Payments infrastructure development fund

• The Reserve Bank of India (RBI) has created a Rs 500-crore Payments Infrastructure Development Fund (PIDF) to encourage acquirers to deploy Points of Sale (PoS) infrastructure — both physical and digital modes — in tier-3 to tier-6 centres and north eastern states.

About:

• The PIDF will be governed through an Advisory Council and managed and administered by RBI.

• RBI will make an initial contribution of ₹250 crore to the PIDF, covering half of the fund, while the remaining contribution will be from card-issuing banks and card networks operating in the country.

• The PIDF will also receive recurring contributions to cover operational expenses from card-issuing banks and card networks. RBI will also contribute to yearly shortfalls, if necessary.

Background:

• The setting up of this fund is in line with the recommendations of the report of the committee on deepening of digital payments, chaired by Nandan Nilekani.

Role of PIDF:

• Given the high cost of merchant acquisition and merchant terminalisation, most of the POS terminals in the country are concentrated in tier 1 and 2 cities and towns and other regions have been left out.