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Payments Infrastructure Development Fund

  • 06 Jun 2020
  • 2 min read

Why in News

Recently, the Reserve Bank of India (RBI) has announced the creation of a Rs. 500-crore Payments Infrastructure Development Fund (PIDF).

Key Points

  • Aim: PIDF has been created to encourage deployment of Point of Sale (PoS) infrastructure, both physical and digital, in tier-3 to tier-6 centres and north eastern states.
  • Corpus: It has a corpus of Rs. 500 crore in which the RBI has made an initial contribution of Rs. 250 crore. The remaining will come from the card-issuing banks and card networks operating in the country.
  • Recurring contributions: The PIDF will also receive recurring contributions to cover operational expenses from card-issuing banks and card networks. RBI will also contribute to yearly shortfalls, if necessary.
  • Governance: The fund will be governed through an advisory council but will be managed and administered by the RBI.
  • Need: Most of the PoS terminals in the country are concentrated in tier 1 and 2 cities because of the high cost of merchant acquisition and merchant terminalisation.
    • The merchant onboarding and training is a key challenge for enhancing the reach of digital payments in smaller towns and cities.
    • Merchant onboarding means adding the new merchant in a payment gateway system.
  • Benefit: It will give a push to digital payments across India.
    • Reduce demand for cash over time.

Source: TH

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