Cash deposit facility in banks through use of UPI soon: RBI

RBI Governor Shaktikanta Das said, 'Given the popularity and acceptance of UPI, as also the benefits seen from the availability of UPI for card-less cash withdrawal at ATMs, it is now proposed to facilitate cash deposit facility through use of UPI.'

New Delhi: The use and features of Unified Payments Interface (UPI) are set to get expanded further with the Reserve Bank of India (RBI) on Friday announcing that it would soon be used for depositing cash through automated teller machines (ATM).

RBI Governor Shaktikanta Das revealed the plans while announcing the monetary policy committee’s decision on policy interest rates.

At present, deposit of cash through cash deposit machines (CDMs) is primarily being done with the help of debit cards. It can also be done by manually entering the bank account number.

“Given the experience gained from card-less cash withdrawal using UPI at the ATMs, it is now proposed to also facilitate deposit of cash in CDMs using UPI,” Das said.

“This measure will further enhance customer convenience and make the currency handling process at banks more efficient,” he added.

Cash deposit machine or CDM is an automated machine that allows customers to deposit cash into their bank accounts without the need for filling out deposit slips or standing in long queues at the bank. It is similar to an ATM machine, but instead of dispensing cash, it accepts cash deposits.

“Allowing cash deposits through UPI is yet another major forward movement of our digital economy and would ensure ease of banking for the customers,” said ASSOCHAM Secretary General Deepak Sood. UPI, which was launched in 2016, has primarily been used for peer-to-peer transactions, bill payments, merchant transactions and other digital payments. In January this year, the RBI broadened the use of UPI by allowing cash withdrawal through it at ATMs.

Syncing wallets to UPI

The RBI Governor also announced that the central bank would allow the use of third-party UPI apps for making UPI payments via prepaid payment instrument (PPI) wallets, like Paytm and GooglePay.

“At present, UPI payments from Prepaid Payment Instruments (PPIs) can be made only by using the web or mobile app provided by the PPI issuer. It is now proposed to permit the use of third-party UPI apps for making UPI payments from PPI wallets,” Das said.

“This will further enhance customer convenience and boost adoption of digital payments for small value transactions,” the governor added.

Soumya Kanti Ghosh, Group Chief Economic Adviser, State Bank of India (SBI), said in a note that the use of third-party UPI apps for making UPI payments from PPI wallets would go a long way in strengthening the fabric of the markets.

e-Rupee in non-bank systems

In another important development, the RBI governor announced a plan to allow distribution of digital rupee or Central Bank Digital Currency (CBDC) through non-bank payment system operators.

“The CBDC pilots are currently in operation with an increasing number of use-cases and participating banks. It is proposed to make CBDC-Retail accessible to a broader segment of users by enabling non-bank payment system operators to offer CBDC wallets,” Das said.

“This will also facilitate testing of the resiliency of the CBDC platform to handle multi-channel transactions,” the governor added.