Shaktikanta Das puts forward the linking of UPI with Japan’s fast payment system, getting a stronger perch

Central banker foresees developed status by 2047 amid global challenges as well as maintains vigilance with active disinflationary monetary policy for growth support

This Thursday, the governor of the Reserve Bank of India, Shaktikanta Das, provided an optimistic outlook for the nation’s economic trajectory. However, he underscored the subtle nature of the journey towards achieving prosperity, acknowledging potential challenges along the way.

“Linkage of fast payment systems of India and Japan may also be explored to leverage the power of fintech and make cross-border payments more efficient and less costly,” RBI governor Shaktikanta Das said at the Symposium on Indian Economy 2023 in Tokyo.

In February, the UPI-PayNow connection for cross-border remittances between India and Singapore was initiated. Ongoing efforts are underway to establish related linkages with various other countries.

In September, Deputy Governor T. Rabi Sankar of the Reserve Bank of India announced that in July, the Indian central bank has formalized a memorandum of understanding with the central bank of the United Arab Emirates, specifically pertaining to the establishment of mutual connectivity for payments and messaging systems.

It has also been highlighted that despite remittances from Japan constituting a minor share, specifically 0.2%, of India’s overall inward remittance receipts, the expenses associated with transmitting funds from Japan to India through banking channels significantly exceed the targeted threshold outlined by the United Nations Sustainable Development Goals (UN-SDG), which stands at 3%, according to the calculations derived from data sourced from the World Bank’s Remittance Prices Worldwide database.

Reserve Bank of India Governor Das anticipates a further amplification of India’s contribution to global growth in the foreseeable future, as the world’s fifth-largest economy and the most populous country, India is emerging as a pivotal driver of global growth, particularly at a time when the Chinese economy faces challenges.

Presently, India accounts for approximately 15% of worldwide economic growth and is anticipated to ascend to the position of the third-largest economy by 2027, as per projections from the International Monetary Fund.

“It is a matter of satisfaction that the Indian economy has sailed through the turbulent waters smoothly during the recent years. Driven by its inherent dynamism and supported by a prudent policy mix, growth is getting a stronger foothold while inflation is also coming under control,” Das said.

The robust performance of India’s economy can be attributed significantly to meticulously calibrated, focused, and targeted monetary and fiscal responses implemented since the onset of the pandemic, according to Governor Das.

Additionally, he highlighted the policy emphasis on fortifying macroeconomic fundamentals and the sustained commitment to structural reforms, distinguishing India in terms of its growth outcomes.

Governor Das highlighted the transformative impact of UPI in catalyzing the fintech revolution in India, underscoring its remarkable success as an international benchmark. Notably, transaction volumes on UPI surpassed 10 billion, reaching 10.6 billion in September, as indicated by data from the National Payments Corporation of India (NPCI).

“Its ability to instantly transfer money between bank accounts through mobile applications has transformed the way people make digital transactions. The interoperability of UPI across banks and payment systems has created a unified payment ecosystem,” he said.