Ripple’s technology helps minimize remittance costs: Navin Gupta, Ripple

Ripple is blockchain technology company that enables payments everywhere, every way, for everyone.

Ripple recently launched its policy paper titled ‘The Path forward for Digital assets adoption in India’. The paper proposes how India’s policymakers can utilize the opportunity afforded by the recent Supreme Court verdict in the “Internet And Mobile Association of India (IAMAI) versus Reserve Bank of India (RBI)” to follow the lead of other markets and enact a transparent, principles-based and proportionate regulatory framework for the digital asset ecosystem in India.

Keeping the backdrop of how India is moving towards a digital economy, we have, Navin Gupta, MD for South Asia and MENA region, Ripple. He joined Ripple following two years as co-founder and CEO of on-demand commercial transportation service. He has extensive experience in global transaction banking, payments and cash management, and strategy planning following nearly two decades.

Excerpts from the interview with Navin Gupta, MD, South Asia & MENA at Ripple.

Navin Gupta, Managing Director, South Asia & MENA at Ripple

DQ: Please tell us about the inception of Ripple. What are they doing in India, and who are they working with?

Navin Gupta: Founded in 2012 and headquartered in San Francisco, Ripple is a technology company that provides a frictionless experience to send money globally using the power of blockchain. Ripple’s products are based on blockchain technology and utilise the cryptocurrency called XRP to facilitate cross-border transactions for its network of financial institutions. Ripple also utilises an interbank messaging system that’s used by banks to send money around the world.

In a world where video can be streamed from the International Space Station, it’s mind boggling to think that the fastest way to send money globally in real time is to bring it in a suitcase on a plane -- an average international payment transaction takes 3-5 days. Ripple’s goal is to change all that through the use of blockchain -- and to enable the world to move money like information moves today.

Ripple’s technology helps minimize remittance costs, cut settlement times from hours and days to just 3 seconds with the use of XRP, and remove billions of dollars in unnecessary intermediary fees. Ripple has more than 300 customers in over 45 markets across 6 continents today.

Ripple is unique as we are the only blockchain company whose products are being used commercially by its customers. This is important as we aim to work with existing financial institutions, along with regulators, governments and central banks, to help evolve the financial systems from within. Ripple started its India operations in 2017, with offices in Bangalore and Mumbai. Our current customers in India include Kotak Mahindra Bank, IndusInd Bank, Yes Bank, Axis Bank, and Federal Bank.

DQ: What are the future plans for Ripple in India?

Navin Gupta: India is a fast-growing market, making it an investment destination with many companies keen to do so. For example, there are about 35 million Indians who live overseas, and they send huge amounts of money back home. On average, 7% of the principal value gets taken away every time they remit money to India.

The current version of our RippleNet solution does not use the digital asset XRP in India considering the regulatory landscape. However, Ripple is keen to introduce the ODL (On-Demand Liquidity) solution to the India market to make remittances faster, easier, better and cheaper through the use of digital assets.

Before we can introduce ODL in India, we are looking forward to clarity around the regulatory aspects of digital assets from the government. Along with other players in the financial industry, we too are optimistic about a robust regulatory framework being adopted by India so that Ripple can help more businesses succeed.

DQ: How is the cryptocurrency industry performing since the Reserve Bank of India’s ban has been lifted?

Navin Gupta: That was a positive move in the right direction for India. The lifting of the RBI ban on trading of digital assets had prompted companies to consider reviving plans to invest and expand businesses in India. However, digital assets, although not outright banned, still exist in a grey area. This caused several banks to halt payments for currency trades in India or overseas, in the absence of any specific communication from the RBI following the Supreme Court decision.

In our view, this grey area is the biggest roadblock in India. Especially as India heads into a path of recovery, a regulatory framework needs to be put into place before organizations can confidently adopt the use of digital assets. However, we are optimistic that a proper regulatory framework will be considered and the industry views will be factored in.

We believe Indian policymakers can lead the way to provide clear regulatory guidance that can manage and mitigate risks to ensure peace of mind -- ultimately helping Indian businesses, entrepreneurs, innovators, and consumers to benefit from blockchain technologies and digital assets in safe and meaningful ways.

There is a lot of potential in India, and opportunities for many ambitious innovators who can succeed with the right kind of regulatory framework and support. With such a high number of Indians employed overseas, India is the highest recipient of foreign remittances. This means that there is demand for fast and cost-efficient methods of cross-border transactions, made possible by enterprise solutions like Ripple’s On Demand Liquidity (ODL) that leverage the digital assets XRP.

DQ: How can a regulatory framework help digital assets adoption in India?

Navin Gupta: In our opinion, a blanket ban or an overall ban is not the solution. Regulation rather than relegation would be a better way of dealing with digital assets and its effect on innovation. Therefore, the best approach would be to create a robust legal framework that incorporates all stakeholders in the financial ecosystem.

With inputs and suggestions from both the public and private sectors, we believe that Indian policymakers would be able to navigate the responsible adoption of digital assets in a holistic and more informed manner. There is a wealth of precedents available in India’s financial and technological policy that may be followed here; in the past, both the Data Privacy Bill and the Indian Bankruptcy Code have had the benefit of public consultations, as does the Telecom Regulatory Authority of India (TRAI) regulation of net neutrality.

Therefore, we urge India’s policymakers to initiate a similar process of public consultations in connection with any proposed policy action touching upon digital assets in India. If the government takes the lead in enacting positive policy changes, it will initiate an opportunity for Indian businesses, entrepreneurs, innovators and consumers to benefit from digital assets in a safe and meaningful way. A thoughtful regulatory approach towards adopting and implementing these technologies will facilitate India maintain its competitive edge.

Recently, Ripple  launched a policy paper titled ‘The Path Forward for Digital Assets Adoption in India’ that takes into account a global economy with a growing appetite for the adoption of digital assets. It covers short, mid, and long-term solutions, and goes into specific legislation and regulations that need to be amended or included in order to take advantage of this financial revolution.

Through this paper, we urge Indian policymakers to have extensive consultations with stakeholders in the digital assets ecosystem and the wider public before taking any policy action touching upon digital assets in India. The paper proposes that any regulatory framework should be technology-agnostic, principles-based, risk proportionate and not rules-driven.

We surveyed regulatory frameworks implemented by other jurisdictions to establish benchmarks for Indian policymakers. More specifically, the paper proposes a taxonomy of digital assets, illustrating how countries across the world are practically defining and classifying digital assets.

The paper also talks about low-hanging fruits that can be realised in the short-term. An example involves Gujarat International Finance Tec - City (GIFT City), that hosts the first International Financial Services Center (IFSC) in India.

A similar IFSC is situated in Abu Dhabi where a well thought out framework for digital assets that is separate from the UAE central bank is introduced. We propose that GIFT City use this as a point of reference to allow trading of digital assets in the short term.

After the Supreme Court's announcement to lift RBI’s ban earlier this year, we have been engaging with concerned government bodies to help set up a framework that can be beneficial for India and the industry as a whole.

There are many examples cited in the paper that should quickly dispel any apprehension about adopting digital assets and hopefully will serve as a guide. The following are our key recommendations for Indian policymakers:  

Financial institutions that join RippleNet can immediately communicate information about a payment between each other in real-time, and settle the payment instantly -- with no failure.

By using this part of Ripple’s technology to originate and receive payments (or just originate). It is quicker, cheaper and more transparent than SWIFT -- but it still requires companies to hold capital in banks all over the world, which is the main cause of the 7% average fee incurred when sending a remittance.

To solve the high cost of remittance due to trapped liquidity, RippleNet institutions can choose to use On-Demand Liquidity (ODL), which allows them to begin sourcing liquidity on demand (i.e. instant foreign exchange when they need it) with the digital asset, XRP. This means even quicker payments, no more reliance on megabanks and no more tied up capital -- approximately 10 trillion USD is trapped around the world now.

By using the digital currency XRP, customers can eliminate the need for pre-funding in destination currencies, thus dramatically lowering costs while enabling real-time payments.

Fiat (government-issued currency), can be converted into XRP and back to fiat within seconds at a digital asset exchange which supports both origin and destination currency, thus making it extremely convenient for users.