GS 3: Economy | Mobilization of resources, Banking

Why in news?

The RBI has constituted a high-level committee headed by former chairman of the UIDAI Nandan Nilekani to set up a robust digital payments ecosystem in the country.

Aim:

To undertake cross country analyses with a view to identify best practices that can be adopted in our country to accelerate digitization of the economy and financial inclusion through greater use of digital payments.

Terms of Reference:

• The committee has been asked to review the existing status of digitization of payments, identify gaps in the ecosystem and suggest ways to plug them.
• The panel has to suggest a medium-term strategy for deepening digital payments, and measures to strengthen safety and security.
• It shall submit its report within a period of 90 days from the date of its first meeting.
• The panel has also been tasked with the responsibility of increasing customer confidence and trust while they access financial services through digital modes.

Need for panel:

• The promotion of digital payments has been one of the primary agendas of the government in the past four years.
• Payments through all electronic forms such as debit and credit cards, mobile wallets, real-time gross settlement (RTGS), national electronic funds transfer (NEFT) and UPI has seen a huge rise. The newest mode of digital payments, UPI, which was launched in 2016, has witnessed an over 300% rise in transaction volumes in the last year and the growth is seen continuing in the near term.
• A/c to National Payments Corporation of India (NPCI) , a record 620.17 million UPI transactions worth just over ₹1 trillion were conducted in December 2018.