Cash deposits via UPI? Here is what RBI Governor Shaktikanta Das announced today

RBI monetary policy: The Reserve Bank of India (RBI) Governor Shaktikanta Das, while announcing the first monetary policy of the fiscal year 2024–25 on Friday, April 5, said that there has been a proposal to provide the facility of cash deposits at CDMs (Cash Deposit Machines) via UPI.

The RBI's statement read, "Deposit of cash through Cash Deposit Machines (CDMs) is primarily being done through the use of debit cards. Given the experience gained from card-less cash withdrawal using UPI at the ATMs, it is now proposed to also facilitate the deposit of cash in CDMs using UPI. This measure will further enhance customer convenience and make the currency handling process at banks more efficient."

On UPI access for prepaid payment instruments (PPIs) via third-party apps, RBI said that at present, UPI payments from Prepaid Payment Instruments (PPIs) can be made only by using the web or mobile app provided by the PPI issuer. "It is now proposed to permit the use of third-party UPI apps for making UPI payments from PPI wallets. This will further enhance customer convenience and boost the adoption of digital payments for small-value transactions," it said.

The governor further said that even non-bank payment operators would also be able to do business in e-Rupee. Das further said that the apex bank will soon issue a draft circular on the revision of the bank's liquidity coverage ratio (LCR). 

The Central Bank Digital Currency (CBDC) pilots are currently in operation, with an increasing number of use cases and participating banks. "It is proposed to make CBDC retail accessible to a broader segment of users by enabling non-bank payment system operators to offer CBDC wallets. This will also facilitate testing the resiliency of the CBDC platform to handle multi-channel transactions," the statement read.

As regards policy, the MPC decided to keep the repo rate unchanged at 6.5 per cent for the seventh consecutive time. The policy stance—withdrawal of accommodation—also remains in place. READ MORE

Commenting on the UPI update, Ashish Goyal, Co-Founder and CFO at Fibe, said, "The regular rise in UPI transaction levels indicates its popularity among users in India. Given the large-scale acceptance of UPI, the move to enable UPI for cash deposit facilities will empower consumers with seamless deposit options but also present a promising opportunity for fintechs to leverage technology for the betterment of financial services."

This initiative will enhance customer convenience by streamlining bank currency handling processes, ensuring a more efficient and unified banking experience for customers. Further, the proposal to allow UPI access for Prepaid Payment Instruments (PPIs) through third-party apps is a vital modification, considering it provides customers the liberty to redefine their financial journey but also paves the way for fintechs to innovate and provide more diverse, user-friendly solutions in the digital payments landscape. This will ultimately help accelerate the adoption of digital payment transactions, Goyal added.