RBI forms Nandan Nilekani-led digital payments panel

Mains Paper 3: Economy | Mobilization of resources, Banking

From UPSC perspective, the following things are important:

Prelims level: Panel and its terms of references

Mains level: Promotion of Digital Payments

Panel on Digital Payments

The RBI has constituted a high-level committee headed by former chairman of the UIDAI Nandan Nilekani to set up a robust digital payments ecosystem in the country.

Terms of Reference

Aim: To undertake cross country analyses with a view to identify best practices that can be adopted in our country to accelerate digitization of the economy and financial inclusion through greater use of digital payments.
The committee has been asked to review the existing status of digitization of payments, identify gaps in the ecosystem and suggest ways to plug them.
The panel has to suggest a medium-term strategy for deepening digital payments, and measures to strengthen safety and security.
It shall submit its report within a period of 90 days from the date of its first meeting.
The panel has also been tasked with the responsibility of increasing customer confidence and trust while they access financial services through digital modes.

Why such move?

The promotion of digital payments has been one of the primary agendas of the government in the past four years.
Payments through all electronic forms such as debit and credit cards, mobile wallets, real-time gross settlement (RTGS), national electronic funds transfer (NEFT) and UPI has seen a huge rise.
The newest mode of digital payments, UPI, which was launched in 2016, has witnessed an over 300% rise in transaction volumes in the last year and the growth is seen continuing in the near term.
A/c to National Payments Corporation of India (NPCI) , a record 620.17 million UPI transactions worth just over ₹1 trillion were conducted in December 2018.