RBI Links FX-Retail Platform to Bharat Connect; Grants Wider Access To Fair Forex Deals

The Reserve Bank of India (RBI) has taken a significant step towards expanding the reach of the FX-Retail platform. The central bank has decided to link the platform with the National Payments Corporation of India’s (NPCI) Bharat Connect. This move is aimed at providing greater transparency and fairness in the pricing of foreign exchange to a broader user base, particularly individuals and Micro, Small, and Medium Enterprises (MSMEs).

The FX-Retail platform, launched by the Clearing Corporation of India Ltd (CCIL) in 2019, is currently accessible through an internet-based application. The platform was developed with the objective of bringing greater transparency and fairness in the pricing of foreign exchange for users, especially for individuals and MSMEs.

The linkage with Bharat Connect will enable users to register and transact on the FX-Retail platform through the apps of banks and non-bank payment system providers integrated with Bharat Connect. Bharat Connect, formerly known as Bharat Bill Payment System, is operated by the NPCI.

In the first phase of this initiative, a pilot facilitating the purchase of the US dollar against the rupee by individuals and sole proprietors is proposed. The scope will be expanded in the future to cover other FX transactions, including the sale of the US dollar against the rupee and other categories of users. Users will continue to have the option to directly access the FX-Retail platform and transact under the existing mechanism.

In addition to this, the RBI has also proposed to launch podcasts for wider dissemination of information that is of interest to the general public. This is part of the Reserve Bank’s efforts to deploy traditional and new-age communication techniques to ensure transparency and greater impact of its decisions, explain the rationale behind its decisions, and disseminate various awareness messages to a wider audience.

In a related development, the RBI has proposed to allow small finance banks to extend pre-sanctioned credit lines through Unified Payments Interface (UPI). This move is expected to make available low-ticket, low-tenor products to ‘new-to-credit’ customers. Small Finance Banks (SFBs) can play an enabling role in expanding the reach of credit on UPI, leveraging a high-tech, low-cost model to reach the last-mile customer.

The RBI’s decision to link the FX-Retail platform with Bharat Connect and its proposal to allow small finance banks to extend credit lines through UPI are significant steps towards enhancing the accessibility and affordability of financial services in India. These initiatives are expected to benefit a large number of individuals and MSMEs, contributing to the overall growth and development of the Indian economy.