Key Features in Personal Finance Transformation, 2022: Like every year, the personal finance industry saw a change in trends, especially as technology and its applications continued to evolve. But the pandemic has put a spotlight on personal finance. It gained high priority as people realized the importance of financial planning and security, leading many to experiment with digital offerings at a time when physical contacts were restricted. Like many other industries, the personal finance market has witnessed a rapid digitization, with existing digital players witnessing a boom and older players rushing to modernise.
Here’s a look at some of the top personal finance moments of 2022 that you should know before you head into 2023.
card-on-file tokenization
As the use of digital payments grew, the Reserve Bank of India (RBI) allowed card networks to tokenize card transactions in 2019 to continue improving the safety and security of card transactions. The Reserve Bank of India had set October 1 as the deadline for the implementation of tokenization of card based payments.
Kush Vatsaraj, Vatsaraj & Co said: “With an aim to improve and enhance the privacy and security of online transactions, RBI instituted the policy of card tokenisation. Enforcing the 2021 e-mandate policy for auto-debit transactions, the token policy prevents online merchants from being able to save important customer credit and debit card details such as the three-digit CVV and expiry date. Now, the actual card details have to be encrypted in the form of a code, called a token, which will be unique for each transaction. In this way, the card information is not shared with third parties and instead the token is shared, which prevents leakage and detection.”
NRIs allowed to use Bharat Bill Payment System (BBPS)
RBI has permitted inward foreign remittances from NRIs under BPPS, allowing NRIs to make direct payments for various utility and other bills, education fees, etc. to themselves or their relatives/family members in India. The platform has over 20,000 billers onboarded on the system and over eight crore transactions are processed on a monthly basis. This will greatly help senior citizens and other individuals who are financially dependent on NRI relatives, allow NRIs to make their utility payments directly instead of depending on local relatives or friends, and overall increase foreign exchange inflow to the country. increases in
interest rate hike
While this is a response to micro and macroeconomic factors rather than a policy move by the government, interest rates see a steep hike in 2022. The repo rate which was 4 per cent since May 2020 is now the highest at 6.25 per cent. The most recent hike on 7th December.
Vatsaraj explained that this has had a cascading effect on the economy and also on home loans and other borrowing by individuals and corporates who are trying to raise long-term and short-term finance.
central bank digital currency
The Reserve Bank of India (RBI) launched the Central Bank Digital Currency (CBDC) – Digital Rupee or e-Rupee (e₹) – for the common man on December 1, 2022. Digital Rupee is a central bank digital currency issued by the RBI. It is similar to physical cash that you carry in your wallet, except that E-Rupee is held electronically in a digital wallet overseen by the RBI. The digital rupee is recognized as legal tender by the RBI, and thus has to be accepted by everyone in the country as a medium of exchange.
Taxation of Virtual Digital Assets
A big question mark has finally been addressed with the announcement of a flat 30 percent income tax on cryptocurrency, NFTs and other virtual digital assets. Vatsaraj added: “The government has defined the term with a broad scope and stringent computation rules, not allowing set-off of crypto-related losses or set-off against gains. Tax as well as TDS from The related requirements dampened some of the excitement and hype around crypto but brought much-needed certainty and clarity.”
Change in Foreign Direct Investment Regime
The RBI introduced a revised ODI regime with a number of relaxations and changes in rules, including those defining portfolio investment, rules related to start-ups, liberalization of rules for round-tripping and overseas investment in the financial services sector. Several issues were addressed such as clarifying In respect of Share Swap, and ESOP.
This will improve the overall climate for investment by Indian HNIs and corporates and open up otherwise inaccessible opportunities for foreign investment.
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