DIGITAL REVOLUTION: RBI REPORT

Reserve Bank of India (RBI) has released the Report on Currency and Finance (RCF) for the year 2023-24.

Report on Currency and Finance (RCF) 2023-24:

• It is published annualy by the RBI.

• It covers various aspects of the Indian economy and financial system.

• Theme: "India’s Digital Revolution."

• It focuses on the transformative impact of digitalization across various sectors in India, particularly in the financial sector.

• It offers insights how digital technologies are reshaping economic growth, financial inclusion, public infrastructure, and the regulatory landscape, while also addressing the associated opportunities and challenges.

Key Highlights from the Report:

• Expansion of Financial Services:

• Technological advancements have significantly enhanced digital financial services.

• Financial inclusion in India is improving, evidenced by the Reserve Bank’s Financial Inclusion Index and narrowing account access gaps.

• In rural India: 46% are wireless phone subscribers, 54% are active internet users.

• More than half of FinTech consumers are from semi-urban and rural India and more than a third of digital payment users are from rural area

• Potential for digital growth is high, with over two lakh gram panchayats connected via BharatNet, offering e-health, e-education, and e-governance.

• Mobile Penetration:

• Internet penetration was 55% in 2023; user base grew by 199 million in three years.

• India has the lowest global cost for data at Rs. 13.32 per GB.

• High mobile data consumption: 24.1 GB per user per month in 2023.

• Approximately 750 million smartphone users, expected to reach 1 billion by 2026.

• India anticipated to become the second-largest smartphone manufacturer within five years.

• Digital Economy:

• Digital economy contributes 10% to India’s GDP; expected to double to 20% by 2026.

• Digitization is enhancing banking infrastructure, direct benefit transfers, and tax collections.

• India Stack:

• Key components: Aadhaar, UPI, and DigiLocker.

• Aadhaar: Largest biometric ID system with 1.38 billion holders.

• UPI: Real-time, low-cost transaction platform with a tenfold increase in transactions over four years.

• DigiLocker: Cloud storage for secure document access.

• Internationalisation of Digital Public Infrastructure:

• Collaborating on digital identity solutions via the Modular Open Source Identity Platform (MOSIP).

• Linking UPI with international payment systems (e.g., Singapore’s PayNow, UAE’s IPP, Nepal’s NPI) for efficient remittances.

• Expanding UPI and RuPay acceptance in Bhutan, Mauritius, Singapore, UAE.

• Sharing Beckn protocol for decentralized, peer-to-peer economic transactions.

• Vibrant Initiatives:

• Open Credit Enablement Network, Open Network for Digital Commerce, and Public Tech Platform for Frictionless Credit are advancing digital lending.

• Fintechs are partnering with banks and NBFCs to enhance digital credit solutions and financial inclusion.

India is at the forefront of the digital revolution, leveraging on digital public infrastructure, a vibrant financial technology (FinTech) ecosystem and a conducive policy environment to emerge as the fastest-growing digital economy in the world.