RBI Report pushes for Digital Transactions

The Reserve Bank of India (RBI) report Payment and Settlement: The Plumbing in the Architecture of India s Financial System makes the following observations about digital payments:

• India s effort to build a less-cash economy is gathering momentum. Digital transactions have witnessed phenomenal growth in digital transactions until March 2019.
• RBI has set an ambitious target to push up the volumes by four times by 2021.
• Digital transactions in value terms have grown by 19.5 per cent during 2018-19, compared to the growth of 22.2 per cent during 2017-18.
• The bulk of digital transactions in value terms (about 82.8 per cent) are accounted for by RTGS transactions.
• The retail component of digital transactions (excluding RTGS customers and interbank transactions) witnessed a volume growth of 59.3 per cent during 2018-19, as against 50.8 per cent growth in the 2017-18.
• RBI expects the volume of cheque-based payments to be less than 2 per cent of the retail electronic transactions by 2021.
• Payment systems like the Unified Payment Interface (UPI) are likely to witness an average annualised growth of over 100 per cent and NEFT at 40 per cent by 2021.
• The number of digital transactions is expected to increase by more than four times from Rs 2,069 crore in December 2018 to Rs 8,707 crore in December 2021.

The report notes that how the digital banking and finance system has evolved with mobile wallets providing banking services available on tap ; digital-only banks eliminating the need for brick and mortar presence, biometric authentication making transactions much safer and more convenient than the conventional modes of payment.