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India is spearheading the global digital revolution, with its financial technology driving the rapid adoption of digital payments, according to Reserve Bank of India (RBI) Deputy Governor Michael Debabrata Patra.
Speaking at the DEPR Conference on “Digital Technology, Productivity, and Economic Growth in India” on November 13, Patra highlighted that the digital economy currently accounts for 10% of India’s GDP and is projected to reach 20% by 2026, based on trends from the past decade.
Unlocking Growth Through Digital Infrastructure
Patra emphasized India’s unique position to capitalize on its digital public infrastructure (DPI), a thriving IT sector, and its large, youthful population, which includes one of the world’s largest AI talent pools. These factors, he said, create fertile ground for unlocking new growth opportunities and optimizing existing ones.
Banks Embrace Digital Transformation
Highlighting the digitalisation of Indian finance, Patra cited survey data showing widespread adoption of digital banking services by Indian banks:
- 100% of banks offer mobile and internet banking.
- 75% provide online account opening, digital KYC, and doorstep banking.
- 60% have introduced digital lending platforms.
- 50% offer payment aggregator services, while 41% use chatbots.
- 24% have embraced open banking, and 10% have integrated Internet of Things (IoT) technology.
“An AI-assisted review of the latest annual reports of Indian banks reveals various instances of productivity gains by SCBs (Scheduled Commercial Banks) from digitalisation,” Patra stated. These gains include significant reductions in costs and resource usage, such as saving 14,500 person-days monthly, cutting customer acquisition costs by 25-30%, and reducing paper use by 84 tonnes annually. Additionally, digitalisation has led to a 40% decrease in customer wait times at branches and saved four lakh litres of fuel through reduced customer commutes.
Global Collaboration and Policy Priorities
India is also playing a pivotal role in international digital finance initiatives, Patra said. Under its G20 Presidency, India has proposed the Global Digital Public Infrastructure Repository, a knowledge-sharing platform for lessons from G20 nations and guest countries.
Patra noted India’s involvement in global projects like Project Nexus and mBridge, which aim to link open finance frameworks across nations. The RBI’s approach balances risk mitigation with financial innovation, focusing on five key policy priorities:
- Digital financial inclusion.
- Development of DPI.
- Customer protection and cybersecurity.
- Promoting sustainable finance.
- Advancing global integration and cooperation.
Balancing Innovation and Supervision Patra concluded by highlighting the RBI’s efforts to maintain open communication with stakeholders and adapt supervisory processes to support both innovation and risk management. “The overall approach,” he said, “has been to balance risk mitigation and financial innovation while fostering global collaboration.”
