As per the World Bank’s research, global cross-border remittances in 2022 was estimated to be at $830 billion.
The present high-cost of remittance for countries is “simply unconscionable” when data connectivity is cheap, and thus, India is currently in talks with more countries to make a “material impact” on the high remittance cost, said T Rabi Sankar, deputy governor, Reserve Bank of India (RBI) ,on Friday.
According to the World Bank remittance prices world-wide database, the global average cost of a retail size of remittance (retail size – $200) was 6.2% in the fourth quarter of 2022.
“For some countries, this cost can be as high as 8%. Such a high cost in today’s context, when data connectivity is so cheap, is simply unconscionable. I believe that given the available technology, the present situation is not sustainable,” said Rabi Sankar while speaking at an event, organised by BCC&I.
As per the World Bank’s research, global cross-border remittances in 2022 was estimated to be at $830 billion. India was the top recipient.
In February this year, India and Singapore had enabled the UPI-PayNow linkage that will enable users in either country to make convenient, instant and cost-effective cross-border transfers using their respective mobile apps.
In July, the country signed an MoU with the Central Bank of the UAE for the cooperation regarding interlinking on mutual payments and messaging systems, among other things. “We are in talks with some other jurisdictions too to make a material impact on the high-cost of remittance,” Rabi Sankar said.
According to him, the central bank digital currency (CBDC) offers very efficient solutions to address the challenge of high cost of remittance. “If we come up with a technologically viable solution to link the CBDC system across country, it can dramatically bring down the cost of cross-border payment by completely bypassing the legacy correspondent banking system,” the RBI deputy governor said, adding such solution would require international cooperation and agreement on multiple legal and technological protocols, something which should be quite doable in today’s hyper-connected global economy.
On the role of digital payment as a tool of financial inclusion, he said, “Essentially a key objective of all our efforts is boosting the payment system today is ensuring rapid financial inclusion.”
Launched in 2016, UPI has emerged as the most popular payment mode not just in India but globally, pioneering persons-to-persons as well as persons-to-merchants transactions in India. More than 78% of the total retail payment transactions in the country is processed on UPI.
“Its volume has increased from 47 lakhs transactions in January, 2017 to 1059 crore transactions in August, 2023. The value of UPI transactions has increased from Rs 1700 crore in January, 2017 to Rs 15.76 lakh crore in August, 2023,” Rabi Sankar informed.
Source:financialexpress.com