Recommendations of the Nilekani Panel for strengthening Digital Payments
The panel headed by Nandan Nilekani has submitted the recommendations to the Reserve Bank of India (RBI) for strengthening digital payments ecosystem.
Recommendations of the Nilekani Panel
The committee has listed a comprehensive set of regulatory interventions that will be needed to achieve the goal of a less-cash economy. The recommendations include:
- Easing KYC costs to banks.
- The government must be at the forefront of the transition to the digital economy by taking steps such as removing transaction charges on all digital payments made by customers to the government.
- Budget for accepting digital transactions similar to government budgets for accepting payments in cash.
- RBI to set an interchange rate for the transaction between customers and leave the merchant discount rate (MDR) on competitive market pricing which would reduce the transaction cost for customers.
- Setting up special risk mitigation and complaint registering digital portals.
- Special data monitoring mechanism to garner granular district-level data on consumer trends and payment behaviour for targeted intervention to improve the existing infrastructure.
- National Common Mobility Card (NCMC) which could be used at all transit locations making all new metro and transit payments interoperable through NCMC.
- NCMC to have two instruments on it viz. a regular debit card which can be used at an ATM, and a local wallet which can be used for contactless payments, without the need to go back to the server or additional authentication.
- The thresholds for small value cash payments to be reduced drastically say Rs 1000, over the next one year.
- RBI should consider the setting up of an acceptance development fund, which is used to develop new merchants in poorly served areas.
- The government should look to provide a tax discount based on the proportion of digital payment transactions accepted by the business similar to what done in South Korea,
- The users must have options to make high-value digital payments at any time. The RBI must review the usage patterns of RTGS and NEFT on a quarterly basis and adjust the hours of operation.
The panel report also includes recommendations to all major regulators such as RBI, SEBI, IRDAI and DoT with the objective to reduce cash-based payments.
Category: Economy & Banking Current Affairs