An RBI-appointed panel set up to review the status of digital payments in January recently submitted its report (see a copy below), in which it said that the Reserve Bank of India (RBI) and the government must target 10X growth in the volume of digital payments in the next three years. This growth will be driven by a shift from high-value, low-volume, high-cost transactions to low-value, high-volume, low-cost transactions, said the five-member panel, headed by Nandan Nilekani. Initiatives such as removing transaction charges on digital payments made to government, simplying KYC processes, and reducing KYC costs for banks are among the committee's 73 recommendations, which are summarised below. A. Recommendations for the RBI 1. Three-year targets Recommendation 1: Plan for 10X volume growth, 3x user growth in three years: Per Capita Digital Transactions per month: 10X (from 22 in March 2019 to 220 in March 2022) Digital Transaction Value/GDP: 2X (from 769% in 2018-19 to 1500% in 2021-22) Number of digital payment users active in the month: 3X (from 100 million to 300 million in 3 Years) CIC/GDP ratio: No specific target, but Currency in circulation should grow slower than GDP growth + inflation, going down by about 3-4% in 5 years, and tend towards the global average (7%). Recommendation 2: Provide a consistent view on Digital Payments. The RBI must rationalize the definition of digital payments, and become the source of accurate and consistent and granular data for better tracking. 2. Accelerating acceptance Recommendation 3: Fix interchange fees on card networks.…
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