India’s central bank abandons UPI rival project

The Reserve Bank of India (RBI) recently made the decision to abandon a controversy-ridden real-time payments project. The project was intended to be a rival to the Unified Payments Interface (UPI), a system backed by the National Payments Corporation of India (NPCI).

UPI is a mobile payment system that enables customers to send and receive money through their bank accounts. Launched in 2011, the system has seen substantial growth in the past few years, with its 900 million-plus users making it one of the most popular digital payment systems in the country.

In an effort to develop its own comparable system, RBI had created the Centralized Payments and Settlement System (CPSS) project. It was envisioned to be an interoperable system for real-time payments and settlements. It was intended to rival UPI, and ensure that customers had an alternative to the NPCI-powered platform.

However, shortly after the project was announced, the government expressed reservations about it. It expressed the fear that the project would stifle competition and potentially lead to a monopoly. The government’s reservations were echoed by financial institutions, who expressed the same fear.

RBI, for its part, maintained that the project would provide a wider platform for customers to make payments, and ensure better access to financial services. The central bank also said that the project would not be linked to UPI, and that it would be kept open for cooperation and collaboration with other payment players.

However, with mounting opposition, RBI has decided to shelve the project. The central bank said that it had concluded that the system’s objectives could be better met without launching the CPSS.

The decision to abandon the project has been welcomed by the government, financial institutions, and industry players, who all felt that the rival project would undermine competition in India’s payments space. It is expected to help ensure that UPI will continue to remain an open platform, which would benefit customers and promote financial inclusion.

The decision has also been hailed as a symbol of the government’s commitment to fostering an open payments system. It has also been praised as evidence of the government’s ability to listen to the concerns of stakeholders and respond with suitable action.