MONTHLY ARCHIVES: DECEMBER, 2016
November has been a historic month for India – the withdrawal of high denomination currency notes (Prime Minister’s Office, November 8, 2016) has disrupted the cash-dependent economy. As the Reserve Bank of India and the banks grapple with the logistics of printing and distributing new currency notes, the government has turned to push digital payments through multiple channels - a panel of Chief Ministers has been constituted to expedite the progress on digital payments, the Niti Aayog made a presentation to 525 district collectors on ways to promote easy digital payments, issuance limits for Pre-Paid Payment Instruments have been increased, transaction charges on debit card payments have been waived by most banks till December 31st, railway ticket counters are being provided PoS terminals etc. Meanwhile use of wallets, net banking and debit card purchases increased significantly in November and many mandis moved transactions away from cash either electronically or through cheques.
Following the feedback received on its consultation paper on increasing usage of the USSD channel, on 22nd November, the TRAI lowered the ceiling tariff from Rs. 1.5 per session to Rs. 0.50 and increased the maximum number of stages in a session from five to eight. The USSD channel can be an effective enabler of financial inclusion by facilitating digital transactions through feature phones, however it remains to be seen how the banks and the TSPs will work to popularise the channel amongst low income customers.
November also saw the roll out of India’s first payments bank – in the first phase, Airtel Payments Bank started operations in Rajasthan through 10,000 access points, offering an attractive 7.25% on deposit accounts, and many other features for easy onboarding and seamless transactions. In other news, Jio Payments Bank, a joint venture of Reliance Industries Ltd and State Bank of India, was incorporated on November 10 marking one more step towards new banking for financial inclusion in India.
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