'Esma being extra-jurisdictional is RBI's stand'

India is well-equipped to manage any excess volatility in the exchange rate due to the outcome of the US election results, said T RABI SANKAR, deputy governor of the Reserve Bank of India (RBI), in a conversation with Tamal Bandyopadhyay at the Business Standard BFSI Insight Summit 2024. Separately, he also spoke about how the RBI is looking to internationalise the Unified Payments Interface (UPI), and the plans for the Unified Lending Interface (ULI) and central bank digital currency (CBDC). Edited excerpts:

- T RABI SANKAR

What do you think will be the impact of the US presidential elections?

There will be short-term volatility in most markets because we are seeing a change in government in what is the largest and most powerful economy in the world. Beyond that, the impact will depend a lot on US involvement in global tariffs and how it manages its fiscal policy. It will also depend on US engagement with geopolitical issues. So, it is very difficult to predict how things will play out or impact the markets in the medium term.

From India's perspective, as far as the exchange rate is concerned, we are well-equipped to manage any excessive volatility.

Additionally, in terms of reserves, the health of the banking system, and the economy, we are well-placed.

What is next in store for UPI?

UPI is a payment instrument that has caught the world's attention due to its efficiency in digital transactions and how it is catching on among both retail and business users. The number of UPI transactions per month is increasing, now reaching about 535 million transactions per day. What we need to ensure is that this growth continues and extends to areas of the economy and sections of the population where UPI is not yet being used. This will not only improve payments for these sections but also increase the efficiency of our economy.

We also need to ensure that UPI can be used offline and on feature phones. The benefits we see with UPI in the domestic space must extend to the global space as well. We have already started efforts to link UPI with other countries such as Singapore, Mauritius, and others.

We should aim to expand UPI's use worldwide so that any Indian with a UPI account can make payments globally. Discussions are ongoing with various advanced economies, and I hope this pans out to make this a reality.