By K R Sudhaman
The G20 summit on September 9-10 could not have come at any time better to highlight India’s great strides in digitalization, that has revolutionized payment system in the country and provided common man easy and quick solutions to his financial problems. With India taking the lead in becoming the voice of voiceless south in such fora that accounted for 85 per cent of the world GDP, an opportunity has come New Delhi’s way particularly from African countries and other developing economies to sell its transformational and cost-effective digital payment systems, produced in house.
India’s central bank, Reserve Bank of India has done pioneering work in digitalization of the payment systems that has revolutionized in money transfer in the country especially to needy farmers, poor, migrant labour and lately lending to micro, small and medium enterprises.
Reserve Bank of India has set up a pavilion at the G20 summit at Pragati Maidan in Delhi where it is not only exhibiting but also providing live demonstration to the delegates. RBI is showcasing five digital platforms that it has adopted successfully in the country.
They are Public Tech Platform (PTP) for frictionless credit, Central Bank Digital Currency, Digital Payments initiative – that is UPI One World, Rupay on the go, an alternative to Visa and Mastercard secured payment systems and lastly Bharat Bill Payment System (BBPS) for cross border bill payment.
These digital platforms on which tremendous work has been done since the launch of AADHAR unique digital identification in 2012, provided easy, affordable and quick solutions to payment woes of common man in the country.
Now it is being extended to take care of lending to MSMEs, which took a severe hit in the country after demonetization and Covid. There are over 60 million MSMEs in the country. They accounted for size-able employment and manufacturing output in the country. MSMEs, are largely dependent on informal lending, which dried up after demonetization. The situation worsened with the abrupt closure of production during Covid. The digital platforms have solutions to some of their financial and marketing woes.
Public Tech Platform has ensured that loans to farmers under the Kisan Credit Card (KCC) are provided frictionless and through digital mode plugging all leakages. KCC has been one of the predominant modes of financing farmers in India since 1998 to provide revolving credit. However, the manual process for such loans has frictions, such as high turn-around time (TAT) of 2-4 weeks, operational cost/out of pocket expenses, and multiple visits to branches and related opportunity cost.
Digitalisation of the KCC, after successful pilot projects in different parts of the country, is now being extended to the whole of India. Now this platform is being extended to Dairy Loans, MSME loans without collateral, personal and home loans, especially in rural India. Several banks are already participating in this transformational technological platform. This had potential to extend more types of loans. The platform unlocks the value of digitised date to channel frictionless credit for all segments of loans.
The RBI has already launched digital currency on a pilot basis and based on the feedback, necessary steps would be taken for introduction of constitutional amendment for this purpose. When introduced this will provide risk less currency and drastically reduce operational cost in holding physical currency. This will also help in checking corruption and illegal activities.
Bharat Bill Payment System launched in 2014 as an integrated bill payment system platform that offers customers an anytime and anywhere bill payment experience for a variety of services, including electricity, water, gas, telephone, DTH, and insurance. Payments can be made through a network of agents, enabling multiple payment modes, with instant confirmation of payment. This aligns with India’s push towards enhancing digital payments, financial inclusion, and promoting efficient and secure transaction systems. At present, there are more than 21,000 billers (the service providers who collect payments from customers) spread across all categories of recurring payments that have been on-boarded onto the platform.
With BBPS cross-border bill payment, a facility has been extended to Non-Resident Indians (NRIs) to undertake utility, education and other bill payments on behalf of their families in India, even as NRIs are residing in other countries. BBPS is enabled to accept cross-border inward payments from the UAE. Bharat Bill Pay’s Cross Border Bill Payment solution enables payment of bills seamlessly with absolute security from any corner of the world. G20 offered an opportunity for India to explore this system to more countries.
Launched in 2016, Unified Payments interface (UPI) One World is a mobile-based, 365x24x7 fast payment system which enables users to send / receive money and make person to person (P2P) as well as person to merchant (P2M) payments instantly through a Virtual Payment Address (VPA), mobile number or by scanning a Quick Response (QR) code. UPI is now one of the most preferred payment solutions in India, with close to ten billion transactions every month.
To enable foreign nationals from G20 countries to have the experience of breezing payments through UPI, UPI One World was launched in February 2023. This facilitates the foreign visitors to take care of their hassle – free and secure payment needs during their stay in India by using UPI. Eligible travellers are 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. One can transact seamlessly with ~50 million merchant outlets across India that accept UPI payments along with various added benefits that include going cashless and ease of expense tracking in UPI One World Mobile Application.
The advantage of these payment systems is that they are much cheaper than the solutions provided by the advanced economies and many of the developing economies could draw lessons from Indian experience to replicate them in their countries. This could be true south-south cooperation to transform life in poor economies. (IPA Service)
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