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RBI’s Vision Document 2019-2021 on Payment and Settlement Systems in India to Promote Digital Economy

A vision document was essential for the growth of the digital economy. Therefore RBI released a vision 2019 – 2021 document on the Payment and Settlement System in India last week aiming at a ‘cash-lite’ society. This document will work as a mechanism for creating confidence among the general public.

The prime focus of the Reserve Bank of India (RBI^[1]) is to ensure a safe, expedient, secure, and reasonable e-payment system, as we can expect a more than four times increase in digital transactions by the year 2021. The main aim is to form a cash-free society.

What is the Objective of the Vision Document?

The vision document will focus on empowering the payment and settlement system in India, and it will increase digital transactions in the economy, besides offering ease to the end consumers. As there is an alignment of payment system providers with the regulators, digital transactions will increase, particularly in rural areas and minor cities. It emphasizes improvement, cyber security, customer protection, financial inclusion, as well as competition.

The report consists of 36 specific action points with 12 specific outcomes based on the inputs from various stakeholders and guidance of the Board for Regulation and Supervision of Payment and Settlement Systems.

The RBI clarified the implementation of the vision document during the years 2019 – 2021. The RBI aims to bring innovation in technology to save the time of end consumers and enable access to various safe, secure, convenient and affordable e-payment options.  

Previous Scenario of Vision Document

Previously RBI issued a vision document in the year 2018 focusing on receptive regulation, robust infrastructure, effective supervision and customer centricity, which resulted in the following:

• Significant fall in paper-based clearing instruments;
• Constant expansion in electronic payment systems like National Electronic Funds Transfer (NEFT), Immediate Payment Service (IMPS) as well as debit/credit transactions;
• Expanded customer base;
• Introduction of Unified Payments Interface (UPI);
• Accelerated use of Aadhaar;

Benefits of Releasing Latest Vision Document 2019 -2021 on Payment Systems

• Setting up of 24×7 helpline will definitely boost customer confidence in terms of a digital payment system;
• Moreover, geo-tagging of payment system touch-points will facilitate an understanding type of transactions which are taking place for companies. This is probably going to diminish fraud;
• It is expected that there will be 100% growth in UPI/IMPS and around 40% growth in NEFT;
• For digital payments, the internal ombudsman;
• This will enable market players to offer services to their clients at the most favourable cost;
• For retail payment systems, e-mandates implementation/standing instructions;
• Creating awareness of customers on cyber-security hygiene;
• Transaction value-based pricing slabs to a fixed minimum transaction-based pricing;

The Focus of Vision Document 2019-2021

• Enhancing the  experience of customers, including robust grievance redressal;
• Empowering payment System Operators as well as Service Providers;
• Enabling of payments Eco-system as well as Infrastructure;
• Put in place Forward-looking Regulations; and
• Undertake Risk-focused Supervision.

Our Opinion

In our opinion, the step taken by the RBI to strengthen the payment system will go a long way. It will act as a mechanism for promoting digital transactions among the general public.

For more information on the vision document of the RBI on Payment and Settlement systems of India: Please read RBI released document and more fintech articles.

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