The Reserve Bank of India has initiated dialogues with countries having sizable Indian diaspora to bring down cost of remittances, deputy governor T Rabi Sankar said.
According to the World Bank, the average cost of cross border remittance is about 6.2% of the value of a transaction.
“Such a high cost in today’s context, when data connectivity is so cheap, is simply unconscionable,” Rabi Sankar said Friday, delivering his keynote address at a Bengal Chamber of Commerce & Industry event.
“I believe with the available technology, this system is not sustainable.”
“We have followed up on this in July by signing an MoU with the central bank of UAE, cooperation regarding inter-linking on mutual payment and messaging system,’ he said.
India signed an agreement with Singapore in February this year to link their respective payment systems using the Unified Payments Interface (UPI) allowing the users of both the countries to make cross-border transactions using mobile apps in a cost effective way.
The deputy governor said that the spread of digital payment infrastructure has become one of the critical drivers of economic growth.
Speaking about India’s growth story post COVID at the event, India’s chief economic advisor, V Anantha Nageswaran said that the response and recovery phase is over and now it is all about consolidation.
“India is poised for good and steady growth for the rest of this decade. Our goal should not be only to become the third-largest economy in aggregate size but also in per capita terms, becoming a middle-income or upper middle-income country, for that we need to make sure that the aspiring middle class is not only able to get the kind of goods and services that they need but they are also in a position to contribute and this is not just a task for the public sector but also the private sector,” he said.