India and Japan may explore linking fast payment systems in order to facilitate easier and less expensive cross-border payments, Reserve Bank of India governor Shaktikanta Das said, expanding the list of countries that are working out such arrangements with domestic payment firms.
“Linking of the UPI (Unified Payments Interface) with fast payment systems of other countries is also being undertaken. Linkage of fast payment systems of India and Japan may also be explored to leverage the power of fintech and make cross-border payments more efficient and less costly,” Das said on Thursday at the Symposium on Indian Economy 2023 organised by Institute of Indian Economic Studies at the Tokyo Chamber of Commerce and Industry, Tokyo, Japan.
In February, India and Singapore had launched a real-term linkage between the UPI and PayNow to facilitate instant and cost-effective cross-border fund transfers.
In September, RBI Deputy Governor T. Rabi Sankar has said that the Indian central bank had in July signed a memorandum of understanding with the central bank of the UAE regarding the interlinking of mutual payments and messaging.
Acknowledging the critical role played by Japan in building infrastructure in India, Das said that the partnership between the two countries could be strengthened in the sphere of human resources.
“There are many collaboration opportunities in frontier technologies such as space technology, artificial intelligence, quantum computing, rare-earths extraction, semiconductors and resilient supply chains, and other areas,” he said.
Das reiterated that while financial innovations ushered in by fintech players had augmented ease of payment and lowered cost, they also posed risks and challenges to the financial system.
Such risks impact overall financial stability and market integrity, Das said.
“We, therefore, intend to play a dual role of acting as promoter of innovation as well as being the regulator. While promoting innovation, our focus is on ensuring a well-regulated ecosystem that addresses systemic risks and challenges,” he said.
Das said that India’s headline inflation remains vulnerable to recurring and overlapping food price shocks, although core inflation had moderated by 170 basis points since its peak in January. Core inflation strips out the volatile components of food and fuel.
“In these circumstances, monetary policy remains watchful and actively disinflationary to progressively align inflation to the target, while supporting growth,” he said.
