All we need to know about the Payments Infrastructure Development Fund (PIDF)? :
Objective: This fund has been created to encourage acquirers to deploy point of sale (PoS) infrastructure, both physical and digital, in tier-3 to tier-6 centers and northeastern states.
Contributions to the fund: The RBI has made an initial contribution of Rs 250 crore covering half the fund. The rest will come from the card-issuing banks and card networks operating in the country.
Management: The fund will be governed through an advisory council but it will be managed and administered by the RBI.
Need for and Significance of Payments Infrastructure Development Fund (PIDF)
Across the years, the payments ecosystem in the country has evolved with a wide range of options such as bank accounts, mobile phones, cards, etc. To accommodate further fillip to the digitization of payment systems, it is necessary to give impetus to acceptance infrastructure across the country, more so in underserved areas.
The fund is also in line with the measures proposed by the vision document on payment and settlement systems in India 2019-2021. The enhanced understanding of PoS infrastructure is supposed to reduce the demand for cash over time. Over 2021, there will be around 5 million active PoS by 2021.
Acceptance Development Fund:
In a similar move, last year, the RBI had also proposed to set up an Acceptance Development Fund which will be used to develop card acceptance infrastructure across small towns and cities.
The Fund will be used to ensure the growth of card acceptance infrastructure such as swipe machines across the country particularly in Tier III and Tier VI cities.
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Indian economy is one of the most agile growing economies in the world. There are many
features that are inherent to the economy. The combination of all the features enables
development economists to classify the Indian economy as a developing one.