RBI’s 2021 Vision Document Makes Digital Payments Its Main Focus

On Wednesday (May 15), the Reserve Bank of India (RBI) released its statement on Payment and Settlement Systems in India: Vision 2019–2021. The Vision 2021 emphasised on innovation, cyber security, financial inclusion, customer protection and competition.

Since 2002, the RBI has been planning the development of the payment systems under RBI’s vision document for the payment and settlement systems in India. The last vison document came in 2018, and envisaged building best-in-class payment and settlement systems for a ‘less-cash’ India through the four strategic pillars: responsive regulation, robust infrastructure, effective supervision and customer centricity.

What Was RBI’s Vision For 2015-2018?

The apex bank has shared that some of the positive outcomes of the developments during the period 2015-2018 were:

• Continued decrease in the share of paper-based clearing instrument
• Consistent growth in individual segments of retail electronic payment systems such as the National Electronic Funds Transfer (NEFT), Immediate Payment Service (IMPS) and card transactions
• Increase in registered customer base for mobile banking
• Launch of new products like Unified Payments Interface (UPI) and Bharat QR
• Significant growth in acceptance infrastructure
• Accelerated use of Aadhaar in payment systems

Further, the RBI said that the growth in electronic payments has been substantial with retail payments reflecting large growth in volume terms. It also shared that in value terms, the change was dominated by Systemically Important Financial Market Infrastructures (SIFMIs), such as the Real Time Gross Settlement (RTGS) system and Financial Markets Clearing through Clearing Corporation of India Ltd. (CCIL).

Quantifying the growth, RBI said that digital payment transaction turnover vis-à-vis GDP (at market prices-current price) increased from 7.14% in 2016 to 7.85 in 2017 and further to 8.42 in 2018.

Also, the turnover in payment transactions vis-à-vis GDP increased from 14.41 in FY 2015-16 to and 14.73 in FY 2016-17 and to 15 in 2017-18. Further, debit card usage at Point of Sale (PoS) vis-à-vis ATM is 30.1% of total in terms of volume against 10.4% in 2014-15.

However, after this the new challenges have arisen which the Payment and Settlement Systems in India: Vision 2019–2021 recognises.

What Is Vision 2019-2021?

Empower every Indian with access to a bouquet of e-payment options that is safe, secure, convenient, quick and affordable.

Based on inputs from various stakeholders and guidance of the Board for Regulation and Supervision of Payment and Settlement Systems, the report consists of 36 specific action points with 12 specific outcomes.

Gaurav Chopra, founder and CEO, IndiaLends says, “RBI through its document spoke about four goal-posts (4 Cs) – Competition, Cost, Convenience and Confidence. With growing competition, industry players will be able to offer services at an optimal cost to their customers. RBI aims to bring innovation in technology and processes that will eventually save time of end consumers.”

The vision 2019-2021 aims for:

• enhancing the experience of customers
• empowering payment system operators and service providers
• enabling the ecosystem and Infrastructure
• putting in place a forward-looking regulation
• supported by a risk-focussed supervision.

Key Action Points Of Vision 2019-2021

• RBI will look to shift the ecosystem from transaction value-based pricing slabs to a fixed minimum transaction-based pricing
• Setting up a 24×7 helpline
• Creation of customer awareness for basic cyber-security hygiene
• Internal ombudsman for digital payments
• Consider implementation of e-mandates / standing instructions for retail payment systems

Key Outcomes Of Vision 2019-2021

• Reduce paper-based clearing as a percentage of retail payments
• Digital payment transaction turnover vis-à-vis GDP (at market prices-current price) is expected to increase to 10.37 in 2019, 12.29 in 2020 and 14.80 in 2021
• Shift Cash on Delivery (CoD) transactions to digital modes for ecommerce
• 50% increase in mobile based payment transactions is expected
• Fraud to Sales (Fraud value / Sales value) x 10000] count for payment systems is expected to be less than 10 bps for most of the payment systems

To see the full details of the RBI’s Payment and Settlement Systems in India: Vision 2019–2021, click here!