Page 11 - Banking Finance November 2022

RBI CORNER

linking credit cards with Unified Pay- The committee also decided to remain "The DBUs will augment our efforts to
ments Interface (UPI) and RuPay credit focused on withdrawing "accommoda- promote financial inclusion by provid-
cards, and in all probability the central tion", which was supported by all ex- ing banking services in a paperless, ef-
bank will allow the same for other card cept External Member Jayanth Varma. ficient, safe and secure environment.
networks such as Visa and Mastercard, The specific financial services to be pro-
While the policy statement was seen
too. vided by the DBUs include, among
as dovish, RBI Governor Shaktikanta
Speaking at the Global Fintech Fest Das alluded to a third major shock - other things, savings, credit, invest-
ment and insurance," said Das.
2022, Vivek Deep, executive director, the other two being the pandemic and
RBI, said, "We have started with RuPay Russia-Ukraine war - which is aggres- This could be a major relief to micro,
cards. But if you see the vision docu- sive monetary policy actions by devel- small and medium enterprises.
ment of our department, the idea is to oped economies.
"On the credit delivery front, to start
generally link credit cards with UPI.
"The world is in the eye of a new storm with, the DBUs will provide end-to-end
This we believe has the potential to be
… The recent sharp rate hikes and for- digital processing of small ticket retail
a game changer in this field. This will
ward guidance about further big rate and MSME loans, starting from online
enhance the benefit of credit and UPI
hikes have caused tightening of finan- applications to disbursals. The DBUs
to a large number of populations." In
cial conditions, extreme volatility and will also provide services related to
his monetary policy address in June this
risk aversion … There is nervousness in certain identified government-spon-
year, the RBI governor Shakti-kanta
financial markets with potential conse- sored schemes," said Das.
Das had said, "To begin with, the
quences for the real economy and fi-
Rupay credit cards will be linked to the
nancial stability," Das said, adding that Banks hike MCLRs, repo-
UPI platform. This will provide addi-
despite this unsettling global environ-
tional convenience to users and en- linked lending rates post
ment, the Indian economy continued
hance the scope of digital payments."
to be resilient. RBI rate action
There was lack of clarity on whether
Joining peer lenders, SBI, Kotak
the RBI will extend this facility to credit
DBUs to boost RBI's finan- Mahindra Bank and Federal Bank are
cards of other card networks, such as
the latest in the list to revise their
Visa, Mastercard, etc. cial inclusion efforts: Das
marginal cost of funds based lending
The Reserve Bank of India (RBI) is fo- rates (MCLRs) in addition to hikes in
RBI raises repo rate by 50 cused on facilitating technology and repo-linked rates from early October.
innovation in the banking sector for the
bps to 3-year high Following a hike in repo rate by the
benefit of taking financial services to
Reserve Bank of India on September 30
The six-member Monetary Policy Com-
the masses, Governor Shaktikanta Das
by 50 basis points to 5.90%, banks
mittee (MPC) of the RBI has decided
said.
to increase the policy repo rate by 50 raised their repo-linked lending rates
"The establishment of DBUs (Digital by a similar margin. Gradually, they
basis points (bps) to 5.9 per cent -
Banking Units) is a step to further aug- also raised the marginal cost of funds
which is largely on expected lines - as
ment the digital infrastructure in the based lending rates.
inflation continues to stay above 6 per
cent, the upper level of its tolerance country," Governor Das said at the The country's largest lender State
launch of 75 DBUs to mark 75 years of
band, for the past eight months. Bank of India (SBI) has revised the
independence. "This will act as an en- MCLR for the benchmark one-year
Except External Member Ashima
abler in the digital ecosystem and will tenor to 7.95%, up by 25 basis points
Goyal, who voted for a 35-basis point
improve customer experience by facili- from previous rate, which came to ef-
hike, the rest were in favour of what
tating seamless banking transactions." fect from October 15, 2022.
the MPC settled for. Since May this
year, the repo rate has been increased Finance Minister Nirmala Sitharaman The one-year tenor MCLR is the rate
by 190 bps to 5.9 per cent, a three- in her budget speech announced the against which most of the consumer
year high. setting up of these branches. loans are tied to.
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