RBI revs drive towards cashless economy

Aims to increase interoperability, accessibility, security of payments systems across the country

The Reserve Bank of India (RBI) has stepped up measures to ensure the use of cash is reduced in the economy. In a Vision-2018 document revealed by the regulator, RBI said it would aim at improving the payments system network in India for a “cashless” economy.

“The broad contours of Vision-2018 revolve around five Cs — coverage, convenience, confidence, convergence, and cost. To achieve these, Vision-2018 will focus on four strategic initiatives such as responsive regulation, robust infrastructure, effective supervision and customer-centricity,” RBI said.

With this vision document in place, the regulator wants to reduce the share of paper-based clearing instruments, increase growth of digital payments space, improve growth in acceptance infrastructure and ensure accelerated use of Aadhaar in payment systems.

CENTRAL BANK VISION

• The regulator wants to reduce the share of paper-based clearing instruments
   
• It aims to raise growth of the digital payments space
   
• It wants to ensure accelerated use of Aadhaar in payment systems

With this in view, RBI will look at directly regulating payments gateway service providers and payments aggregators and will be revising the current guidelines. Apart from this, they will look at developments in technology such as distributed ledgers, and blockchain, among others, and will ensure that a regulatory framework is put in place as required. Guidelines regarding prepaid payment issuers, mobile banking and white label ATMs (automated teller machines) will also be reviewed.

In order to improve the payments space, RBI will also look at improving the payment infrastructure space by improving the ATM and point of sales network. There will also be measures to include that there is better fraud monitoring and enhanced customer service.

The central bank, with the finance ministry, has been working towards reducing cash transactions and improving the payments infrastructure in the country. The focus on reducing cash transactions has been to improve convenience and because cash comes at a cost. India’s cash-to-gross domestic product proportion was a little over 12 per cent in 2014, higher than several other economies. According to a 2015 report, RBI and commercial banks annually spend Rs 21,000 crore on currency operations.