Nandan Nilekani Current Affairs - 2020

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Nilekani Panel suggests measures to encourage Digital Payments

The Reserve Bank of India (RBI) appointed Nandan Nilekani committee has submitted its suggestions on measures to encourage digital payments in India to RBI Governor Shaktikanta Das.

Background: In January 2019 the RBI had set up the five-member panel under the chairmanship of Nandan Nilekani to provide suggestions on deepening digital payments with a view of encouraging digitization of payments and of enhancing financial inclusion through digitization.

Key Recommendation by Nilekani Panel

  • The measures suggest by Nilekani Panel includes elimination of all charges, round the clock (24×7) RTGS (real time gross settlement) and NEFT (national electronic funds transfer) facility and duty-free import of point-of-sales (POS) machines.
  • As per the report within last five years many people have entered the Indian banking network system through the Financial Inclusion schemes like Pradhan Mantri Jan Dhan Yojana (PMJDY) and also lot of digital credit into bank accounts have been added due to direct benefit transfers (DBT), and digitization of government payments.
  • Customer Service: Panel suggested that there should be no convenience fee on payments made by customers to government agencies. It also recommended that to handle customer complaints payment systems should use machine-driven, online dispute resolution systems.
  • Payment Monitoring: It recommended that for monitoring the digital payment systems, the RBI and the government should put in place an appropriate mechanism and must make aggregated information (based on blocks, and PIN code), available to all players involved on a monthly basis, so that they can make the necessary adjustments in a timely manner.
  • Larger balances: Since digital transactions result in larger balances with banks, thus panel suggested that customers must be allowed to initiate and accept a reasonable number of digital payment transactions without levying any charges.
  • Digital Infrastructure: Although the banks have issued more than billion debit cards and 50 million credit cards but, with only about 3.5 million POS devices, and 2 lakh ATMs to accept cards there acceptance is still low from an infrastructure perspective. Thus to incentivize acquirers of cards in spite of the acute paucity of acquisition infrastructure in India, the committee suggests that regulator must intervene at regular intervals to fine tune interchange fee levied and to address other related issues, as well as to ensure that there is level playing field in market both for issuer and acquirer.
  • The features of ATMs much be enhanced such that it act as a complete Digital facilitation point. It includes features of ATMs such as from cash dispenser to support gamut of banking facilities as well as cash Deposit, tax deposits, bills payment, funds transfer, mobile recharge and customer support and grievance reporting
  • Suggested internationalization plan for Indian payment systems like RuPay and BHIM (Bharat Interface for Money) UPI (Unified Payment Interface applications) to ease the flow of remittances into India and also to help Indian travellers make payments abroad.

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Nilekani Panel on Digital Payments submits report to RBI

The Reserve Bank of India (RBI) appointed committee on ‘suggestions on promoting digital payment’ has submitted its report to RBI Governor Shaktikanta Das. The committee was headed by Nandan Nilekani, also known as Aadhaar Architect.

Key Highlights

  • Background: In January 2019 RBI had set up a five-member panel headed by Nilekani, on deepening digital payments with a view of encouraging digitisation of payments and enhancing financial inclusion via digitisation.
  • Panel Members: Besides Nandan Nilekani (Infosys co-founder), H R Khan (former RBI deputy governor), Kishore Sansi (former MD and CEO of Vijaya Bank), Aruna Sharma (former secretary in ministries of IT and steel) and Sanjay Jain (chief innovation officer, Centre for Innovation, Incubation & Entrepreneurship (CIIE), IIM Ahmedabad).

Tasks Undertaken:

  • The panel was tasked to review existing status of digitisation of payments in India, identify current gaps in ecosystem and suggest ways to bridge them. It also assessed current levels of digital payments in financial inclusion.
  • It undertook cross country analyses with a view of identifying best practices which can be adopted in India so as to accelerate digitisation of economy and financial inclusion through greater use of digital payments.

Way Ahead

  • RBI will examine recommendations given by committee and will link action points, wherever required and necessary, in its ‘Payment and Settlement Systems in India: Vision 2019 – 2021‘ for implementation.
  • The Payment Systems Vision 2021 was recently released by RBI. It seeks to ensure a secure, safe, quick, affordable and convenient, e-payment system with aim of making India a ‘cash-lite’ society.

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