Given the popularity of UPI, the Reserve Bank of India (RBI) has now introduced a cash deposit facility using UPI at Cash Deposit Machines (CDMs).
Till now customers have been using debit cards to deposit cash at CDMs that are deployed by banks to enhance customer convenience while reducing cash-handling load on bank branches.
RBI Governor Shaktikanta Das on Friday said: "Given the experience gained from card-less cash withdrawal using UPI at the ATMs, it is now proposed to also facilitate deposit of cash in CDMs using UPI. This measure will further enhance customer convenience and make the currency handling process at banks more efficient."
With an aim to provide more flexibility to PPI (Prepaid Payment Instruments) holders, the central bank on Friday also proposed to permit linking of PPIs through third-party UPI applications. This will enable the PPI holders to make UPI payments like bank account holders.
At present, UPI payments from PPIs can be made only by using the web or mobile app provided by the PPI issuer. This new initiative will further enhance customer convenience and boost adoption of digital payments for small value transactions.
CBDC wallets
The central bank has proposed to make CBDC-Retail accessible to a broader segment of users in a sustained manner, by enabling non-bank payment system operators to offer CBDC wallets. This is expected to enhance access and expand choices available to users apart from testing the resiliency of the CBDC platform to handle multi-channel transactions, Das said. Currently, most users are on the UPI platform.
The RBI began the pilot for retail CBDC (Central Bank Digital Currency) in December 2022, and pilots in the wholesale segments are also underway with more use cases and more participating banks.
Edul Patel, CEO of Mudrex, welcomed the proposal and said this is a significant step towards embracing innovation and enhancing financial inclusion.
"By enabling non-bank payment system operators to participate in the distribution of CBDC, the RBI aims to foster a more competitive and diverse ecosystem, which will ultimately benefit consumers. This approach not only expands access to CBDC but also encourages innovation in payment services," he added.