From Rs 2000 Note Withdrawal To New UPI Features: 5 Key Decisions RBI Announced In 2023

Amidst the global recession fears, high inflation and interest rates, and geopolitical tensions that dominated the headlines in 2023, India's central bank, the RBI, made many key announcements throughout the year, which affected the common man's financial lives in more ways than one.

As 2023 draws close to its end, let us look back at five major announcements RBI made this year:

5 Key Decisions RBI Announced In 2023

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1.Withdrawing Rs 2000 Notes From Circulation

Probably the biggest decision that RBI announced this year was the withdrawal of Rs 2000 notes from circulation.

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The Rs 2,000 note was introduced in November 2016 to meet the currency requirement after the Rs 500 and Rs 1,000 notes were demonetised. Over the years, as the objective of the ?2,000 note was met and smaller denomination notes were available in adequate quantities, the printing of the Rs 2,000 note stopped in 2018¨C19. Ultimately, in May of this year, the RBI decided to pull it out of circulation. However, the RBI had already clarified that these Rs. 2000 notes will remain legal tender, implying that they can be used in transactions as a valid currency denomination.

2.Four New UPI Features Announced

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In September this year, the RBI, along with the National Payments Corporation of India (NPCI), launched four new UPI features and products. To boost the digital inclusivity of UPI, the new features launched include a credit line on UPI, UPI Lite X for offline payments, a near-field communication (NFC)-enabled Tap & Pay feature, conversational payments through Hello! UPI, as well as conversational bill payments with BillPay Connect. Click here to know more about the features.

Also Read: The Untold Story Of Dilip Asbe & His Team, Who Are The Brains Behind UPI

3.Portal Launched For Public To Find Their Forgotten Money

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In August this year, the RBI announced the launch of a portal to help people claim their forgotten money. The RBI had launched the UDGAM (Unclaimed Deposits: Gateway to Access Information) centralised web portal.

The launch of the web portal was aimed at aiding users in identifying their unclaimed deposits and accounts and enabling them to either claim the deposit amount or make their deposit accounts operational at their respective banks. Reserve Bank Information Technology Pvt. Ltd. (ReBIT), Indian Financial Technology & Allied Services (IFTAS), and participating banks have collaborated on developing the portal.

According to the RBI, as of February 2023, Rs 35,000 crore in deposits were lying unclaimed. It was transferred to the RBI by public sector banks (PSBs) earlier this year.

Also Read: Did You Know RBI's Logo Was Inspired By The East India Company

4.Keeping Repo Rate Unchanged In 5 Out Of 6 MPC Meetings

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After hiking the repo rate for the sixth consecutive time in the MPC meeting conducted in February this year, the RBI went on to keep the repo rate unchanged for all five consecutive bi-monthly MPC meetings that were conducted in April, June, August, October, and December this year. As recently as December itself this year, the RBI decided to keep the repo rate unchanged at 6.5 percent for the fifth time in a row. This somewhat acted as a breather for loan EMI-paying borrowers after the RBI hiked the repo rate continuously from May 2022 to February 2023.

5.Tightening Lending Rules By Increasing Risk Weights

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In November this year, the RBI increased the risk weights for consumer credit exposure, including personal loans, by 25 percentage points to 125 percent. This means that earlier banks needed to maintain a capital of Rs 9 for every Rs 100 they loaned, but now they will have to keep Rs 11.25. The hike in risk weight implies that banks and NBFCs will need to set aside a higher amount of capital for these loans, leading to an increase in the cost of capital. This adjustment, as per the RBI's guidelines, applies to both existing and new personal loans. Click here to read the RBI's circular.

A hike in risk weights was expected to lead to higher interest rates and reduced access to credit for consumers as banks adjusted lending practices to meet increased capital requirements. This could impact borrowing costs and limit the availability of loans.

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