RBI sets up panel under Nandan Nilekani to boost digital payments

RBI sets up panel under Nandan Nilekani to boost digital payments
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Mumbai, Jan 9: The Reserve Bank of India (RBI) has set up a committee to recommend on how to ‘deepen’ digital payments. The idea is to encourage digitisation of payments and enhancing of financial inclusion through digitisation.
The five-member committee would be headed by Nandan Nilekani, chairman of Infosys Technologies and former chairman, Unique Identification Authority of India. The panel is to give its report within 90 days from the date of its first meeting.
The other panel members are H R Khan, former deputy governor at RBI; Kishore Sansi, former managing director at Vijaya Bank; Aruna Sharma, former secretary, ministry of information technology; and Sanjay Jain, chief innovation officer, Center for Innovation, Incubation & Entrepreneurship, IIM Ahmedabad. The committee will review the state of digitisation of payments in the country, identify gaps and how to bridge these.
The payments space has seen much of change in the past year, on rules and in other aspects, from data localisation to wallet interoperability. And, the Supreme Court’s (SC’s) Aadhaar judgment which barred private companies from using that database for paperless verification of customers.
Payments executives say the regulator needs to come up with a solution for electronic Know Your Customer (KYC) norms. Leading banks and wallet companies have been unable to perform KYC verification since that October order of the SC, and unable to digitally enroll customers.
The panel will also assess the current levels of digital payments in financial inclusion and suggest a medium-term strategy for deepening of digital payment. The country’s affinity for cash remains strong, despite the massive demonetisation exercise of late 2016. The estimate is cash transactions form 90 per cent of the total in volume and 60-70 per cent in terms of value.
The committee will also undertake analysis across countries, to identify those that could be adopted here.
According to the latest RBI data, prepaid payment instruments in December saw a fall of six per cent in transaction volume over the previous month to 394.17 million; value fell 16 per cent to Rs 18,500 crore.
Card transactions in December saw a drop of four per cent in volume against November and five per cent in volume, to 1.3 billion transactions and Rs 3.8 trillion respectively.
The Unified Payments Interface saw growth of 18 per cent in volume and 12 per cent in value to 620 million transactions worth Rs 1 trillion in the same period.