RBI sets up $65 mn fund to boost digital payments infrastructure in small towns

RBI sets up $65 mn fund to boost digital payments infrastructure in small towns
Photo Credit: VCCircle
8 Jun, 2020

The Reserve Bank of India (RBI) on Friday said it has set up a Rs 500 crore ($65 million) fund to bolster the country’s digital payments infrastructure.

The Payments Infrastructure Development Fund (PIDF) will aid the deployment of points of sale (PoS) infrastructure, both physical and digital, in tier-3 to tier-6 centres and north eastern states, the central bank said.

RBI will make an initial contribution of Rs 250 crore ($32.5 million) to the fund, while the rest will be sourced from card issuing banks and card networks operating in the country, as per the statement. The latter will also make recurring contributions to the PIDF to cover operational expenses, it said, adding that the apex bank will infuse funds in case of yearly shortfalls.

“Over the years, the payments ecosystem in the country has evolved with a wide range of options such as bank accounts, mobile phones, cards, etc. 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,” the statement added.

The fund will be governed through an advisory council and administered by the RBI, it said.

Apart from facilitating transactions at merchant establishments, PoS terminals are also used to withdraw cash using debit cards and open system prepaid cards issued by banks in India. The country had a total of 51,39,001 PoS systems deployed by public sector and private sector banks, according to RBI data in March.