India’s UPI (unified payments interface) has spurred development of new payment-related products and services, Das said, adding that linking the UPI with fast payment systems of other countries is being undertaken.

“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,” he said at the Symposium on Indian Economy 2023 in Tokyo.

In March, Japan’s digital minister Kono Taro told Mint that Japan would consider linking systems eventually if his country adopts UPI. The UPI-PayNow linkage for cross-border remittances between India and Singapore was launched in February 2023 and other similar linkages with several countries are work in progress, said a footnote in the text of his speech uploaded by RBI.

Another footnote said that although remittances from Japan make up only a small fraction — 0.2% — of the total inward remittance receipts by India, the cost of sending remittances from Japan to India through banks is much higher than the United Nations Sustainable Development Goals (UN-SDG) target of 3%. These estimations, it said, are based on the World Bank’s Remittance Prices Worldwide database.

Das said the advent of fintech has transformed the landscape of traditional financial services, improving the delivery of financial services by making them faster, cheaper, efficient and more accessible.

India, he said, is currently the world’s third largest fintech ecosystem in terms of the number of fintechs operating in India, growing at a robust pace and projected to generate around $200 billion in revenue by 2030. It will contribute to approximately 13% of the global fintech industry’s total revenue in 2030.

“The defining feature of the Indian model of digitisation is the lead taken by the government and the public sector in building infrastructures, on top of which innovative products are created by private sector fintech firms and start-ups,” said Das.

Speaking on UPI, Das said it has played a phenomenal role in the fintech revolution in India and that its success story has become an international model. Transaction volumes on UPI have crossed 10 billion and stood at 10.6 billion in September, showed 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 payments systems has created a unified payment ecosystem,” he said.

However, Das cautioned that while financial innovation improves ease of payment and lowers the cost, it also poses risks and challenges to the financial system, which have a bearing on overall financial stability and market integrity.

According to Das, RBI intends to play a dual role of acting as a promoter of innovation as well as being the regulator.

“While promoting innovation, our focus is on ensuring a well-regulated ecosystem that addresses systemic risks and challenges,” he said.

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Updated: 09 Nov 2023, 01:16 PM IST