that UPI will now be accessible to foreigners who come into India and don't even have a bank account in India.It will be implemented very soon. That will probably give a flip to tourism. Similarly, we have launched UPI which can be used even without a smartphone. It can be used through feature phones. Through…through various technologies. UPI these sort of use cases are coming up and becoming popular because of UPI. We are trying to ensure that UPI and you know, system and similar digital payment system can be used in such a way that even in the absence of connectivity, even in the absence of you know, smartphones, payments can actually continue to happen as efficiently. Overall it will increase the efficiency of economic efficiency in India and to the extent we are globalizing UPI, I think, it will increase the economic efficiency for cross-border transaction and trade.
Sonu Sood, AIR Correspondent:
So you feel that India will play a leadership role in helping other countries also adopt similar systems?
T. Rabi Sankar, Deputy Governor RBI:
Well absolutely, absolutely. In fact, you know, India is, I might say, India is recognized as you know, major players globally in terms of its payment systems efficiency, in terms of its fintech ecosystem, in terms of its startup you know, the vibrancy of its startup ecosystem. India already has been recognized for this. The ability of Indians to innovate and come up with innovative solutions to social and economic , you know, problem, is pretty well recognized. So India is in a good place. India has the systems. India has the infrastructure and India has actually shown how that infrastructure can be extended to a population scale. UPI is probably the best example of that. Given all this, there is a lot of interest from many countries outside to use UPI and generally, to you know, either borrow or learn from India's Payment Systems. Many many countries are showing interest. We already have you know, UPI available for merchant payments in UAE, Singapore since 2019. These are Merchant payments. What we enabled today is person to person remittances. We also have them in Bhutan and Nepal. Some other countries are also in the pipeline. So, you know, we would like to play a role where UPI becomes a globally recognized product and you know, enables the benefits of UPI which we are now getting in India to extend those benefits to a global scale.
Sonu Sood, AIR Correspondent:
Thank you so much Sir, for giving us an overview of the Indian digital payment ecosystem and the cross-border linkage which was launched today between India's UPI and Singapore's PayNow.
T. Rabi Sankar, Deputy Governor RBI:
Thank you so much.
This program was produced and presented by the new services division of All India Radio. You can listen to it on our mobile app News On AIR. This program is also available on our YouTube channel News On AIR Official. You may email your opinion about this program at airnsdtalks@gmail.com
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