RBI Suggests Enabling UPI For Cash Deposits, Expands Retail Digital Currency

In a move to further promote digital transactions and enhance customer convenience, the Reserve Bank of India (RBI) has proposed new measures related to Unified Payment Interface (UPI) and Central Bank Digital Currency (CBDC).

RBI Governor Shaktikanta Das announced these proposals as part of the monetary policy outlook. One of the significant proposals is to enable cash deposits in banks through the UPI mechanism. Currently, depositing cash in Cash Deposit Machines (CDMs) is primarily done using debit cards. Building on the success of card-less cash withdrawal using UPI at ATMs, the RBI now plans to facilitate cash deposits in CDMs using UPI. This move is expected to improve customer convenience and streamline the currency handling process at banks.

Additionally, the RBI proposed allowing UPI payments from Prepaid Payment Instruments (PPI) wallets through third-party UPI apps. Presently, UPI payments from PPIs are limited to using the web or mobile app provided by the PPI issuer. Allowing the use of third-party UPI apps for such payments is aimed at enhancing customer convenience and promoting digital payments for small value transactions.

The central bank also intends to make Central Bank Digital Currency (CBDC) more accessible to a broader range of customers by enabling non-bank payment system operators to offer CBDC wallets. Currently, CBDC pilots are operational with an increasing number of use-cases and participating banks. Enabling non-bank payment system operators to provide CBDC wallets will not only broaden the reach of CBDC-Retail but also facilitate testing the resiliency of the CBDC platform for multi-channel transactions.

Furthermore, the RBI plans to launch a mobile app for accessing the Retail Direct portal. The Retail Direct Scheme, launched in November 2021, aims to provide retail investors direct access to government securities. The introduction of a mobile app for this purpose is expected to significantly increase convenience for retail investors and further deepen the G-sec market.

These proposed measures by the RBI underline its commitment to promoting digital payments, enhancing financial inclusion, and facilitating easier access to government securities for retail investors.