With an aim to provide a further boost to digital payments, the Reserve Bank of India (RBI) on Wednesday announced its decision to rationalise charges on debit card transactions. The central bank informed about its decision at the fifth Bi-monthly Monetary Policy review held today. RBI stated that debit card transactions at ‘Point of Sales’ have shown significant growth in recent times. With a view to give further fillip to acceptance of debit card payments for purchase of goods and services across a wider network of merchants, the central bank decided to rationalise the framework for Merchant Discount Rate (MDR) applicable on debit card transactions based on the category of merchants. “A differentiated MDR for asset-light acceptance infrastructure and a cap on absolute amount of MDR per transaction will also be prescribed. The revised MDR aims at achieving the twin objectives of increased usage of debit cards and ensuring sustainability of the business for the entities involved. The revised instructions for MDR on debit card transactions will be issued today,” added RBI.
Meanwhile, the central bank kept the repo rate unchanged, given the caution over rising inflation. The central bank had reduced the benchmark lending rate by 0.25 percentage points to 6 percent in August, bringing it to a 6-year low, however, kept it unchanged in October. The Consumer Price Index (CPI) for October had accelerated to a seven-month high of 3.5 percent from a year ago. Besides inflation, higher oil prices and the impact of the seventh pay commission are also likely to play a role in RBI’s monetary policy decision.
Digital transaction scenario
Value of digital transactions across the country has increased by 80% with the total amount expected to reach Rupees 1,800 crore in 2017-2018, official data suggests. The value of digital payments till October this year was at Rupees 1,000 crore, nearly equal to the value for entire 2016-2017. According to the Ministry of Information Technology, digital payments registered Rs 136-138 crore on an average from June-August keeping on the trend from the beginning of the year.
Even though the disruption of cash flow caused by demonetisation was restored early year, the volume of digital transaction rose in March and April – Rupees 156 crore in both months and thereafter maintained a steady monthly average of Rupees 136-138 crore with value on the rise. Data from the finance committee of the Parliament reflect significant increases, since Prime Minister Modi announced demonetisation, in digital transactions across all platforms – UPI, BHIM, IMPS, M-wallet and debit cards. Digital progress in establishing the “Jan-Dhan-Aadhaar-Mobile Trinity’ has been successful to a certain extent as 118 crore mobile phones, similar number of Aadhaar cards and 31 crore Jan Dhan accounts could be linked.
In terms of usage of digital platforms in government works, there has been a significant improvement as 72 lakh registered entities filed GST (Goods and Services Tax) that saw 100 per cent increase in online filing. In 2016-2017, e-filing of income tax returns rose by 23 per cent as compared to2015-2016. According to a report, the government report added, “Since November 2016, there has been a 221% increase in volume of transactions and 118% increase in value of transactions in the non-tax receipt portal.” the government has also said that direct benefit transfer (DBT) has resulted in savings of Rupees 57,029 crore up to 2016-2017.