RBI MPC Meet 2024: New Guidelines for Digital Transactions and Aadhaar-enabled Payment System

Reserve Bank of India governor Shaktikanta Das, during the RBI MPC Meet 2024, announced the issuance of guidelines for a principle-based framework for authenticating digital payment transactions. The focus is on enhancing the security of digital payments, emphasizing the need for an additional factor of authentication (AFA).

Das highlighted that while RBI has not prescribed a specific AFA, the payments ecosystem has predominantly adopted SMS-based One Time Password (OTP). The proposed framework aims to embrace alternative authentication mechanisms, considering technological innovations. Instructions for this principle-based framework will be issued separately.

Aadhaar-enabled Payment System (APES) to Undergo Streamlining

Governor Das shed light on the significance of Aadhaar-enabled Payment System (APES), allowing customers to conduct digital payment transactions in assisted mode. In 2023, over 37 crore users engaged in AePS transactions, contributing significantly to financial inclusion. To enhance the security of AePS transactions, plans include streamlining the onboarding process, incorporating mandatory due diligence for AePS touchpoint operators, followed by banks. Additional fraud risk management requirements will also be under consideration, with detailed instructions to follow.

Repo Rate Unchanged in the Sixth Consecutive Meeting

In the latest RBI MPC meeting, held from February 6 to 8, the central bank decided to maintain the repo rate at 6.5%, marking the sixth consecutive meeting with no change in the lending rate. The decision, aimed at vigilant inflation control, continues the pause initiated in April last year. Governor Shaktikanta Das affirmed the Monetary Policy Committee's decision to keep the repo rate steady.

Industry Reactions to Repo Rate Decision

Pankaj Kalra, CEO of EOGEPL, expressed that maintaining the repo rate at 6.5% reflects dedication to guiding India's economic journey despite global challenges. The decision is poised to uphold stability amid uncertainties, acknowledging concerns about inflationary pressures.

Pradeep Aggarwal, Founder & Chairman of Signature Global (India) Ltd, highlighted the RBI's decision to keep rates on hold as a strategic move to balance inflation control without hindering economic growth. The decision is seen as beneficial for both borrowers and developers.

Vikas Bhasin, Chairman & Managing Director of Saya Group, echoed optimism in the real estate sector, stating that the steady repo rate provides stability, fueling housing sales and supporting growth in 2024.

Various industry leaders, including Amit Modi of County Group and Ajendra Singh of Spectrum Metro, welcomed the RBI's decision, emphasizing its positive impact on the real estate sector. The decision is perceived as a testament to the resilience of India's economy.

Kush, CEO of Essar Power, praised the RBI's cautious approach, maintaining the repo rate at 6.5%, to uphold economic stability. The deliberate monetary policy aims to create a conducive environment for strategic investments amidst inflationary challenges.

The overall industry response suggests that the RBI's decision provides a stable foundation for economic growth and strategic investments across sectors.