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<ul><li>Unsecured <keyword id="35520" type="General" weightage="50" keywordseo="personal-loans" source="Orion">personal loans</keyword> account for 37% of Bajaj Finance’s loan book, while it is at 21% for Aditya Birla Capital and it is 27% for IIFL (standalone).</li><li>Tighter norms may impact <keyword id="6357120" type="General" weightage="80" keywordseo="paytm" source="Orion">Paytm</keyword>’s break-even timelines if there is a slowdown in loan disbursals.</li><li><keyword id="706950" type="General" weightage="50" keywordseo="aditya-birla-finance" source="Orion">Aditya Birla Finance</keyword> and IIFL may need to infuse capital after the November 16 tightening of capital norms by RBI. </li></ul>Reserve Bank of India’s <a href="https://www.businessinsider.in/finance/news/rbi-tightens-norms-on-personal-loans-for-banks-and-nbfcs-stock-reaction/articleshow/105277492.cms" data-type="tilCustomLink" target="_blank">crackdown on personal loan disbursals</a> by banks and non-banking finance companies will have a cascading effect on the sector. But the worst hit will be non-bank players as they will be hit on both asset and the liability sides. While they will have to pay higher rates while borrowing from banks and bond markets, they will also have to pass on higher costs to borrowers. This will slow down the rapid growth in their balance sheet, which has been driven by rapid growth in the disbursement of unsecured personal/consumer loans. According to analysts, non banking finance companies like Paytm and Bajaj Finance would be most affected by RBI’s move to tighten capital norms on unsecured loans and also loans disbursed to non banks. This will not only make lending more expensive for non banks but in many cases will also force them to raise more capital ahead of schedule. <keyword id="116253" type="General" weightage="80" keywordseo="sbi-cards" source="Orion">SBI Cards</keyword>, Bajaj Finance, IIFL and Aditya Birla have relatively higher proportion of unsecured loans on their portfolio and, therefore, tighter capital norms will impact them the most. Unsecured personal loans account for 37% of Bajaj Finance’s loan book, while it is 21% for Aditya Birla Capital and it is 27% for IIFL (standalone), according to Jefferies. According to Jefferies, SBI Cards can see an estimated.400 basis points cut in its Tier 1 capital adequacy ratio while Bajaj Finance can see 220 basis point hair cut to Tier 1 CAR. However, both NBFCs are well capitalised and have higher return on equity (low capital consumption). “IIFL (standalone entity) and Aditya Birla Capital can see a 50-80 bps haircut to Tier 1 capital, which can lower their Tier 1 to 13%/15%. IIFL may need to infuse capital in the standalone entity; at ABFL, next phase of capital raise may get advanced,” the global investment bank said in a report. in funding costs. SBI Cards faces highest drag on Tier I CAR and highest dependence on bank-funding. The tighter norms will not impact NBFCs but even fintechs like Paytm. Loan disbursals by fintechs will also slow down from the current levels as they may find it hard to raise funds and even pass on higher cost loans to consumers. Japanese investment bank Nomura says in a report, that in the past 18 months, nearly 25%-30% of incremental growth for NBFCs has come from unsecured retail. Any moderation in unsecured credit for NBFCs will hence have an impact on both growth and profitability for NBFCs in our view. Moreover, the regulatory action comes at a time when credit costs in these segments have started to inch up. For Paytm's lending partners, higher funding costs and increased capital requirements will affect product profitability in the buy-now-pay-later and personal loans segments. Non bank lenders like private banks may also start to improve their underwriting standards after this which will impact overall growth. Jefferies says: “We also watch out for the pricing environment and ability of Paytm to pass-through hike in funding costs. In our base case earnings, we forecast consumer loan disbursal growth to normalise from 90% in FY24 to 40% in FY25 and 35% in FY26. Any additional 10 percentage point slower disbursal growth (vs. base case) in FY25/26E can lead to 5-10% impact on lending revenues and ~2-3% impact on overall contributions, which may impact break-even timelines as well. Paytm may be able to compensate for this through faster ramp-up of its merchant financing business.” ALSO READ: <a href="https://www.businessinsider.in/personal-finance/news/the-dark-truth-behind-rbis-crackdown-on-easy-personal-loans/articleshow/105287366.cms" data-type="tilCustomLink" target="_blank">The dark truth behind RBI’s crackdown on easy personal loans</a>

RBI crackdown on personal loans – Bajaj Finance, IIFL, Aditya Birla and SBI Cards to take a bigger hit, say analysts

Customers, especially in retail verticals could be having a feel of future run expected in interest rates, and might be front loading their purchases in days to come giving a fillip to consumer demands in select niche areas, said <keyword id="2017241" type="General" weightage="80" keywordseo="sbi-research" source="Orion">SBI Research</keyword> in a report. The sector-wise data for April indicated that credit off-take has happened in almost all sectors. Personal loans segment continued to perform well, registering an acceleration in growth to 14.7 per cent in April 2022 and contributed around 90 per cent of the incremental credit during the month, primarily driven by housing, vehicle loans and other personal loans segments, the report said on Tuesday. The omicron fuelled days brought the bleak memories from last year. <keyword id="16898" type="General" weightage="80" keywordseo="spike" source="Orion">Spike</keyword> in caseloads in select developed economies scared the psyche, the scars of past coming to the fore. Businesses caught unaware previously and braving essential commodities as well as specialised essentials like chips shortages kept the expectations short.Against that backdrop, the report said that the GDP numbers did not disappoint much and it inspired the market. <keyword id="3658" type="General" weightage="50" keywordseo="india" source="Orion">India</keyword>'s gross domestic product during fiscal year 2021-22 is estimated at 8.7 per cent as compared to a contraction of 6.6 per cent in the year 2020-21, official data showed. The GDP grew 4.1 per cent year on year in Q4FY22 as against 1.6 per cent during the same quarter of FY21. By far, trade, hotels, transport, communication and services related to broadcasting are the only sectors which are still not out of the woods post the pandemic. The report said these sectors will reach or cross the pre-andemic levels by Q1FY23. The global economic outlook is marred with downside risks due to the ongoing geopolitical upheaval and its impact on trade, output and prices. Sharp increase in most commodity prices, significant tightening of financial conditions due to frontloaded monetary policy actions and high inflation are posing financial stability concerns. "The <keyword id="188983" type="General" weightage="20" keywordseo="world-economic-outlook" source="Orion">World Economic Outlook</keyword> (WEO) has cut its global growth forecast for 2022 relative to its January 2022 projection by 0.8 percentage points to 3.6 per cent. <keyword id="1334" type="General" weightage="20" keywordseo="china" source="Orion">China</keyword>'s economy remained deep in a slump in May as lockdowns continued to weigh on activity. The downward revision is sharper for emerging markets and developing economies than for advanced economies," the report added. SEE ALSO: <a target="_blank" class="c-link c-message_attachment__title_link" href="http://www.businessinsider.in/tech/mobile/news/moto-g82-5g-expected-to-launch-in-india-on-june-9-expected-price-specs-and-everything-you-need-to-know/articleshow/91919825.cms">Moto G82 5G expected to launch in India on June 9 – expected price, specs and everything you need to know</a> <a target="_blank" class="c-link c-message_attachment__title_link" href="http://www.businessinsider.in/cryptocurrency/news/an-indian-home-can-live-for-a-year-with-the-energy-it-needs-to-mine-a-single-bitcoin/articleshow/91916128.cms">An Indian home can live for a year with the energy it needs to mine a single Bitcoin</a>

Consumers in retail verticals may front load their purchases in niche areas due to rate hikes: SBI Research

<ul><li>The 30-share BSE index Sensex was down 261.92 points, and the NSE Nifty was trading 0.75% lower at 10:10 am. </li><li>Here’s a list of the top losers and gainers in the Nifty pack. </li><li>These are the top stocks that are buzzing in trade today.</li><li><a href="https://www.businessinsider.in/">Check out the latest news and updates on Business Insider.</a> </li></ul>Indian stock market indices Sensex and Nifty opened on a tepid note on Wednesday, tracking losses in index-heavyweights like HDFC Bank, ICICI Bank, and ITC amid weak cues from global markets. The 30-share BSE index Sensex was down 261.92 points, and the NSE Nifty was trading 0.75% lower at 10:10 am. Here’s a list of the top losers and gainers in the Nifty pack. <table style="border-width: initial; border-style: none;"></colgroup><tbody><tr><td style="border-left:solid #000000 0.9907650000000001pt;border-right:solid #000000 0.9907650000000001pt;border-bottom:solid #000000 0.9907650000000001pt;border-top:solid #000000 0.9907650000000001pt;vertical-align:bottom;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Top Nifty Gainers </td><td style="border-left:solid #000000 0.9907650000000001pt;border-right:solid #000000 0.9907650000000001pt;border-bottom:solid #000000 0.9907650000000001pt;border-top:solid #000000 0.9907650000000001pt;vertical-align:bottom;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Top Nifty Losers </td></tr><tr><td style="border-left:solid #000000 0.9907650000000001pt;border-right:solid #000000 0.9907650000000001pt;border-bottom:solid #000000 0.9907650000000001pt;border-top:solid #000000 0.9907650000000001pt;vertical-align:bottom;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Titan </td><td style="border-left:solid #000000 0.9907650000000001pt;border-right:solid #000000 0.9907650000000001pt;border-bottom:solid #000000 0.9907650000000001pt;border-top:solid #000000 0.9907650000000001pt;vertical-align:bottom;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Wipro </td></tr><tr><td style="border-left:solid #000000 0.9907650000000001pt;border-right:solid #000000 0.9907650000000001pt;border-bottom:solid #000000 0.9907650000000001pt;border-top:solid #000000 0.9907650000000001pt;vertical-align:bottom;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Tata Steel </td><td style="border-left:solid #000000 0.9907650000000001pt;border-right:solid #000000 0.9907650000000001pt;border-bottom:solid #000000 0.9907650000000001pt;border-top:solid #000000 0.9907650000000001pt;vertical-align:bottom;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Coal India </td></tr><tr><td style="border-left:solid #000000 0.9907650000000001pt;border-right:solid #000000 0.9907650000000001pt;border-bottom:solid #000000 0.9907650000000001pt;border-top:solid #000000 0.9907650000000001pt;vertical-align:bottom;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Bajaj Fin Serv </td><td style="border-left:solid #000000 0.9907650000000001pt;border-right:solid #000000 0.9907650000000001pt;border-bottom:solid #000000 0.9907650000000001pt;border-top:solid #000000 0.9907650000000001pt;vertical-align:bottom;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">NTPC </td></tr><tr><td style="border-left:solid #000000 0.9907650000000001pt;border-right:solid #000000 0.9907650000000001pt;border-bottom:solid #000000 0.9907650000000001pt;border-top:solid #000000 0.9907650000000001pt;vertical-align:bottom;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Hero MotoCorp </td><td style="border-left:solid #000000 0.9907650000000001pt;border-right:solid #000000 0.9907650000000001pt;border-bottom:solid #000000 0.9907650000000001pt;border-top:solid #000000 0.9907650000000001pt;vertical-align:bottom;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">ONGC </td></tr><tr><td style="border-left:solid #000000 0.9907650000000001pt;border-right:solid #000000 0.9907650000000001pt;border-bottom:solid #000000 0.9907650000000001pt;border-top:solid #000000 0.9907650000000001pt;vertical-align:bottom;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Bajaj Auto </td><td style="border-left:solid #000000 0.9907650000000001pt;border-right:solid #000000 0.9907650000000001pt;border-bottom:solid #000000 0.9907650000000001pt;border-top:solid #000000 0.9907650000000001pt;vertical-align:bottom;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">IOC </td></tr></tbody></table>*as of October 14, 10:00 am These are the top stocks in news today. Future Enterprises crash 5% Kishore Biyani led Future Enterprises shares crashed 5% during the early trading hours on Wednesday. The company informed investors that it defaulted on a payment of the interest on Non-Convertible Debentures worth ₹15.14 crore. The due date for fulfilling the interest was October 12. This also moved other Future Group stocks — Future Retail and Future Lifestyle Fashion and Future Consumer were down 3%. Wipro down 6% The shares of IT major Wipro were down 6% after it reported a 3.40% year-on-year (YoY) decline in consolidated net profit at ₹2,465.70 crore for the quarter ended September 30. The company also approved buyback of shares worth ₹9,500 crore at a floor price of ₹400 per equity share. Brokerages tread caution as they see a limited upside in the stock. SBI Cards shares climb 3% after festive season offer The shares of SBI Cards and Payment Services jumped over 3% after the company unveiled over 1,000 new offers spread across the country ahead of the festive season. The offers will be available for SBI cardholders till November 1. Karnataka Bank up over 3% The shares of India's twelfth largest private sector bank, Karnataka Bank were trading 3% higher after it reported 12.78% growth in its net profit to ₹119.44 crore for the quarter ended September 30. NTPC down 3% The shares of government-owned National Thermal Power Corporation (NTPC) were trading 3% lower after it announced plans to raise ₹4,000 crore via the issue of Non-Convertible Debentures. Adani Green gains 3% The shares of Adani Green were up 3% after the Competition Commission of India (CCI) approved the acquisition of various solar energy assets by a joint venture of Adani Energy and Total Solar. SEE ALSO: <a href="https://www.businessinsider.in/stock-market/news/top-stocks-to-watch-wipro-infosys-future-retail-airtel-irctc-srf-and-others/articleshow/78651966.cms" data-type="tilCustomLink">Top stocks to watch — Wipro, Infosys, Future Retail, Airtel, IRCTC, SRF, and others</a> <a href="https://www.businessinsider.in/tech/mobile/news/apple-new-iphone-12-series-with-5g-launched-starting-at-rs-69999-along-with-side-homepod-mini-debut/articleshow/78647779.cms" data-type="tilCustomLink">Apple's new iPhone 12 series with 5G launched starting at ₹ 69,999 along with HomePod Mini debut</a> <a href="https://www.businessinsider.in/science/news/a-spacecraft-flying-by-venus-on-wednesday-night-could-confirm-recently-found-signs-of-alien-life/articleshow/78646790.cms" data-type="tilCustomLink">A spacecraft flying by Venus on Wednesday night could confirm recently found signs of alien life</a>

Top stock movers — Wipro, Future Retail, SBI Cards, NTPC, Adani Green and others

<ul><li>At 7:45 am, the SGX Nifty was up 0.17%, indicating a green start for Nifty50.</li><li>Here’s a list of stocks to watch for in trade today. </li><li><a href="https://www.businessinsider.in/">Check out the latest news and updates on Business Insider.</a> </li></ul>Indian stock-market indices are likely to begin on a tepid note on Wednesday, led by mixed cues from the global markets. The Indian markets ended at record highs on Tuesday, with Nifty inching closer to the 14,000 mark. At 7:45 am, the SGX Nifty was up 0.17%, indicating a green start for Nifty50. On Tuesday, the US stocks pulled back from record highs as hopes for $2,000 direct stimulus payments faded. The Dow Jones Industrial Average closed 0.22% lower, and the S&amp;P 500 was down 8 points. These are the stocks to watch out for during the trading session today: Jindal Stainless Jindal Stainless Hisar (JSHL) said its board had approved the company’s merger into the country’s largest stainless steel maker Jindal Stainless Ltd (JSL). Having a total melting capacity of 0.8 million tonnes per annum (MTPA), Hisar-based JSHL is the largest speciality stainless steel producer in India with a diversified value-added product portfolio. Future Retail &amp; RIL After Amazon, the<a href="https://www.timesnownews.com/business-economy/companies/article/future-retail-writes-to-sebi-asks-to-expedite-review-of-deal-with-reliance-retail-quickly/700431"> Kishore Biyani-led Future Group has written to market</a> regulator SEBI to review and approve its ₹24,713 crore deal with RIL. Future Group has requested SEBI to expedite the review of the proposed deal and issue a no-objection certificate, while Amazon had urged that the review of the “impugned transaction” be suspended. Jindal Steel &amp; Power Jindal Steel and Power (JSPL) said it had received the ‘regular rail supplier’ status from the Indian Railways. In a statement, JSPL said it had become the first private company in India to be awarded the ‘regular supplier’ status from the national transporter. SBI, PNB, HDFC Bank, ICICI Bank, Manappuram Finance, Muthoot, other NBFCs and banks SBI, PNB, HDFC Bank, ICICI Bank, Manappuram Finance, Muthoot, other NBFCs and banks will be in focus during the trade today. The <a href="https://timesofindia.indiatimes.com/business/india-business/financial-sector-faces-challenging-times-ahead-rbi/articleshow/80015883.cms">Reserve Bank of India (RBI) in a report</a> on Tuesday said the India's financial sector should brace for challenging times ahead with an increased risk of deterioration in asset quality and lower demand for loans. UPL UPL has completed the pre-payment of $410 million of 3.25% Senior Notes due October 2021. The company said that the pre-payment, which concluded on December 28, was done using the cash on its balance sheet. This prepayment is in line with its commitment to reduce debt. TCS &amp; Wipro The ₹16,000-crore buyback of Tata Consultancy Services, which will end on January 1, has received an overwhelming response from investors and has been subscribed 163% so far. Similarly, for Wipro, today is the second day to <a href="https://www.businessinsider.in/stock-market/news/wipro-share-buyback-offer-should-you-sell-your-shares-heres-what-analysts-are-saying/articleshow/80006272.cms">subscribe to ₹9,500 crore buyback</a>. The issue for Wipro will close on January 11. IRCTC Indian Railways will operate a special Mumbai-Delhi Rajdhani train 4 days a week. IIFL Securities The ₹90-crore share buyback for IIFL Securities will open today. SEE ALSO: <a href="https://www.businessinsider.in/politics/world/news/mitch-mcconnell-says-the-senate-will-consider-trumps-demand-for-2000-stimulus-checks-but-rejects-initial-vote/articleshow/80017236.cms" data-type="tilCustomLink">Mitch McConnell says the Senate will consider Trump's demand for $2,000 stimulus checks but rejects initial vote</a> <a href="https://www.businessinsider.in/thelife/news/american-airlines-just-completed-the-boeing-737-maxs-first-passenger-flight-in-the-us-since-march-2019/articleshow/80016117.cms" data-type="tilCustomLink">American Airlines just completed the Boeing 737 Max's first passenger flight in the US since March 2019</a> <a href="https://www.businessinsider.in/india/news/new-strain-of-uk-covid-19-virus-is-a-lot-more-contagious-warns-indias-health-ministry/articleshow/80011618.cms" data-type="tilCustomLink">The new strain of COVID-19 is a lot more contagious, warns India's Health Ministry</a>

Top stocks to watch — SBI, HDFC Bank, Wipro, RIL, Future Retail, TCS, Jindal Stainless, UPL, IRCTC, and others

In a major restructuring exercise, <keyword id="6354731" type="DOMAIN" weightage="20" keywordseo="state-bank-of-india">State Bank of India</keyword> has created a separate Financial Inclusion and Micro Market (FI&amp;MM) vertical with a focus on rural and <keyword id="9333024" type="UNKNOWN" weightage="20" keywordseo="semi-urban-areas">semi urban areas</keyword> to improve customer experience. Under this newly launched vertical, the bank will offer loans mainly for agriculture as well as allied activities, and micro and small enterprises, <keyword id="13222" type="CITY" weightage="20" keywordseo="SBI">SBI</keyword> said in a statement on Tuesday. About 8,000 branches in rural and semi urban areas have been identified for providing specialised services to micro segment, including micro credit for <keyword id="390673" type="PERSON" weightage="20" keywordseo="small-businesses">small businesses</keyword> and farmers, it said. The thrust is also to improve service quality and availability of banking services through the bank's vast network of over 63,000 customer service points in rural, semi urban, urban and metro areas, it said, adding the new vertical will provide a boost to the micro-finance sector. "Today is an important day in our resolve to ensure that SBI stands with the citizens of the country, across all segments. The key elements of creating the FI&amp;MM vertical are to bring sharper focus to different business lines and improve the quality of interaction with customers at the branch," SBI Chairman Rajnish Kumar said. This is an initiative by SBI to cater to financial requirements of people residing in the hinterland of the country, as part of its financial inclusion journey, he added. "The new FI&amp;MM vertical will provide an opportunity to serve the small business, Agri &amp; allied segment so that they can run their businesses smoothly, especially in the current times of uncertainty. The creation of the FI&amp;MM Vertical was conceived, created and implemented fully in house," Kumar said. Commenting on the Delhi region, CGM in-charge Vijuy Ronjan said as many as 612 branches spread across four states, including Delhi and Haryana, would fall under the new vertical. "The initiative will help improve credit delivery to the retail, MSME and agriculture sector in the rural and semi-urban areas of the country. Besides, it will lead to better utilisation of banking correspondent channel. As a result, the goal of financial inclusion and doorstep banking of the government can be given a further push," Ronjan said. On the first day itself, he said, the circle has disbursed about Rs 7.17 crore to 168 eligible MSME units through the FI&amp;MM vertical under the Guaranteed Emergency Credit Line (GECL), part of the Atmanirbhar Bharat Abhiyan package. The statement further said the FI&amp;MM vertical is headed by the bank's deputy managing director Sanjeev Nautiyal at the national level. To ensure special focus and smooth functioning at the local level, it said, the FI&amp;MM vertical will comprise of a four tiered structure under the Chief General Manager, General Manager, RMs at <keyword id="9333023" type="COMPANY" weightage="20" keywordseo="regional-business-offices">Regional Business Offices</keyword> (RBO) and <keyword id="9333022" type="LOCATION" weightage="20" keywordseo="district-sales-hub">District Sales Hub</keyword> to strengthen the credit delivery system and improve the turnaround time for quick sanctions and disbursement of small loans. The primary emphasis will be on consolidating the district level presence which will provide constant sales and recovery support to branches in the FI&amp;MM network, it said. The DSHs will also play an important role in strengthening the reach of customer service points (CSPs) and ensure improvement in quality and availability of services rendered to customers. Amid the COVID-19 pandemic, SBI has been at the forefront in providing relief measures to existing SME borrowers, such as 10 per cent of fund based working capital limits by way of CCECL (Common COVID-19 Emergency Credit Line), easing of working capital finance along with moratorium on term loans and working capital. SEE ALSO: <a href="https://www.businessinsider.in/finance/news/yes-bank-is-looking-to-raise-10000-crore-through-fpo-with-kotak-securities-axis-capital-and-sbi-capital-reportedly-to-be-key-players/articleshow/76153458.cms">Yes Bank is looking to raise ₹10,000 crore through FPO – with Kotak Securities, Axis Capital, and SBI Capital reportedly to be key players</a> <a href="https://www.businessinsider.in/business/news/how-to-apply-for-msme-loan/articleshow/76154606.cms">Here’s how MSMEs can apply for loans from SBI, ICICI Bank and others</a> <a href="https://www.businessinsider.in/finance/news/sbi-axis-bank-and-kotak-mahindra-bank-and-other-banking-stocks-are-raising-capital-to-fill-npa-hole/articleshow/76054599.cms">Indian lenders like SBI, Axis Bank and others need $20 billion⁠ in capital— most of it will go into filling up NPA holes</a>

SBI announces new vertical to focus on rural and semi urban areas

<ul><li>Over the years, India has changed from a cash-led economy to a smartphone-led payment economy, says SBI Ecowrap. </li><li>Lower currency in circulation results in less leakage of deposits and it will impact monetary transmission positively, it adds. </li><li>In FY16, the share of currency in circulation (CIC) in payment systems was at 88%. This has come down to 20% in FY22. </li></ul> For the first time since 2002 – that’s 20 years – currency in circulation has declined during the Diwali week, says a report by SBI Ecowrap. This is, however, barring a marginal decline seen in the same period in 2009 because of economic slowdown. “Indian economy is undergoing a structural transformation. The innovations in technology have changed the Indian payment system. Over the years, the Indian cash-led economy now has changed to (a) smartphone-led payment economy,” the report said, calling it a remarkable development. This coincides with a record high in terms of value of UPI transactions in October 2022 – 7.3 billion transactions to the tune of ₹12.11 trillion – growing by 73% year-on-year <a href="https://www.business-standard.com/article/finance/upi-processes-over-7-bn-transactions-in-oct-record-high-since-inception-122110100569_1.html"> in volume terms</a>. Digital transactions turn faster, cheaper and easier Over the years, digital payments have become cheaper and easier and even brought those without bank accounts into the system. Moreover, the interoperable payment systems like UPI, wallets and prepaid payment instruments or PPIs have made the process simpler. As per the report, small retail payments done through UPI/e-wallets account for around 11-12% of the payment industry. Moreover, the share of cash in payment systems has reduced drastically in the last six years. In FY16, the share of currency in circulation (CIC) or cash transactions in payment systems was at 88% - this was prior to the launch of UPI in 2016. This share has come down to 20% in FY22. Moreso, it’s estimated to go down to 11.5% by FY27. Subsequently, the share of digital transactions that have been defined as IMPS, UPI and PPI by the report – have increased substantially. These transactions were at 11.26% in FY16 - and went up to 80.4% in FY22. It is expected to touch 88% in FY27. Clearly, digital transactions are taking the place that cash once held. “The success of the digital journey is primarily due to the relentless push by the Government to formalise and digitalise the economy. Over the years, the system has expanded rapidly with new innovations like QR code, NFC etc and has also seen the swift entry of big tech firms in this industry,” the report said. Less cash to print India has always been an economy with high cash in circulation. It comes next only to Japan and Hong Kong in terms of currency <a href="https://timesofindia.indiatimes.com/business/india-business/high-cash-in-circulation-aids-current-rbi-policy/articleshow/92641909.cms">in circulation (CIC) as a percentage </a>of GDP, which was at 14.2% in FY22, as per RBI data. As this percentage reduces and the economy is formalised, it can aid the banking system. “In simple terms, it implies that the RBI has to print less of currency given that UPI transactions impact currency in circulation with a lag. This is a win-win for both RBI and government, as it results in saving of seigniorage costs and also a less cash economy,” the report said. Currently, liquidity estimation of the country is impacted by a high amount of cash in the system, which is not easy to account for. Without a currency leakage, this estimation can now see a fundamental reorientation, the report says. “A lower currency in circulation also is akin to a CRR cut for the banking system, as it results in less leakage of deposits and it will impact monetary transmission positively,” the report said. CRR or cash reserve ratio is a specified minimum fraction of the total deposits of customers, which commercial banks have to hold as reserves either in cash or as deposits with the central bank. Apart from encouraging digital payments via UPI, the RBI is also currently working on piloting a Central Bank Digital Currency (CBDC) or the digital rupee. The RBI governor Shaktikanta Das said that it can transform the way the business is done. “It was indeed a landmark moment in the history of money, in the history of currency in our country. Going forward, it will be a landmark achievement so far as the functioning of the entire economy is concerned,” Das said on November 2.

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RBI crackdown on personal loans – Bajaj Finance, IIFL, Aditya Birla and SBI Cards to take a bigger hit, say analysts

Malini Bhupta

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Top stock movers — Wipro, Future Retail, SBI Cards, NTPC, Adani Green and others

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SBI announces new vertical to focus on rural and semi urban areas

PTI

Diwali week cash circulation declines for the first time in 20 years: SBI Ecowrap

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