iNDICA NEWS BUREAU-
Non-resident Indians will soon be able to pay utility and education bills, on behalf of their families and parents living in India. The Reserve Bank of India on August 5 proposed to activate the Bharat Bill Payment System (BBPS).
The RBI governor, Shaktikanta Das, announced the decision to enable BBPS to facilitate NRIs during the central bank’s Monetary Policy Meet (MPC) held on Friday, August 5.
A statement issued by the RBI governor said, “It is now proposed to enable BBPS to accept cross-border inward bill payments. This will enable Non-Resident Indians (NRIs) to undertake bill payments for utility, education and other such payments on behalf of their families in India. This will greatly benefit the senior citizens in particular.” The statement explained that BBPS is an interoperable platform for standardized bill payments. This has transformed the bill payment experience for users in India. Over 20,000 billers are part of the system, and more than 8 crore transactions are processed on a monthly basis.
In RBI’s statement on developmental and regulatory policies added: “BBPS is currently accessible only for residents in India. To facilitate Non-Resident Indians (NRIs) undertake utility, education and other bill payments on behalf of their families in India, it is proposed to enable BBPS to accept cross-border inward payments. This will also benefit payment of bills of any biller on-boarded on the BBPS platform in an interoperable manner. Necessary instructions will be issued shortly.”
The guidelines issued by RBI for the implementation of BBPS state: “Bill payment is a major component of the retail payment transactions. The committee to study the feasibility of implementation of GIRO based Payment Systems had estimated that over 30,800 million bills amounting to Rs. 6223 billion are generated each year in the top 20 cities in the country. Though various forms of payments are accepted, cash and cheque payments continue to be predominant, particularly at the Billers’ Own Collection Point.”
“While the existing systems are safe and robust, they do not fully address the needs of the consumers to pay a variety of “bills” including utility bills, school/university fee, municipal taxes, etc. due to the lack of interoperability in the bill payment processes as well as the lack of access to various modes of electronic payments by a vast majority of customers.”
The guidelines issued by RBI for the implementation of BBPS had stated: “Bill payment is a major component of the retail payment transactions.” The central bank had stated that the committee to study the feasibility of implementation of GIRO based Payment Systems had estimated that over 30,800 million bills amounting to Rs. 6223 billion are generated each year in the top 20 cities in the country. “Though various forms of payments are accepted, cash and cheque payments continue to be predominant, particularly at the Billers’ Own Collection Point.”
“While the existing systems are safe and robust, they do not fully address the needs of the consumers to pay a variety of “bills” including utility bills, school/university fee, municipal taxes, etc. due to the lack of interoperability in the bill payment processes as well as the lack of access to various modes of electronic payments by a vast majority of customers. There is, therefore, a need for an integrated bill payment system in the country that offers interoperable and accessible bill payment services to customers through a network of agents, allows multiple payment modes, and provides instant confirmation of payment.”
India’s Fiscal Status
The RBI governor in his statement elaborated on the fiscal status of the country: “The Indian economy has naturally been impacted by the global economic situation. We have been grappling with the problem of high inflation. Financial markets have remained uneasy despite intermittent corrections. We have witnessed large portfolio outflows to the tune of US$ 13.3 billion during the current financial year so far (up to August 3).”
“Nevertheless, with strong and resilient fundamentals, India is expected to be amongst the fastest growing economies during 2022-23 according to the IMF, with signs of inflation moderating over the course of the year. Export of goods and services together with remittances are expected to keep the current account deficit within sustainable limits. The decline in external debt to GDP ratio, net international investment position to GDP ratio and debt service ratio during 2021-22 impart resilience against external shocks. The financial sector is well capitalized and sound. India’s foreign exchange reserves, supplemented by net forward assets, provide insurance against global spillovers. Our umbrella remains strong.”
On decisions and deliberations of the Monetary Policy Committee (MPC). He said that the MPC met from August 3 to 5 and reviewed the macroeconomic situation and its outlook. “The MPC decided unanimously to increase the policy repo rate by 50 basis points to 5.4 percent, with immediate effect. Consequently, the standing deposit facility (SDF) rate stands adjusted to 5.15 percent; and the marginal standing facility (MSF) rate and the Bank Rate to 5.65 percent. The MPC also decided to remain focused on withdrawal of accommodation to ensure that inflation remains within the target going forward, while supporting growth.”
“Let me now dwell briefly on the MPC’s rationale for its decisions on the policy rate and the stance. Against the prevailing adverse global environment, the MPC noted that domestic economic activity is resilient and progressing broadly along the lines of the June resolution of the MPC. Consumer price inflation has eased from its surge in April but remains uncomfortably high and above the upper threshold of the target. Inflationary pressures are broad-based and core inflation remains at elevated levels. The volatility in global financial markets is impinging upon domestic financial markets, including the currency market, thereby leading to imported inflation.”
Das added, “With inflation expected to remain above the upper threshold in Q2 and Q3, the MPC stressed that sustained high inflation could destabilize inflation expectations and harm growth in the medium term. The MPC, therefore, judged that further calibrated withdrawal of monetary accommodation is warranted to keep inflation expectations anchored and contain the second-round effects. Accordingly, the MPC decided to increase the policy repo rate by 50 basis points to 5.4 percent. The MPC also decided to remain focused on the withdrawal of accommodation to ensure that inflation remains within the target going forward, while supporting growth.”
