RBI's Tries to Thrust the Usage of Cards by Its New Fund Plan

By SiliconIndia   |   Thursday, October 6, 2016
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BENGALURU: In order to espouse a cashless economy, Reserve Bank of India (RBI) has decided to set up an Acceptance Development Fund (ADF). The purpose would be to boost e-payments in shops in semi-urban and rural areas and extend the network for card acceptance in India. Indian Banks Association (IBA) will run ADF and set the rules for contribution and utilization of funds. Drafted guidelines for the ADF working model will be brought out by December 31, 2016.

The RBI had noted a non-uniform growth in e-payments across all sectors and segments of the country. It also lacked visibility of facility at all locations, and the situation appears to be alarming. Particularly, activation or usage rates of the credit/debit card were quite low, especially in the market of goods and services. On the other hand, card usage at ATMs has shown steep slope, obviously positive.

A report by E&Y revealed that there are only 693 machines per million of India’s population with lowest POS (point-of-sale) terminal penetration in the world. If compared with similar emerging countries, Brazil has 32,995 terminals per million people, and China and Russia have the count of around 4000 terminals per million people.

Under the Pradhan Mantri Jan Dhan Yojana scheme, the card base has had an overwhelming response—it increased to 68 crores, however, the number swipe machines for the credit cards stands at just 14 lakh. Not all banks are in the business of installing machines tough. The concept of establishing an ADF is to make such banks contribute in installing a maximum number of pos machines with the help of banks those who are already into the machine deployment.

"The ADF, which would be established and operated under the aegis of Indian Banks' Association (IBA), will set the rules for contribution and utilization of funds. In addition, it will plan the deployment of acceptance devices across various geographic and merchant segments in the country," the statement said.

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