Indian Economy and Issues Relating to Planning, Mobilization, of Resources, Growth, Development and Employment

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3.PAYMENT INFRASTRUCTURE DEVELOPMENT FUND SCHEME

Recently, the Reserve Bank of India (RBI) has announced the operationalisation of the Payment Infrastructure Development Fund (PIDF) scheme.

OBJECTIVE:

• Develop payment acceptance infrastructure in tier-3 to tier-6 cities (centres), with a special focus on the north-eastern states of the country.
• The fund will be operational for three years effective from 1st January, 2021 and may be extended for two more years.
• An Advisory Council (AC) under the chairmanship of RBI deputy governor BP Kanungohas been constituted for managing the PIDF.
• The PIDF presently has a corpus of Rs. 345 crore, with Rs. 250 crore contributed by the RBI and Rs. 95 crore by the major authorised card networks in the country.
• The authorised card networks shall contribute in all Rs. 100 crore.
• Besides the initial corpus, PIDF shall also receive annual contributions from card networks and card issuing banks.

IMPLEMENTATION:

• The focus shall be to target those merchants who are yet to be terminalised (merchants who do not have any payment acceptance device).
• Merchants engaged in services such as transport and hospitality, government payments, fuel pumps, public distribution system (PDS) shops, healthcare and kirana shops may be included, especially in the targeted geographies.
• The fund will be used to subsidize banks and non-banks for deploying payment infrastructure, which will be contingent upon specific targets being achieved.
• The Advisory Council will devise a transparent mechanism for allocation of targets to acquiring banks and non-banks in different segments and locations.
• 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).
• Acquiring banks (also acquirers or merchant banks) are financial institutions processing debit and credit card transactions on behalf of a merchant or business.
• 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%.
• Multiple payment acceptance devices and infrastructure supporting underlying card payments, such as physical Point of Sale, mobile Point of Sale, General Packet Radio Service (GPRS) , Public Switched Telephone Network (PSTN) and QR code-based payments will be funded under the scheme.

BREAKUP OF SUBSIDY:

• A subsidy of 30% to 50% of cost of physical PoS and 50% to 75% subsidy for Digital PoS shall be offered.
• The subsidy shall be granted on a half-yearly basis, after ensuring that performance parameters are achieved, including conditions for ‘active’ status of the acceptance device and ‘minimum usage’ criteria, as defined.

 

SOURCE: PIB