The Reserve Bank of India (RBI) has announced a slew of policy decisions covering the country’s repo rate, payment systems, financial markets, and the regulation of stressed assets, which are expected to help various stakeholders, including the general consumers.

Concluding its three-day monetary policy committee (MPC) meeting on Thursday, RBI made several important observations concerning the state of the Indian economy.

It noted that while headline inflation has been in a downward trajectory globally, it is still above the comfort level, and RBI will continue to monitor the situation closely.

The MPC has yet again kept the repo rate unchanged at 6.50 per cent, stressing that despite softening in the inflation, it will likely remain above its target through FY23-24.

Exuding confidence in the progress of the economy, RBI Governor Shaktikanta Das, in a press statement, said that the “domestic macroeconomic fundamentals are strengthening”, with economic activity exhibiting resilience and inflation moderating. Das said, “The current account deficit has narrowed, and the foreign exchange reserves are comfortable”.

Listing several positive developments, the governor said, “the banking system remains stable and resilient”, credit growth has been robust, and the “domestic financial markets have evolved in an orderly manner”, even as the fiscal consolidation continued.

Key Policy Announcements

E-RUPI Vouchers:

Besides announcing its stand on the repo rate, RBI issued several policy directives, such as expanding the scope of e- RUPI vouchers, streamlining the processes for the Bharat Bill Payment System and membership criteria, and issuing and accepting RuPay Cards globally.

E- RUPI, a digital voucher launched in August 2021, is issued by banks on behalf of the governments and sometimes for corporates. As part of the changes, it has now permitted non-bank Prepaid Payment Instrument (PPI) issuers to issue these vouchers to the beneficiaries.

RBI is soon expected to modify other aspects, like reloading vouchers, authentication processes, issuance limits, etc., to facilitate using e-RUPI coupons.

Says Rahul Jain, CFO at NTT DATA Payment Services India, “Previously, e-RUPI digital vouchers were exclusively issued by banks. However, the new initiative allows non-bank prepaid payment instruments (PPI) issuers to join the fold, thereby providing further momentum into India’s financial technology ecosystem, including UPI and other digital payment solutions. Streamlining the process of issuance and redemption will enhance convenience and accessibility for a broader user base.”

He adds, “This decision holds the promise of facilitating secure, trustworthy, and expedited access to funds, thereby enhancing efficiency. Such advancements are particularly crucial in light of the growing adoption of digital payments.”

Shashank Agarwal, a Delhi High Court advocate, says the decision will ensure the benefits reach a wider range of people. “Soon such vouchers can be issued by issuers like PayTM, Amazon Pay, etc. on behalf of individuals,” he says.

Bharat Bill Payment System:

RBI will further streamline the Bharat Bill Payment System (BBPS) for the ease of the transaction process and the membership criteria for onboarding. It is expected to encourage greater participation and enhance the system’s efficiency.

In December 2022, RBI expanded its scope to include all categories of payments and collections and facilitate inbound cross-border bill payments. BBPS, operated since August 2017, has over 20,500 billers and processes over 9.8 crore transactions monthly.

Says Jain, “The proposal to streamline the transaction process and membership criteria for BBPS “is a significant development that is set to elevate India’s payment ecosystem, offering customers convenient, transparent, and accessible payment solutions at any time and from anywhere.”

Issuance And Acceptance Of RuPay Cards:

To broaden the payment options for Indian travellers, RBI has allowed Indian banks to issue RuPay Prepaid Forex cards for use at ATMs, PoS machines and online merchants overseas.

Also, the RuPay Debit and Credit and Prepaid Cards would be enabled for issuance in foreign jurisdictions for international use, including India. It is expected to issue further guidelines separately. These cards issued by Indian banks have gained global acceptance through bilateral co-badging arrangements with international partners and card schemes.

Raman Vig, co-founder and CEO of Roopya, an automated Fintech CRM (customer relationship management platform), says, “Banks are now permitted to issue Rupay prepaid forex cards for Indians travelling abroad. These cards will expand the payment options and make transactions in foreign currency easy and quick as the card can be used for various purposes.”

Other Decisions

In addition to the payments systems, RBI issued guidelines for the financial markets and rules concerning stressed assets, digital lending, priority sector lending by the cooperative banks, etc.

For instance, RBI has allowed scheduled commercial banks to set their limits for borrowing in “call and notice money markets” within the prudential limits for inter-bank liabilities.

It has also decided to put in place a regulatory framework for permitting “default loss guarantee” arrangements in digital lending.