Expert explains: Will Nandan Nilekani panel's recommendations boost digital payments?
The Nandan Nilekani committee's recommendations for boosting digital payments have been received positively by industry experts. The panel has suggested a number of measures to boost digital transactions. This includes elimination of charges, round the clock RTGS and NEFT facility and duty-free import of point-of-sales machines. The Nilekani panel was appointed by the Reserve Bank of India. The panel submitted its suggestions on promoting digital payments to Governor Shaktikanta Das last month.
The panel recommended that there should be no convenience fee on payments made to government agencies by customers. Also, the payment systems should use machine-driven, online dispute resolution systems to handle complaints. "The committee recommends that the RBI and the Government put in place an appropriate mechanism to monitor the digital payment systems and make aggregated information based on blocks, and PIN code, available to all players on a monthly basis, so that they can make the necessary adjustments," said a report of the panel.
Commenting on the panel's suggestions, Mandar Agashe, Founder and Vice Chairman, Sarvatra Technologies, told Zee Business Online, “The Nandan Nilekani committee has drafted a very comprehensive document outlining recommendations to boost digital payments in India which provides viable solutions to a large range of diverse problems that hinder extensive digitization. The acceptance infrastructure is the foundation of this – which will allow for widespread adoption of digital payments through different modes while boosting consumer confidence through the shared fraud registries, which will help make digital transactions a daily habit. Reducing the overall cost to the consumer such as service charges for digital payments will help achieve target growth."
Sarvatra Technologies is one of the leading banking technology solutions providers to banks and financial institutions. In view of India being an overwhelmingly cash heavy economy, Agashe said its transition to a digital society cannot be done overnight. "Therefore a robust infrastructure offering a good network of ATM outlets and mini ATMs in close vicinity will facilitate smooth cash-in cash-out at the convenience of the customer. This will infuse a behavioural change thereby drastically shoring up the volume of digital payments," he added.
The Nilekani panel noted that in last five years, India has seen many people enter the banking network through the Pradhan Mantri Jan Dhan Yojana, and a lot of digital credit into bank accounts due to the direct benefit transfers, and digitisation of government payments. The banks have issued about a billion debit cards and 50 million credit cards. However, acceptance is still low from an infrastructure perspective, with only about 3.5 million POS devices, and 2 lakh ATMs to accept cards.
The committee recommended, "Ideally, MDR and interchange fees should be determined by the market. However, that does not appear to be working, and there are fewer acquirers."
Get Latest Business News, Stock Market Updates and Videos; Check your tax outgo through Income Tax Calculator and save money through our Personal Finance coverage. Check Business Breaking News Live on Zee Business Twitter and Facebook. Subscribe on YouTube.