RBI Governor pitches for reducing cost, time of remittances

Reserve Bank Governor Shaktikanta Das on Monday made a case for reducing time and cost of overseas remittances, which are important for developing economies.

The new technology and payments system can be used for expediting and expanding cross-border payments, he noted.

“Remittances are the starting point for many emerging and developing economies, including India, to explore cross-border peer-to-peer (P2P) payments. We believe there is immense scope to significantly reduce the cost and time for such remittances,” Das said in his keynote address at the conference on 'Central Banking at Crossroads'.

Besides, he said, the feasibility of expanding real-time gross settlement (RTGS) to settle transactions in major trade currencies such as dollar, Euro and Pound can be explored through bilateral or multilateral arrangements.

India and a few other economies have already commenced efforts to expand linkage of crossborder fast payment systems both in the bilateral and multilateral modes, he said.

The Central Bank Digital Currency (CBDC) is another area which has the potential to facilitate efficient cross-border payments, he added.

Going forward, he said, harmonisation of standards and interoperability would be important for CBDCs for cross-border payments and to overcome the serious financial stability concerns associated with cryptocurrencies.

The RBI Governor also raised concerns over misuse of Artificial Intelligence in the banking space saying it could lead to more cyber-attacks and data breaches.

“Banks and other financial institutions must put in place adequate risk mitigation measures against all these risks. In the ultimate analysis, banks have to ride on the advantages of AI and Bigtech and not allow the latter to ride on them,” he said.