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Vivek

May 27 · 5 min read

RBI rolls out digital-heavy agenda for 2022-23

To implement norms on prudential lending by digital platforms, the RBI said it would have to work with other agencies, including the government. The central bank had in November issued a consultation paper on lending through online platforms.

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Source: financialexpress

By Shashank Didmishe

The Reserve Bank of India (RBI) has announced it will introduce a central bank digital currency (CBDC), in collaboration with other agencies, including the government.

To implement norms on prudential lending by digital platforms, the RBI said it would have to work with other agencies, including the government. The central bank had in November issued a consultation paper on lending through online platforms.

The recommendations include restricting balance-sheet lending by digital lending apps only to the regulated entities, rules to prevent illegal digital lending activities, and treating ‘Buy Now Pay Later(BNPL) as part of balance-sheet lending.

The Reserve Bank of India (RBI) is planning to adopt a graded approach to the roll-out of its own digital currency, the report said.

The design of the central bank's digital currency needs to be in line with the stated objectives of monetary policy, financial stability, and efficient operations of currency and payment systems, it added. The RBI will also facilitate the setting up of 75 digital banking units in 75 districts by July 2022, according to the Indian Banks Association.

All public sector banks, 10 private banks, and a small finance bank are working to operationalize digital banks by this deadline.

In order to sensitize banks and other financial institutions to the risks related to climate change, the Reserve Bank of India is set to issue a consultative paper on the subject.

The paper will familiarize banks with international practices and enable the adoption of a strategic approach to climate-related risks.

In January 2022, an RBI-mandated sustainable finance group did a survey with public sector banks (PSBs) and private and foreign banks. The central bank will include the feedback in the paper on climate change risk.

Payment systems in India are expected to strengthen momentum in the next five years, with the implementation of Unified Payments Interface (UPI) and PayNow linkages.

The RBI has initiated a process for a geo-tagging framework that will provide information about the locations of existing payment touchpoints.

Banks and other payments-related firms can get insight into regional penetration of digital payments by monitoring infrastructure density across different locations.

The central bank has come out with a document called Vision 2025: Formulation and Release of Payment System Vision 2025, which describes its vision for the future of payments ecosystems in India.

The regulator will also upgrade e-Kuber based on newer technologies with wider flexibility and stability.

It is taking appropriate measures for further popularisation of the RBI Retail Direct Scheme for improving its overall reach for suitable retail investors. The aim is to broaden the government securities market by increasing retail participation.

The RBI is expected to issue further draft guidelines on the other risk categories and output floor by June 2022, while the final guidelines will be issued by September 2022, the report said.

The Reserve Bank of India (RBI) is taking measures to further popularise the RBI Retail Direct Scheme, in order to increase retail participation in the government securities market.

The RBI is expected to issue draft guidelines on other risk categories and an output floor by June 2022, while issuing final guidelines by September 2022, according to a report released by the State Bank of India.