RBI Unveils Bold Reforms | From Conversational Payments to Frictionless Credit

RBI vide. Press Release No. 2023-2024/724 dated August 10, 2023, has introduced a Statement on various developmental and regulatory policies relating to

(i) Financial Markets;

(ii) Regulation and Supervision;

(iii) Payment Systems;

(iv) FinTech.

The proposal aims to promote stability and sustainability in the financial ecosystem. The key proposals as laid down in the Statement on Developmental and Regulatory Policies are discussed in detail hereunder:

1. Introduce a secured AI-Driven “Conversational Payments” mechanism on the UPI platform

UPI, with its ease of usage, safety and security, and real-time feature, has transformed the digital payment ecosystem in India. As Artificial Intelligence (AI) is becoming increasingly integrated into the digital economy, conversational instructions hold immense potential in enhancing the ease of use, and consequently, the reach of the UPI system.

Therefore, the RBI has proposed to launch an innovative payment mode viz., “Conversational Payments” on UPI. This mode will enable users to engage in a conversation with an AI-powered system to initiate and complete transactions in a safe and secure environment.

This channel will be available on both smartphones and feature phone-based UPI channels, thereby helping in the deepening of digital penetration in the country. Initially, this facility will be available in Hindi and English and subsequently, it will be extended to include more Indian languages.

2. Strengthening Regulatory framework for Financial Benchmark Administrators enhancing transparency

Earlier, the Reserve Bank issued a regulatory framework regarding the administration of ‘significant benchmarks’ by benchmark administrators in the financial markets regulated by the RBI such as the USD/INR Reference Rate.

Taking into account the evolution of the domestic financial markets since then, and along with global best practices, the regulations for financial benchmarks have been reviewed.

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