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Mumbai: Intra-country remittances through payment vehicles have dropped nearly 25-30% in November and December after the Reserve Bank of India (RBI) directed lenders to maintain detailed records of recipients, industry executives told ET. These new domestic money-transfer rules, which kicked in from November 1, are aimed at preventing the misuse of banking channels for online frauds.
All leading players in the domestic money transfers (DMT) business, such as Fino Payments Bank, Airtel Payments Bank, NSDL Payments Bank, Spice Money, PayNearby, FIA Technology, and PayPoint, have seen a drop in business, said the executives cited above.
“Implementing the new RBI guidelines is tough, and we had hoped the regulator would give us an extension,” said an industry participant. “We have put in place APIs to conduct KYC of the remitter and store records of the recipient, but it’s a cumbersome process. In the November and December period, business is down 30% month-on-month.”
Fino Payments Bank, one of the largest listed players in the domestic remittance business, has seen business drop more than 30% in November and December, industry sources revealed. Fino processes more than ₹3,500 crore in remittances every month. At the end of the September quarter, Fino had processed domestic transfers worth ₹10,453 crore. For the full fiscal year ending March 2024, total remittances stood at ₹52,695 crore.
The impact on Airtel Payments Bank, another large domestic remitter, could not be immediately ascertained. Industry sources suggested the payments bank had seen a similar impact on its DMT business.
NSDL Payments Bank, which processes nearly ₹2,000 crore of domestic remittances in a month, has seen business fall by more than 30%. It had processed Rs 24,000 crore in FY24. PayNearby, which processes close to ₹1,500 crore monthly transfers has seen a similar impact, sources said.
Fino PB, NSDL PB, Airtel PB declined to comment. Spice Money & PayNearby did not respond to ETs query.
DMT companies have suggested it would take another quarter for the industry to stabilise and achieve a “new normal”.
“The markets have dropped by 25-30%, but the sense is it will settle to a level lower than what it used to be,” said an industry official, who did not wish to be named. “It will start stabilising in another quarter.”
As per RBI rules, there is a ₹25,000 monthly cap on DMT, with a daily limit capped at ₹5,000. These transactions also require second factor authentication as per the new rules that seek to curb money laundering.
Industry sources suggest the domestic remittances industry has swelled to more than ₹2.5 lakh crore annually. Delhi, Mumbai, Indore, Rajasthan and Gujarat are among the major corridors from where a large chunk of the remittances originates. Bihar, Madhya Pradesh, Rajasthan and Uttar Pradesh are among the largest receivers of these inflows.
Experts say that remittance flows are a good proxy of the state of the intra-country migrant economy. While conduits for such transfers vary, payment companies use NPCI’s Aadhaar-enabled payment services and DMT channels such as bank-to- bank transfers through IMPS or NEFT.
