Wednesday, May 8, 2024

Currency In Circulation after Demonetization

 I am going to analyze the CIC in the economy over the years after demonetization to gain better insights.

After the Demonetization of Modi Government, in Nov 8th,2016, India underwent a lot of upheaval.

We have since started using cashless means more. This graph shows the Currency In Circulation since a few(2) years and the image clearly shows peaks at around the harvesting season of may.


The heavy peak of may,2023 is also accentuated by the fact that 2000 rupee notes were demonetized around that time.

Here is another graphic to look at.


Apart from the earlier mentioned peaks around april,2023, some peaks of the CIC can be seen in Jul,2020 and may,2021 which coincided with the COVID 2019 first and second waves.

Thursday, December 9, 2021

UPI breaks the glass ceiling

        UPI had crossed 5 lakh crore($66 Billion) transaction value every month around May,2021 as mentioned in my previous posts. 

Latest news indicates it has crossed 100 Billion Dollars this October,2021. Hence FY,2021-22 is going to see for the first time UPI transaction value of more than 1 trillion dollars.

Among other updates is that One97 communications or the parent company of PayTM has launched a rather muted IPO. Its shares are down by a large margin after being allotted at ₹ 2150/- a piece.

PhonePe has emerged as the market leader with share of 47% in the UPI payment space followed by Google Pay which has a market share of 33% and PayTM with 10% share. Other players in the market include Amazon Pay and WhatsApp Pay.

Mobile Banking apps like iMobile and SBI Yono too have a significant market share.

RBI has woken up from slumber and made efforts at enabling UPI on feature phones. They are also reportedly working tackling the problem of small value transactions hitting the Core Banking System and cluttering the system.

RBI has proposed that all applications like GooglePay and PhonePe would be able to transact using UPI via their wallet balance which will not reflect in the bank passbook.

Wednesday, June 9, 2021

Financial tips on using UPI Apps

 A question asked on Quora got my attention:


Unified payment interface(UPI) can make your financial planning go haywire.

Impulse shopping which means customers throwing all caution to the wind and buying indiscriminately can cause long term reduction in savings.

Saving habit inculcated into people due to adverse economic conditions can be undone by profligacy.

A personal policy of not spending too much on non-essential items can go a long way in ensuring well being and a better future for the family.

CONTROL

This word depicts what is lacking in people. That one word or the lack of self discipline can make people act irresponsibly.

Now in a digital world one needs to be careful. We need to exercise control over ourselves in order to achieve something.

This google search is not something I did as a routine.

Its borne out of years of struggle with mind and its control.

It begins with a thought. The thought germinates and becomes a seedling. Seedling into a plant and a plant into a tree... The thought was of self improvement. The very desire to improve oneself is sufficient condition to go down the right path or worse course correction.

Wednesday, May 26, 2021

Retracing the history of UNIFIED PAYMENT INTERFACE(UPI)

I am no one in particular.

I am more ordinary than every other engineer who claims he is a software engineer. What got me enthused around 2008-12 was the speed up of aadhaar project and the possibility of widespread electronic payments.

Cashless means of payment were expected to reduce high levels of corruption in the society. The rollout of aadhaar gave a hope in the administrators that finally India could see a cashless or at least a less cash economy.

Around Oct,2013 the RBI set up a committee that went into payments invited suggestions for popularizing mobile banking. The committee also consisted of Mr. Dilip Asbe the then COO of NPCI.

These were the terms of reference of the Mobile Banking Committee:

The Reserve Bank of India has announced the constitution of a Technical Committee on Mobile Banking, to examine the options/alternatives including the feasibility of using encrypted SMS based funds transfer using an application that can run on any type of handset for expansion of mobile banking in the country.

Terms of Reference of the Committee are:

a. to conduct an in-depth study of the challenges faced by banks in taking mobile banking forward to the desired level;

b. to study the challenges faced by banks in introducing the Unstructured Supplementary Service Data (USSD) channel and suggest solutions, if any, to take this forward;

c. to consider the advantages/challenges of having a single application across all handsets in an SMS encrypted environment;

d. to examine any other optimum solution that would take mobile banking to every nook and corner of the country; and accordingly,

e. to draw up a road map for implementation of the solutions/options recommended

The Reserve Bank of India, Department of Payment and Settlement Systems, Central Office, Mumbai had invited the public to comment on the said move. The committee notification was issued by Ajit Singh, AGM, RBI on Oct 9th.

It is widely believed that Unified Payment Interface took birth as a consequence of the ideas and deliberations and of this committee report.

It is not clear after Jan,2014 when this report was available to April 12th,2016 when UPI was formally launched what all happened. If you search this committee report you will not find any reference to the word Unified Payments Interface(UPI).

Google claims it was consulted on the design of UPI to the federal reserve. So we can conclude that the birth of UPI as well as the idea of demonetization were well kept secrets. That both were connected was known even during Demo since the goal of promoting cashless payments was added to the motivations behind Demonetization.

Just look at these statistics around the few months of the year 2020 on the prevalence of UPI among the population.

This is October, November and December

This is July, August and September

This is March, April and May

This is Dec,2019 - Feb,2020

If we plot these trends which are obviously going up,



The latest news from the UPI stable is that transaction value has crossed 5 lakh crore(5 trillion rupees which is approx. 66 billion dollars worth of transactions every month)