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RBI creates $66 mn fund to boost digital payments in smaller cities
Photo Credit: Reuters

The Reserve Bank of India has created a Rs 500-crore ($66 million) Payments Infrastructure Development Fund to facilitate digital payments in smaller cities and towns.

The fund aims to encourage the deployment of Points of Sale (PoS) infrastructure—both physical and digital modes—in smaller cities, towns and north-eastern states, the central bank said in a statement.

The RBI will make an initial contribution of Rs 250 crore to the fund. The remaining contribution will come from card-issuing banks and card networks operating in the country, it said.

The fund will also receive recurring contributions to cover operational expenses from banks and card networks. The RBI will contribute to yearly shortfalls, if necessary, the central bank said.

The fund will be governed by an advisory council and administered by the RBI.

The RBI said that the payments ecosystem in the country has evolved over the years with a wide range of options such as bank accounts, mobile phones and cards. “To provide further fillip to digitisation of payment systems, it is necessary to give impetus to acceptance infrastructure across the country, more so in underserved areas.”

Digital payments have been rising in India over the past few years, especially after the government’s shock move in November 2016 to ban high-value notes then circulating in the financial system.

On June 4, the country recorded as many as 4.63 crore transactions worth a total Rs 9,639 crore on the mobile-based Unified Payments Interface system. This is the highest volume of transactions among electronic payments, according to RBI’s payment systems data.

In value terms, the National Electronic Funds Transfer system topped the chart with total amount of Rs 63,148 crore through 94.5 lakh transactions.

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