Payment Infrastructure Development Fund (PIDF) | UPSC
Payment Infrastructure Development Fund (PIDF)
WHY IN NEWS:
The Reserve Bank of India (RBI) announced the operationalisation of the payment infrastructure development fund (PIDF) scheme.
SYLLABUS COVERED: GS 3: RBI
PAYMENT INFRASTRUCTURE DEVELOPMENT FUND (PIDF)
- Over the years, payments ecosystem in the country has evolved with a wide range of options such as bank accounts, mobile phones, cards, etc.
- The Reserve Bank will make an initial contribution of ₹250 crores to the PIDF covering half the fund and remaining contribution will be from card issuing banks and card networks operating in the country.
- The PIDF will also receive recurring contributions to cover operational expenses from card issuing banks and card networks.
- The Reserve Bank will also contribute to yearly shortfalls, if necessary.
- The PIDF will be governed through an Advisory Council and managed and administered by Reserve Bank.
- An advisory council (AC) under the chairmanship of RBI deputy governor BP Kanungo has been constituted for managing the PIDF.
- The fund will be operational for three years effective from January 1, 2021 and may be extended for two more years.
- The implementation of targets shall be monitored by the RBI with assistance from card networks, the Indian Banks’ Association (IBA) and the Payments Council of India (PCI).
- The authorised card networks shall contribute in all Rs 100 crore.
- The card issuing banks shall also contribute to the corpus based on the card issuance volume — covering both debit and credit cards — at the rate of `1 and `3 per debit and credit card issued by them, respectively.
- Card networks will have to chip in with one basis point (bps), or 0.01 paisa per rupee of transaction.
- Card issuing banks will have to contribute one bps and two bps —0.01 paisa and 0.02 paisa — per rupee of transaction for debit and credit cards respectively.
- They must also contribute Rs 1 and Rs 3 for every new debit and credit card issued by them during the year.
- The RBI shall contribute to yearly shortfalls, if any.
- The focus shall be to target those merchants who are yet to be terminalised (merchants who do not have any payment acceptance device).
- The AC shall devise a transparent mechanism for allocation of targets to acquiring banks and non-banks in different segments and locations.
- Tentatively, tier-3 and tier-4 centres will be allocated 30% of the acceptance devices, tier-5 and tier-6 centres will get 60% and the north eastern states will be given 10%.
- Merchants engaged in services such as fuel pumps, public distribution system (PDS) shops, healthcare and kirana shops may be included, especially in the targeted geographies.
- A subsidy of 30% to 50% of cost of physical PoS and 50% to 75% subsidy for Digital PoS shall be offered.
- Payment methods that are not interoperable shall not be considered under the PIDF.
CLAIMS AND REIMBURSEMENT
- The subsidy shall not be claimed by applicants from other sources like the National Bank for Agriculture and Rural Development (NABARD), etc.
- In case other mechanisms exist for providing subsidy or reimbursing cost of deployment of acceptance infrastructure, no reimbursement shall be claimed from PIDF.
- The subsidy shall be granted on a half-yearly basis, after ensuring that performance parameters are achieved.
- The minimum usage shall be termed as 50 transactions over a period of 90 days and active status shall be minimum usage for 10 days over the 90-day period.
SOURCES: PIB | Payment Infrastructure Development Fund (PIDF) | UPSC