The Reserve Bank of India (RBI) on Tuesday released a report on benchmarking India’s payment systems, which provides a comparative position of the payment ecosystem in the country relative to comparable payment systems and usage trends in other major countries.

On demonetisation of all Rs 500 and Rs 1,000 banknotes, the report said it led to a push in the use of cheques and digital payments, and use of e-Money picked up on a very large scale, "The digital landscape changed with the increase in the usage of UPI, Aadhaar Payments Bridge System (APBS), RuPay, Bharat Bill Payment System (BBPS), etc."

However, a relatively high level of cash in circulation offers scope for a higher level of digitisation and the last mile availability of Point of Sale (PoS) terminals is lower in India and much needs to be done in this regard, the RBI report said.

The study found that India has a strong regulatory system and robust large value and retail payment systems, but the country is required to take further efforts to bring down the volume of paper clearing and increase acceptance infrastructure to enhance digital payments.

Talking on cashless economy, the RBI report said there is a substantial growth seen in e-payments by government and in digital infrastructure in terms of mobile networks.

The 72-page report said that growth in the volume of payment systems transactions has been strong and steady in the country, but, the decline in cheques usage has, however, been slow.

“It may be recalled that in the First Bi-monthly Monetary Policy Statement, 2019-20 announced on April 4, 2019 , it was stated that “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. A report containing the findings of such an exercise will be placed on the RBI website by the end of May 2019," the RBI said.

The benchmarking of India’s payment systems is undertaken by selecting a mix of 21 countries which include Australia, Brazil, Canada, China, France, Germany, Hong Kong, India, Indonesia, Italy, Japan, Mexico, Russia, Saudi Arabia, Singapore, South Africa, South Korea, Sweden, Turkey, United Kingdom and USA.

The RBI 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.

According to the RBI report, payment systems have been rated on the basis of categories:

(a) “Leader”

: ranked 1st or 2nd or 3rd

(b) “Strong”: in the top rungs of the countries other than the leaders (4th to 9th)

(c) “Moderate”: ranked in the middle (10th to 15th)

(d) “Weak”: in the lowest rungs (16th to 21st).

India ranks as a LEADER in the following indicators:

Regulation of costs of payment systems.

Features available in Cheque instruments.

Number of debit cards issued.

Number of ATMs deployed across the country.

Per capita cash withdrawal at ATMs.

Share of Credit Transfers in payment systems.

Availability of alternate payment systems.

Share of e-Money in payment systems.

Citizen to Government (C2G) e-payments; Business to Government (B2G) e-payments; Government to Business (G2B) e-payments.

Oversight by the Central Bank.

Cross border personal remittance flows.

India ranks STRONG in the following indicators:

Laws in place and scope of regulation.

Cash in Circulation per capita.

Number of Point of Sale (PoS) terminals deployed across the country.

Volume and growth of Credit Transfers Credit transfers.

Real Time Gross Settlement System (RTGS).

Fast payment systems available in the country Fast payments.

Volume and growth of e-Money.

Mobile and Broadband subscriptions.

Customer safety and Authentication Standards.

Ombudsman scheme for Complaints Redress.

Central counterparty is operational in the country.

India ranks MODERATE in the following indicators:

Cash in Circulation as a percentage of GDP.

Overall Payment Systems transactions volume and growth.

Value of payment systems transactions to cash in circulation Payment. Systems Transactions.

Number of credit cards issued.

Debit and Credit Card usage at PoS terminals and online.

Presence of domestic Card Network and its share.

Government e-payments in the country.

Regulation of Payment Aggregators.

Costs of cross border personal remittances.

India ranks WEAK in the following indicators:

Rate of decline of cheques.

Ratio of Cheque volume vs payment systems volume.

Share of debit and credit card payments in payment systems.

Number of people per PoS terminal.

Value of debit and credit card payments to cash in circulation.

Number of people per ATM; Ratio of ATM Withdrawal vs cash in circulation.

Volume and year on year growth of direct debits; Share of direct debits in payment systems.

Digital payment of utility bills; Public Mass Transportation systems in the country.

Availability of channels and operators for cross border personal remittances.

First Published:Jun 4, 2019 8:16 PM IST