The Reserve Bank of India (RBI) has taken the lead in terms of emphasizing on digital banking in the country. It has ushered in several reforms already with many more lined up for the near future. The RBI has already been playing a pro-active role in the current scenario, having cut the key policy repo rate 5 times in succession while also enabling a shift towards external benchmarks for banks in terms of loan pricing.
In the latest development, NEFT charges will be completely waived from January, 2020 onwards. Customers will not be paying any fees/charges for all transactions done via NEFT (National Electronic Funds Transfer) as per the new development. The proposal has already been raised by RBI (Reserve Bank of India) for boosting digital transactions in the country on the 3rd anniversary of the demonetization exercise.
More on these new developments
RBI has also issued its proposal pertaining to FASTags being enabled for payments made at fuel stations and also for parking charges. Digital payments comprised of approximately 96% of overall retail payments in the non-cash segment in the period between October last year to September, 2019.
In this same period, UPI (Unified Payments Interface) and NEFT payment systems were able to handle approximately 874 crore and 252 crore transactions respectively. The NEFT and UPI platforms witnessed handsome growth of 20% and a whopping 263% respectively. The RBI has already stated that the huge growth in these payment systems has been enabled by several measures that it has taken in the recent past.
Every citizen will now be empowered even further with the Exceptional (e) Payment Experience as per the RBI’s statement and they will get access to multiple choices. The RBI has thus proposed to mandate banks not to charge savings bank account customers for online transactions in the NEFT system with effect from January 2020. The Acceptance Development Fund may also be operationalized by the country’s apex bank in order to scale up acceptance infrastructure in the country from the 1st of January, 2020, as per reports.
Other key aspects worth noting
There will be a new committee that will be established by the apex bank for analyzing the requirement pertaining to QR code plurality and the need for the continuation or fusion of the same from the consumer and systemic perspectives. The RBI is also planning to allow the link-up with NETC (National Electronic Toll Collection) FASTags in case of all payment systems which have obtained authorization and other instruments such as cards, UPI and non-bank PPIs. This will naturally enable swifter FASTag usage in the future as per the statement made by the RBI.
The announcement of the RBI was made on the 3rd anniversary of the decision taken by the Central Government pertaining to demonetization of Rs. 1,000 and Rs. 500 notes. They were banned on the 8th of November, 2016 and the RBI introduced brand new Rs. 500 and Rs. 2,000 notes accordingly. The RBI has also stated that its bench marking initiatives and studies have shown that India is already doing well in terms of payment systems. RuPay acceptance has been massively enabled by the RBI in Bhutan and this will engage actively with regulators of payment systems under diverse jurisdictions, enabling better synergies and lower costs and time spent on inward remittances. This will be really important when it comes to vital remittance corridors.
The Reserve Bank of India (RBI) has also come up with various incentives for scaling up its initiatives for digital payments. This includes on-boarding newer toll players and transit space payment providers along with widening the overall ecosystem by facilitating e-mandates and other new usage categories. Cash based transactions still dominate the Indian economy although post demonetization, the Government and RBI have taken several measures to push digital payments and it has clearly borne fruit. With no charges on NEFT transactions, usage statistics should definitely increase for this payment system in 2020 as opined by industry experts.