The Reserve Bank of India (RBI), on Friday (June 5), announced that it set up a Payment Infrastructure Development Fund (PIDF) of INR 500 Cr to boost digital payments across the country.
The new fund is expected to encourage fintech companies and banks to deploy point of sale (PoS) infrastructure across the country, particularly focusing on Tier 3 to Tier 6 cities and north eastern states, including Arunachal Pradesh, Assam, Manipur, Meghalaya, Mizoram and others.
The fund is said to be governed by the advisory council, along with RBI managing and administering the deployment. According to a report in Business Standard, the central bank will focus on developing digital infrastructure, both physical as well as digital modes, in underserved areas to give impetus to acceptance infrastructure.
On October 4, 2019, RBI had proposed to set up an ‘Acceptance Development Fund,’ which was set up to card acceptance infrastructure such as PoS machines across the country, particularly Tier 3 and Tier 6 cities. It has been effective from January 1, 2020.
Recently, RBI has also relaxed compliance for digital payments companies to enhance security features on payment cards from June 16, 2020, to September 30, 2020.
RBI’s India Vision Document 2019-2021
This decision by the government aligns with RBI’s payment and settlement systems in India Vision 2019-2021, where it had envisioned to build best-in-class payment and settlement systems for ‘less-cash’ India through the four strategic pillars: responsive regulation, robust infrastructure, effective supervision and customer-centricity.
Furthermore, the vision document had stated that the usage of debit cards at PoS transactions will be around 44% of total debit card transactions by 2021. Also, it had stated that there will be around 5 Mn active PoS by 2021 and there will be a 50% increase in mobile-based payment transactions. According to RBI, the enhanced ability to boost the digital payments systems is said to reduce demand for cash and save time for end consumers.