RTGS may be extended to US$, Euro, and British pound

The Reserve Bank of India is exploring the expansion of the Real-Time Gross Settlement System (RTGS) to include transactions in US dollars, euros, and British pounds, according to RBI Governor Shaktikanta Das. The money transfer facility’s expansion could be achieved through bilateral or multilateral arrangements, he said.

US dollar_TPCI

Image Credit: Shutterstock

The Reserve Bank of India (RBI) is considering expanding the Real-Time Gross Settlement (RTGS) system to facilitate transactions in major currencies like the US dollar, Euro, and British pound through bilateral or multilateral agreements. RBI Governor Shaktikanta Das emphasized the potential of Central Bank Digital Currency (CBDC) to streamline cross-border payments, particularly for remittances,
which are crucial for emerging economies like India. He noted that there is significant potential to reduce both the cost and time of such transactions. Mr. Das said, “India and a few other economies have already commenced efforts to expand linkage of cross-border fast payment systems both in the bilateral and multilateral modes.”

RTGS allows immediate fund transfers between banks, with a minimum transaction amount of Rs 2 lakh and no maximum limit. Currently, transactions are conducted only in rupees; however, the proposed expansion aims to enhance efficiency and reduce costs associated with international transactions through bilateral or multilateral arrangements. To improve cross-border payment systems, India has initiated several projects, including Project Nexus. This initiative interlinks India’s domestic instant payment systems with
those of Malaysia, the Philippines, Singapore, and Thailand by standardizing connections. As a result, operators can connect to all countries in the network through a single interface.

India has also established bilateral arrangements for cross-border payment linkages with countries such as Singapore, the UAE, Mauritius, Sri Lanka, and Nepal. According to the Bank of England, global cross-border payments are projected to exceed US$250 trillion by 2027. India’s remittances reached US$ 111 billion last year, the highest globally, according to the World Migration Report 2024 released by the International Organisation for Migration. CBDCs, which are digital forms of a paper currency, issued by central banks, have the potential to enhance the efficiency of cross-border payments. India has launched both wholesale and retail CBDCs, positioning itself at the forefront of digital currency innovation.

Leave a comment

Subscribe To Newsletter

Stay ahead in the dynamic world of trade and commerce with India Business & Trade's weekly newsletter.