Page 15 - Banking Finance May 2021

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UPI transactions rise 19% India rolls back decision to Non-banking finance
month-on-month, hits Rs. cut interest rates on small companies seek easier

5.05 lakh crore in March savings rules for cancelling NACH
The value of transactions through the India has reversed the decision to mandates
Unified Payments Interface rose 19% lower interest rates by up to 1.1% on Non-banking finance companies,
month-on-month to Rs. 5.05 lakh its state-backed small savings particularly those with an asset base of
crore. According to data released by programme, Finance Minister Nirmala less than Rs. 500 crore, have sought
National Payments Corporation of Sitharaman said recently, adding that relaxation in rules for cancelling
India on Twitter, the volumes rose by orders to cut rates to a near five- National Automated Clearing House
an equivalent amount to 2.73 billion. decade low were issued because of an mandates by their customers. The
Growth in UPI volumes has been driven oversight. Finance Industry Development Council
over the last year by burgeoning QR- Small savings are the lifeblood of India's has written to the National Payments
based acceptance points across the low and middle-income groups, and Corporation of India "to provide
country. The value of peer-to- cutting interest rates would have dealt cancellation facility through simpler
merchant transactions through UPI a severe blow to hundreds of millions means such as WhatsApp and SMS" in
has exceeded that of transactions
of Indians at a time when many have a secure manner.
made using credit cards or debit cards
lost jobs and faced pay cuts amid the In a letter to the NPCI MD & CEO, Dilip
at points of sale. Such P2M pandemic. Ms Sitharaman tweeted, Asbe, FIDC has stated this would
transactions have benefited from the
"India shall continue to be at the rates enable customers to cancel NACH
zero-merchant discount rate regime.
which existed in the last quarter of mandates in a simple manner rather
Innovations in merchant alert systems 2020-2021, i.e., rates that prevailed as than having to access the companies'
have also done a lot to boost
of March 2021." websites to carry out such a request.
merchant transactions over the
channel. "Orders issued by oversight shall be It has also requested NPCI to allow
withdrawn," she added. small NBFCs (with an asset base of less
The next phase of growth in UPI
transactions could be driven by A day earlier, on the last day of the than Rs. 500 crore - which are
innovations that are likely to be 2020/21 financial year, India had cut categorised by the RBI as non-
ushered in by the New Umbrella Entity interest rates on small savings by up to systemically important) to provide such
(NUE) licensees. NPCI is itself working 1.1% for the June quarter. The a facility on a 'best effort' basis and not
on developing a platform for feature government reviews interest rates on as a mandate.
phones which, too, could have a role government-backed schemes every "Most of our members are small NBFCs
in driving growth. quarter. that operate in limited geographies

BANKING FINANCE | MAY | 2021 | 15