RBI's Report on Currency and Finance 2023-24: Key highlights and borrowing trends

The Reserve Bank of India released its report on currency and finance for the year 2023-24. The theme of the report is 'India's digital revolution'.

Key highlights

The report notes that India is at the forefront of the digital revolution, with a vibrant fintech ecosystem and a conducive policy environment. Digital technologies are 'unlocking' opportunities in financial inclusion and use in cross-border trade and remittances. The digital economy currently accounts for 10 per cent of the country's GDP and is expected to double to 20 per cent by 2026.

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The report adds that the increased regulatory framework has boosted consumer confidence in digital fintech products. Coming to the challenges, data privacy, third-party risks, and fraud claims continue to scar an otherwise booming industry. The average cost of a data breach jumped 28 per cent in the last three years. The automotive industry is the most vulnerable to such digital attacks.

Borrowing trends

Under consumers availing personal loan options digitally, the percentage of young borrowers has risen considerably, with 65 per cent of the total personal loans given to borrowers aged less than 35. Meanwhile, the Average ticket size of personal loans disbursed by fintech has slumped over the last two years.

The report further notes that the adoption of digital technologies has boosted the efficiency of banks and reduced risks. 'Based on a study by Patnam and Yao(2020), 400 million mobile money users in India found that mobile money use increased the resilience of households to shocks by dampening the impact of rainfall shocks on economic activity and household consumption. The study also indicated that firms adopting mobile payments improved their sales after six-months of use, had lower subjective uncertainty and greater sales optimism,' the report added.

Flagging poor internet penetration

India's internet penetration stands at 55.3 per cent, which is below the global average of 67.1 per cent.

'Moreover, there is geographical and regional divide in the availability: internet subscriptions per 100 population in urban areas were more than two times higher compared to rural India with an all-India average of 68.2. Among the rural households, only 9.9 per cent have access to a computer, while the proportion is 32.4 per cent among the urban households,' said the RBI's report.