Page 14 - Banking Finance April 2021

ROUNDUP

UPI transactions rise 19% low and middle-income groups, and Bharat Interface for Payments (BHIM)
cutting interest rates would have dealt app in late 2017.
month-on-month, hits Rs. a severe blow to hundreds of millions
5.05 lakh crore in March of Indians at a time when many have India's rising COVID-19
The value of transactions through the lost jobs and faced pay cuts amid the cases risk denting economic
Unified Payments Interface rose 19% pandemic. Ms Sitharaman tweeted,
month-on-month to Rs. 5.05 lakh "India shall continue to be at the rates recovery
crore. According to data released by which existed in the last quarter of A surge in CoronaVirus cases in India
2020-2021, i.e., rates that prevailed as could hurt the economy's recovery
National Payments Corporation of
India on Twitter, the volumes rose by of March 2021." from a rare recession, as curbs to avoid
an equivalent amount to 2.73 billion. "Orders issued by oversight shall be a new wave creates delays in putting
Growth in UPI volumes has been driven withdrawn," she added. millions who lost their jobs to the
pandemic back to work.
over the last year by burgeoning QR- A day earlier, on the last day of the
based acceptance points across the 2020/21 financial year, India had cut Deputy governor Michael Debabrata
country. The value of peer-to- interest rates on small savings by up to Patra wrote in the latest RBI monthly
merchant transactions through UPI 1.1% for the June quarter. The bulletin, "There is a restless urgency in
has exceeded that of transactions government reviews interest rates on the air in India to resume high growth,
made using credit cards or debit cards government-backed schemes every and incoming data point to even
at points of sale. Such P2M quarter. contact-intensive services such as
transactions have benefited from the personal care, recreation and hospitality
zero-merchant discount rate regime. NPCI to introduce new gathering traction." He also added, "But

Innovations in merchant alert systems digital payments product another outbreak, more lockdowns and
have also done a lot to boost restraints, will get unbearable in spite of
merchant transactions over the for feature phones learning from the initial experience of
channel. National Payments Corporation of living with the virus."
India has recently stated that it is
The next phase of growth in UPI working on a digital payments product That is perceived as a cautionary
transactions could be driven by for feature phone users and those who footnote to the RBI's earlier year-on-
innovations that are likely to be are not too comfortable using mobile year growth projection of 26.2% for
ushered in by the New Umbrella Entity apps. the April to June quarter. Kaushik Das,
(NUE) licensees. NPCI is itself working chief India economist at Deutsche Bank
on developing a platform for feature According to Praveena Rai, Chief AG in Mumbai, says if cases continue
phones which, too, could have a role Operating Officer, NPCI, the product is to rise, it will cost the economy and the
in driving growth. at the proof of concept stage right impact on growth will be felt in the
now. This new product will help further April to June quarter.
India rolls back decision to the NPCI's goal of taking digital "Anticipating such a possible uptick in
payments to every Indian.
cut interest rates on small COVID-19 cases, we have already
"We need to move into the market taken relatively lower real GDP growth
savings which is feature phone-based…Moving estimate for April-June of 25.5% year-
India has reversed the decision to towards voice-enabled payments will on-year," he stated, compared to the
lower interest rates by up to 1.1% on be the trend of digital payments that RBI's forecast.
its state-backed small savings we should see and India will be a clear In recent weeks, new COVID-19 cases
programme, Finance Minister Nirmala innovator there,", Rai added.. have shot up across India despite a
Sitharaman said recently, adding that While an SMS-based payment solution rollout of a nationwide vaccination drive.
orders to cut rates to a near five- called Unstructured Supplementary Confirmed infections have risen to more
decade low were issued because of an Service Data (USSD) was launched by than 40,000 daily from a low of about
oversight. NPCI in 2016, its use later got 9,800 in February, pushing the overall

Small savings are the lifeblood of India's discontinued with the launch of the tally past the 11.5 million mark. T

14 | 2021 | APRIL | BANKING FINANCE