• The Reserve Bank of India (RBI) on Tuesday constituted a high-level committee headed by former chairman of the Unique Identification Authority of India (UIDAI) Nandan Nilekani to set up a robust digital payments ecosystem in the country.
Vital highlights suggested by the committee
• The committee has been asked to review the existing status of digitization of payments, identify gaps in the ecosystem and suggest ways to plug them.
• According to its terms of reference, the panel has to suggest a medium-term strategy for deepening digital payments, and measures to strengthen safety and security.
• The panel has also been tasked with the responsibility of increasing customer confidence and trust while they access financial services through digital modes.
• The promotion of digital payments has been one of the primary agendas of the government in the past four years.
Rising in digital payment system
• Payments through all electronic forms such as debit and credit cards, mobile wallets, real-time gross settlement (RTGS), national electronic funds transfer (NEFT) and Unified Payments Interface (UPI) have seen a huge rise over the last few years, especially since the government’s demonetization exercise in November 2016.
• The newest mode of digital payments, UPI, which was launched in 2016 has witnessed an over 300% rise in transaction volumes in the last year and the growth is seen continuing in the near term.
• A record 620.17 million UPI transactions worth just over ₹1 trillion were conducted in December, as compared to 524.94 million transactions valued at ₹82,232.21 crore in November.
• An 18% increase in transaction volume, data from the National Payments Corporation of India (NPCI) showed.
Mains Paper 3: Economy | Mobilization of resources, Banking
Prelims level: Panel and its terms of references
Mains level: Promotion of Digital Payments