Home » Current Affairs In-depths & Editorials » GS3 » Economy » Banking » RBI paper on Cash vs Digital Payments

RBI paper on Cash vs Digital Payments

Santhosh Kumar 29/11/2023

RBI paper on Cash vs Digital Payments mind map
Paradox in Currency Demand
Cash and Digital Payments
Simultaneous rise
Counterintuitive trend
Decoding the paradox
Indian context focus
Key highlights
Transactional use of cash
Decline observed
Substituted by digital payments
Store-of-value role
Remains intact
Pandemic impact
Transitory uptick in currency demand
Driven by
Precautionary motives
Store-of-value motives
Empirical estimation
Currency demand function
Autoregressive distributed lag (ARDL) models
Significant impacts
Income
Opportunity cost of holding cash
E.g., interest rates
Uncertainty
Inverse association
Digital payments vs currency demand
Other determinants
Maintain cash demand
Recent trends and data (2023)
Decline in cash deals
Rise in digital payments
RBI Occasional Research paper findings
Influence on currency demand
Precautionary motives
Store-of-value motives
Falling use as payment medium
Substitution indicators
Large-denomination banknotes growth
Muted growth in small-value notes and coins
Subdued cash withdrawals
Diminishing cash velocity
Digital modes preference
For small-value retail transactions
Economy growth impact
Cash and digital payments potential
Increased transactional activity
Precautionary variables significance
Potential moderation
Of positive income effect on currency demand
RBI Digital Payment Index (RBI-DPI)
March 2023 data
Index value: 395.57
September 2022 data
Index value: 377.46
March 2022 data
Index value: 349.30
Overall increase
Across all parameters
Driven by
Payment infrastructure growth
Payment performance enhancement
Unified Payments Interface (UPI)
Significant transaction growth
Record set in October 2023
Transactions: 11.4 billion
Value surpassed: Rs 17.6 lakh crore
Currency in Circulation (CiC)
October 2023 data
Growth rate: 4.3%
Year-ago comparison
Previous rate: 7.7%
Factors
Withdrawal of Rs 2,000 notes
Money supply (M3) growth
October 2023 data
Growth rate: 11.0%
Year-ago comparison
Previous rate: 7.8%
Excluding factors
HDFC and HDFC Bank merger impact

If you like this post, please share your feedback in the comments section below so that we will upload more posts like this.

Related Posts

Bharat BillPay Enables SBI NCMC Card Recharge

Bharat BillPay Enables SBI NCMC Card Recharge

19/04/2024 / Banking

Draft Omnibus Framework for recognizing SROs mind map Reserve Bank of India Introduction RBI's role Regulating currency and credit system Maintaining financial system stability Need for the framework Growth of REs Increased use of innovative technologies Enhanced customer outreach Self-Regulatory Organizations (SROs) Definition Organizations regulating professions or industries Non-governmental organizations Create rules for order in businesses Role and Effectiveness Enhancing regulations' effectiveness Providing technical expertise Aiding in policy framing Complementing regulatory frameworks Characteristics of an SRO Credibility, objectivity, responsibility Authority from membership agreements Governance standards enforcement Surveillance methods for monitoring Objectives of the SRO Overarching objectives Enhancing sector professionalism Compliance, innovation, ethical conduct Development of self-regulatory principles Specific objectives Promoting compliance culture Representing members' collective voice Sharing sectoral information with RBI Encouraging research and innovation Responsibilities of the SRO Towards Members Promoting best business practices Establishing minimum benchmarks Protecting stakeholder interests Disseminating sector-specific information Promoting statutory/regulatory knowledge Towards the Regulator (RBI) Informing RBI of sector developments Assisting RBI in compliance and development Acting as a bridge between REs and RBI Eligibility Criteria for SROs Requirements Not-for-profit company Adequate net-worth and infrastructure Professional competence and integrity Representing the sector Fit and proper status for recognition Governance Framework Professional management Transparent practices ‘Fit and proper’ criteria for Directors Adequate human and technical resources Application for Recognition Process and Documents Memorandum and Articles of Association Constitution of Board and Directors Membership criteria roadmap Authorizations and powers of office bearers Conditions for Recognition True and non-misleading information Adherence to prescribed requirements Periodic review by RBI Right of RBI to revoke recognition Recent News Announcement date October 06, 2023 Feedback submission deadline January 25, 2024 RBI's call for comments Inviting public and stakeholder feedback Indian Context Impact on Indian financial sector Enhanced self-regulation standards Addressing challenges of expanding REs Promoting transparency and innovation Ensuring compliance and consumer protection

Draft Omnibus Framework for recognizing SROs

24/12/2023 / Banking

Silicon Valley Bank Issue- Recent Developments, Reasons & Significance

Silicon Valley Bank Issue- Recent Developments, Reasons & Significance...

18/03/2023 / Banking, Policies/Plans/Guidelines/Frameworks, United States of America (USA)

IL&FS/NBFC Crisis - The Need for Financial Sector Reforms

IL&FS/NBFC Crisis – The Need for Financial Sector Reforms

23/10/2018 / Banking, GS3

Categories: Banking

Tags: 28+29.11.2023, Newsbits

Subscribe

0 Comments

Inline Feedbacks

View all comments

X