KOLKATA: The Reserve Bank of India has said that strong regulations have helped India’s payments system grow rapidly and earned leadership position in the world even as bringing down volume of paper clearing along with raising acceptance of digital utility bill payments still remains a challenge.

There has been substantial growth in e-payments by government and also in digital infrastructure in terms of mobile networks. The Aadhaar enabled electronic Know Your Customer and the smartphone revolution has also helped n explosion in digital payment options, RBI said in a study which benchmarked India’s progress in payment systems over the past decade.

RBI said that India firmly remained in the global map in terms of innovations in retail payments. The third largest Asian economy recorded an accelerated growth rate of over 50% in the volume of retail electronic payment transactions in the last four years, backed by higher financial inclusion and adoption of mobile payments. The traction seen in 2018-19 was largely due to the steep growth in Unified Payments Interface (UPI).

“India’s Payment Systems are considered to be efficient, safe and secure. The payment and settlement systems are also adequately regulated and supervised. Over the past decade, a number of innovations have taken place in retail payments. These have reshaped payment processes and changed the retail payments landscape by influencing users in their choice of payment instruments,” RBI said, in a study for Benchmarking India’s Payments System.

However, the progress in terms of reducing cash in circulation as percentage of GDP has seen a moderate progress even after demonetisation vis-à-vis other countries. The progress in overall payment systems transactions volume and growth and number of credit cards issued have been ranked “moderate”.

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RBI carried out the exercise by selecting a mix of 21 countries including advanced countries such as the UK and US, Asian economies like Japan, China and Hong Kong, and BRICS nations including Brazil, Russia and South Africa.

“Benchmarking India’s Payments Systems is necessary to gauge India’s progress vis-à-vis payment systems and instruments in major countries and give further impetus to the planned efforts for deepening the digitisation of payments,” RBI said.

The analysis was attempted under 41 indicators covering 21 broad areas including regulation, oversight, payment systems, payment instruments, payment infrastructure, utility payments, Government payments, customer protection and grievance redressal, securities settlement and clearing systems and cross border personal remittances.

In addition, the innovations and changes have lowered costs and have increased social welfare. Benchmarking is an effective means of evaluating the efficiency of the payment systems in the country.





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