Digital Payments in India to increase to 1 trillion by 2023

By Ridhima Malhotra 

Global financial services company Credit Suisse reports that Digital Payments in India are projected to rise fivefold in the next five years and will reach $1 trillion.

 Entry of global players like Google, Facebook and WhatsApp is likely to cause a major increase in the digital payments market.Google's digital payment app, Tez plays a big part in increasing awareness about digital payments.  In just four months,  Google's payment app is in close competition with Axis Bank which has been processing similar digital transactions.

This week WhatsApp rolled out its payment feature for select users across the country, providing a strong boost to it's digital payment ecosystem. WhatsApp tries to incorporate the payment feature in its chat application itself. Although it would be challenging to bring in large modifications in one of the world's busiest app. The Unified Payments Interface (UPI) channel has overtaken mobile wallets in terms of monthly value transactions. Now UPI and mobile wallet transactions are almost equal to a quarter of the value of card payments made at point of sale terminals. Credit Suisse mentioned in its report that "Digital payments (in India) currently aggregate less than USD 200 billion, of which mobile is still at just USD 10 billion in financial year (FY) 2018 E (estimated) . We estimate that the total digital payment market in India will grow to USD 1 trillion by FY23E led by the growth in mobile payments".

After demontisation, a sudden spurt in the growth of digital money transactions was seen. The government's push for a cashless economy has also proven to be boost for digital payment applications. However, it remains to be seen if the new global  players are able to carve out a niche in the Indian market.

WhatsApp UPI opens door for Indian Payments

By Shweta Arya


WhatsApp has over 200 million active monthly users in India. The platform is now leveraging this massive reach by the launch of its own digital payment service exclusively for India.

WhatsApp has only launched the beta version of the payments feature for now. The WhatsApp Pay feature is only available in India and the transactions will be done via Unified Payments Interface (UPI). UPI is a payment method where the user will have to link their bank account and have a separate UPI PIN to generate the transaction.

The entry of big players like WhatsApp and Google at this juncture could mean the end of the road for smaller, struggling firms.

While WhatsApp Pay seems to make life easier, the only drawback is that it is not compatible for making payments to e-commerce marketplaces such as Flipkart, Amazon, etc. The feature is also not exclusively for making payments to shopkeepers or brick and mortar stores until and unless the shopkeeper is in your contacts. Paytm founder Vijay Shekhar Sharma has also demanded a level-playing field for all UPI-based apps. WhatsApp has custom-implemented Unified Payments Interface (UPI) system which is not secure and flouts norms laid out by the National Payments Corporation of India (NPCI) that has developed the UPI system.                                                                                     

If WhatsApp implements an effective strategy, it has the potential to become as big as WeChat, China’s largest messaging application with over 960 million monthly active users. It isn’t just about the number of users, but also in terms of engagement levels, WhatsApp scores way higher than other apps. Therefore, theoretically it will be easier for it to engage customers who are looking at making peer-to-peer payments.

New Bad Loan Resolution Framework : RBI

By Aashi Sehrawat

To overcome bad loan problems, Reserve Bank of India (RBI) has come up with a strict 180-day timeline within which banks have to finalise a resolution plan in case of a default, failing which they have to refer the account for bankruptcy under the Insolvency and Bankruptcy Code (IBC). The loan-restructuring mechanisms were issued late on Monday. This framework seeks to push more big defaulters towards bankruptcy to get rid of the bad loans faced by lenders.

A major change that will impact banks immediately is the fact that most existing stressed asset schemes have been subsumed by the new framework, i.e., schemes such as Corporate Debt Restructuring (CDR), Strategic Debt Restructuring (SDR), the Scheme for Sustainable Structuring of Stressed Assets (S4A), and the Flexible Structuring of Long Term Loans won't exist now.

So, what does the framework describe?

·    Banks must report defaults on a weekly basis in the case of borrowers with more than Rs 5 crore in bank debt. Once a default has occurred, banks will have 180 days within which to come up with a resolution plan. Should they fail, they will need to refer the account to the IBC within 15 days.

·   The new set of rules mandate that all future restructuring will amount to the account being termed as bad, which means an immediate provisioning of 15%.

·   The Joint Lenders Forum (JLF), which had been set up to coordinate resolution of large consortium loans, has also been disbanded.

·        Since the Revised Framework has replaced all the existing schemes, so now existing accounts under these schemes, (if not restructured and implemented), will now be governed by this revised framework. Lenders would need to go back to the drawing board to ensure that the restructuring meets the norms under the Revised Restructuring Framework.

By this big reform in plans, RBI has removed many constraints on debt restructuring. The framework will help the Indian Banking System to move towards time bound resolution of stressed loans.

RIL wins Golden Peacock Award

By Shivam Saklani

Reliance Industries Limited, on Friday won Golden Peacock Award 2017 for Corporate Social Responsibility initiatives. In a statement, RIL said that the award was recognition, in particular, of the work done by its CSR arm Reliance Foundation under Founder and Chairman Nita Ambani. RIL said that Reliance Foundations has touched the lives of over 15 million people across India, covering more than 13,500 villages and 74 urban locations.

Golden Peacock Awards, instituted by the Institute of Directors (IOD) in 1991 in India, are regarded as benchmark of Corporate Excellence. One of the key initiatives recognized by the jury, chaired by Supreme Court former Justice Arijit Pasayat, aims at impacting farmer’s livelihood through water and food security interventions.

Under its rural transformation initiative, Reliance has been implementing a program called “Bharat India Jodo (BIJ)” that works closely with marginal and small farmers for enhancing lives and livelihood, and making agriculture a first choice profession.While the initial engagement is aimed at land development and water security measures, the other key intervention, under the program promote food and nutritional security and creating linkages for better price realization.

Budget 2018: Education and Employment

By Shivam Saklani

As the government gears up for the growth of around 8% in this fiscal year, we discuss what budget 18 had in the store for us, especially regarding education and employment area.

The estimated budgetary expenditure on health, education and social protection for 2018-19 is Rs. 1.38 lakh crore, observing a rise of 16 thousand crore from previous budget. Mr. Jaitely announced setting up of Eklava Model Residential School; on par with Navodaya Vidyalayas to provide the best quality education to the tribal children in their own environment by 2022 in every block with more than 50% ST population and at least 20000 tribal persons with special facilities for preserving local art and culture.

The government again didn’t address any substantial scheme for higher education in the conventional Scirence and Arts subjects, but giving impetus to technical education, FM announced Prime Minister’s Research Fellows (PMRF). Under this scheme 1000 best B.Tech students will be identified Each year from primier institutions and provide them facilities to do PHD in IITs and IISCs with a handsome fellowship.

Budget 2018 has given a big thrust to MSME to boost employment and economic growth. A sum of Rs. 3794 crore has been provided for giving credit support. In Mudra Yojna, government has set a target of Rs. 3 Lakh Crore for lending in 2018-19.

While presenting the budget, the FM cited an independent study stating that 70 lakh formal jobs will be created this year. Mr. Jaitely also announced that the government will contribute 12% of the wages of the new employees in the EPF for all the sectors for next three years. He proposed to make amendments in the Employees Provident Fund and Miscellaneous Provisions Act, 1952to reduce Women employees’ contribution to 8% for first three years of their employment against existing rate of 12% or 10% with no change in Employer’s contribution.

The government has yet to show substantial work on the employment sector. With the last budget of the government out, the only option left for the government to fare well in the elections would be to show results in the promises made.

Economic Survey 2018

By Shivam Saklani

The Economic Survey 2018 has estimated that the Indian Economy will grow by 7-7.5 per cent in 2018-19, thus re-establishing India as the world’s fastest growing economy.

FM Arun Jaitely, presented the Economic Survey in the parliament on Monday, and said that the second half of FY18 can clock 6.75 per cent growth. A 50% increase in the number of indirect taxpayers, was reported in this survey but the survey also cites that collections of direct taxes by the states and other local governments, where they have powers to collect them, is significantly lower than their counterparts in other federal countries. It directly implies that there is still the need of tax awareness for the citizens.

The survey had impeccably captured the footprints of climate change on the Indian Territory and its adverse impacts on agricultural yields. Improper Irrigation was again cited as the biggest reason for the irregular agrarian yield. It is time India should take help from Israel in solving the problem. The Economic Survey has observed that the quality of hygiene and sanitation had a significant impact on improving the health outcomes. The Swachh Bharat Mission has increased the sanitation coverage in rural India from 39% in 2014 to 76% in Jan 2018.

8 States and 2 UT have been declared as Open Defecation Free (ODF). The Survey also told that an average household in an ODF village saves up to Rs. 50,000 every year.

The survey has suggested that the country has to become one of the largest producers of knowledge. Currently it is said that 1 out of every 6 student in the US+UK is Indian. The survey stated the need to invest more in the research sector, so as to attract youth towards research fields.

The survey said that India’s formal sector i.e. non-farm payroll is substantially greater than currently believed. It further states that the digitization of government data and introduction of GST have provided an opportunity to make some preliminary estimates of formal employment. Defining formal employment in 2 ways, either in terms if employees receiving some kind of social security benefits or from a tax net perspective, the survey states that there are 22 crore employees in the country currently (out of 1.3 billion population) for this , EPFO & ESIC data has been used.

While some economists have said that new EPFO Registration doesn’t necessarily mean a new job; it could simply have been fallout of demonetization, where hitherto informal workers were newly registered as formal employees. The good news is that the survey lists employment generation, specifically finding good jobs for the young and burgeoning work force as a key area of policy over the medium term. The action and policies of the government on the same are yet to be seen.

India-ASEAN Summit 2018

By Shweta Arya

The India-ASEAN Summit 2018 is scheduled for 25th and 26th January 2018. It is a semi-annual meeting held by the members of the ‘Association of Southeast Asian Nations’ (ASEAN) in relation to economic, political, security and socio-cultural development of Southeast Asian countries.           

The ASEAN comprises Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, Philippines, Singapore, Thailand and Vietnam.

In addition, the summit serves as a prominent regional and international conference, with world leaders attending its related summits and meetings to discuss about various problems and global issues, strengthening cooperation, and making decisions. The summit has been praised by world leaders for its success and ability to produce results on a global level.

The invitation to all 10 ASEAN heads of state/government as chief guests for 'India’s 68th Republic Day' celebrations will mark yet another and even more significant upgrade of the relationship. All 10 ASEAN leaders will be present at the ceremony.

The India-ASEAN trade is currently only US$ 71 billion and has been declining since reaching a peak of US$80 billion in 2011-12. Despite more than 22% of India’s cumulative outward FDI being located in ASEAN and 2,000 Indian companies being present in ASEAN countries, India’s profile is modest when compared to China and Japan. 

Under its 'Act East Policy', New Delhi is pushing to boost its relationship via connectivity, commerce and culture with this regional bloc. This gesture reflects the Indian intent to highlight the priority it attaches to its South East Asian neighbourhood