The Reserve Bank of India (RBI) has proposed creating a plug-and-play system for cross-border payments to boost interoperability between countries. RBI Governor Shaktikanta Das discussed the potential of new technologies like fast payment systems and central bank digital currencies (CBDCs) to make cross-border transactions more efficient.
However, he also pointed out that countries might prefer to design their systems based on domestic needs, which could hinder global harmonization.
To address this issue, Das suggested developing a plug-and-play system that would allow countries to replicate cross-border payment solutions while maintaining their sovereignty. This system would provide a flexible framework, enabling each nation to implement tailored solutions that remain compatible with others.
India has already made progress in this area and plans to further develop this plug-and-play approach, which is expected to benefit the global community by facilitating smoother cross-border transactions.
Das emphasized the transformative role of DPI in India’s digital evolution. DPI refers to foundational technology systems managed primarily by the public sector, which are open and accessible to all users and developers. These systems are scalable, interoperable, and cost-efficient, vital in advancing financial inclusion and innovation.
Das also introduced the Unified Lending Interface (ULI), a new platform aimed at simplifying credit access. This system integrates various data sources, including land records, to streamline credit appraisals, particularly for smaller and rural borrowers. The ULI is expected to revolutionize lending in India, similar to the way Unified Payments Interface (UPI) transformed payments.
Central Bank Digital Currency (CBDC) and Future Prospects
CBDC is another focal point of the RBI’s digital strategy. India has been testing CBDC pilots for both retail and wholesale segments since late 2022. These pilots have already seen substantial user engagement and are exploring features like offline capabilities and programmability. CBDCs could play a crucial role in financial inclusion by ensuring targeted fund delivery and addressing challenges like access to agricultural credit.
Das also discussed the importance of integrating artificial intelligence (AI) with DPI. AI can enhance DPI’s capabilities by providing personalized services, improving risk management, and streamlining operations. However, it’s crucial to address challenges related to data privacy, ethical AI governance, and transparency.
As India moves toward its centenary, the RBI is focused on creating robust, customer-centric financial systems. The conference underscored the RBI’s vision of leveraging digital technologies to build an inclusive and innovative financial ecosystem.