RBI announces creation of Payments Infrastructure Development Fund

RBI has played a much broader role in Indian economy compared to other central banks. Apart from usual one of monetary policy and banking regulation, RBI also has established several monetary and banking. institutions. My earlier BQ piece on the topic.

RBI acts like a social venture capitalist. It establishes these institutions and then gradually sells them without the motive of profit. The purpose is market development, Currently, RBI owns DICGC, Bharatiya Reserve Bank Note Mudran Pvt. Ltd and Reserve Bank Information Technology Pvt. Ltd.

RBI has added a 4th entity to the list: Payments Infrastructure Development Fund

The Reserve Bank announces creation of a Payments Infrastructure Development Fund (PIDF) to encourage acquirers to deploy Points of Sale (PoS) infrastructure (both physical and digital modes) in tier-3 to tier-6 centres and north eastern states.

Over the years, payments ecosystem in the country has evolved with a wide range of options such as bank accounts, mobile phones, cards, etc. To provide further fillip to digitisation of payment systems, it is necessary to give impetus to acceptance infrastructure across the country, more so in underserved areas.

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.

 

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