RBI Introduces Scoring System To Map Digital Payments

The Reserve Bank of India (RBI) has introduced a scoring system, called the Digital Payments Index (DPI), to review digitisation of payments effectively.

The periodic scores will assess the performance of the digital payments industry. The review will be based on important operating parameters such as rural penetration and innovation in existing modes and channels. The DPI will be made available in the public domain from July 2020.

The scoring system is expected to allow consumers and stakeholders to analyse local area developments in infrastructure, access, demographic and acceptance related growth with reference to broader domestic and global standards in digital payments.

“Digital payments in India have been growing rapidly. The Reserve Bank shall construct and periodically publish a composite DPI to capture the extent of digitisation of payments effectively,” Shaktikanta Das, RBI Governor was quoted as saying by ET.

The DPI would be based on multiple parameters and reflect the penetration and deepening of various digital payment modes. “This development is indicative of the power being put by the government to aggressively drive the financial inclusion agenda. A body that periodically tracks the penetration of digital payment modes serves as a yardstick, while also suggesting that the RBI is keen on measuring the sector progression, and whether it is aligned to their target goals,” Anand Kumar Bajaj, MD and CEO, PayNearby said in a statement.

The RBI will also publish guidelines for setting up of a new Self-Regulatory Organisation (SRO) in April 2020. This is aimed at enhancing the communication mechanism between payment sector stakeholders, such as the service provider and banks, and regulatory and supervisory bodies, such as the RBI and National Payments Corporation of India (NPCI).

“At an individual level, this initiative will enable companies to gauge the ground-level effectiveness of the various programs running across the country. The index will also assist the financial payments ecosystem to identify areas of growth and improvement for widespread permeation of cashless payments.” Kumar added.

According to the Reserve Bank of India estimates, total digital transactions in volume terms recorded a growth rate of 58.8 % during 2018-19, on top of a growth of 50.4 % during 2017-18. The RBI says digital transactions in value terms grew by 19.5 percent during 2018-19, compared to the growth of 22.2 percent during 2017-18.

“The DPI will be beneficial for us to understand usage of digital channels in urban and rural areas. Banks and Payment companies will get to know which channels are more popular among consumers. The mapping of digital payments will eventually help the end consumers evolve in the space,” said Mandar Agashe, founder and vice chairman, Sarvatra Technologies.