RBI Governor Shaktikanta Das (Photo: Bloomberg)
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New age tech firms who are entering the payments ecosystem and coming under the regulatory ambit for the first time have shown reluctance to comply with regulatory instructions at times, citing various reasons like the cost of carrying out system-level changes, said Shaktikanta Das, Governor, Reserve Bank of India (RBI).
Speaking at the Payment System Operators (PSOs) conference in Kochi, Das said, “Since payment system operations are heavily dependent on technology, many new-age tech firms are entering the payments ecosystem. Some of them have come under the regulatory ambit of the Reserve Bank for the first time. At times, some PSOs display unwillingness to comply with regulatory instructions, citing various reasons like "cost of carrying out system-level changes”.
“For long-term success, the PSOs should specifically focus on ensuring good governance and prudent risk management; maintaining robust IT infrastructure with cyber resilience; and putting in place responsive grievance redress mechanism”, Das said. “Efforts may also be made for ensuring wider participation in the framework for offline payments. PSOs may also work on the formation of Self-Regulatory Organisations (SROs) for the greater good of all stakeholders”, he added.
A payment system operator means a legal entity responsible for operating a payment system. The PSO provides services by operating on certain models. They largely outsource their payment and settlement-related activities to various other entities.
Das emphasised that the payments landscape in India has evolved into a state-of-the-art system that is affordable, accessible, convenient, fast, safe and secure. About 1,050 crore retail digital payment transactions worth Rs 51 trillion crore processed in January 2023 stand as testimony to the size and efficiency of India’s digital payments. Further, launched in 2016, India’s flagship payments platform – Unified Payments Interface (UPI) – has revolutionised the payments ecosystem with about 803 crore transactions worth Rs 13 trillion processed in January 2023 alone.
This has resulted in the Digital Payments Index (DPI), developed by the Reserve Bank to gauge the adoption of digital payments in the country, go up from 100 as the base in March 2018 to 377.46 as of September 2022 in a testimony to the long way the country has travelled, Das said.
Complimenting the PSOs for the work done during the pandemic, Das said, during the pandemic, the resilience of payment systems was severely tested. But PSOs rose to the occasion and showed remarkable tenacity.
“Movement of people running the operations of PSOs was restricted, and some of them also fell ill. In such a situation, a spurt in digital payments was observed. Suddenly, many more people started transacting digitally. All our payment systems have proved their worth during the pandemic. Among other things, I remember the efforts taken to tag the payment systems and the stakeholders as ‘essential services’. This was a single-most defining factor which enabled everyone to carry out various transactions unhindered”, he said.
Das also highlighted that PSOs must always be cognisant of the emerging threats of cyber security, data protection, etc., in the wake of the rise in digital payments and put in place suitable risk mitigation measures.
Meanwhile, he also touched upon the fact that having successfully implemented so many payment systems domestically on such a large scale, the time has come to expand our reach overseas. “Our home-grown payment products, UPI and RuPay network, are enhancing their global footprint. The launch of UPI linkage with Singapore’s PayNow is a major step forward. In future, such linkages with other countries will make cross-border payments simple, affordable and real-time. QR code [1] based merchant payments through UPI apps are already enabled in Bhutan, Singapore and UAE. All these would also help project India’s soft power at the global level”, he said.
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First Published: Sat, March 18 2023. 15:30 IST
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