India at forefront of digital revolution: RBI report
- India is at the forefront of the digital revolution, leveraging on digital public infrastructure, a vibrant financial technology (FinTech) ecosystem and a conducive policy environment to emerge as the fastest-growing digital economy in the world, Reserve Bank of India (RBI) said in the Report on Currency and Finance (RCF) for the year 2023-24.
Highlights:
- Digital technologies are unlocking opportunities in financial inclusion, fiscal transfers and cross-border trade and remittances, it added in the report.
- The theme of the Report is “India’s Digital Revolution”.
- As per the report the positive role played by the regulatory framework has led to increasing confidence of consumers in digital financial products, boosting operating and technical efficiencies of financial institutions.
- However, digital technologies also present challenges related to cybersecurity, data privacy, vendor and third-party risks, customer protection, upskilling and reskilling of human resources, complex financial products and business models, the report highlights.
- “India is leading the global digital revolution, emerging as a frontrunner on the back of its robust digital public infrastructure, rapidly evolving institutional arrangements, and a growing tech-savvy population,”.
- “Globally, India ranks first in biometric-based identification (Aadhaar) and real-time payments volume; second in telecom subscribers; and third in terms of the start-up ecosystem,” he said.
- “The flagship Unified Payments Interface (UPI) has revolutionised the retail payment experience for end- users, making transactions faster and more convenient,”.
- “The digital lending ecosystem is becoming vibrant with initiatives such as the Open Credit Enablement Network, the Open Network for Digital Commerce and the Public Tech Platform for Frictionless Credit”.
- The Governor said digitalisation in finance is paving the way for next-generation banking; improving access to financial services at affordable costs; and enhancing the impact of direct benefit transfers by effective targeting of beneficiaries in a cost-efficient manner.
- Loans in the retail segment are being enabled by online payments and E-commerce is being boosted through embedded finance.
- “All these innovations are making financial markets more efficient and integrated,” he said.
- On the external front, digitalisation is driving growth in India’s services exports and lowering remittance costs. India’s digital journey is setting a benchmark for peer economies.
- Stating that digitalisation also presents challenges related to cybersecurity, data privacy, data bias, vendor and third-party risks, and customer protection, he cautioned that increased inter-connectedness may lead to systemic risks.
- “Additionally, emerging technologies can introduce complex products and business models with risks that users may not fully understand, including the proliferation of fraudulent apps and mis-selling through dark patterns.
- Digitalisation may induce human resource challenges in the financial sector, necessitating strategic investments in upskilling and reskilling,”.
- In this rapidly evolving landscape, balancing financial stability, customer protection and competition will remain the key policy challenge.
Prelims Takeaway:
- JAM Trinity
- RBI