Payment Infrastructure Development Fund (PIDF) Scheme – UPSC Prelims

Department: Reserve Bank of India
Objective: Develop payment acceptance infrastructure in tier-3 to tier-6 cities (centres), with a special focus on the north-eastern states of the country.
  • Implementation:
    • The focus shall be to target those merchants who are yet to be terminalized (merchants who do not have any payment acceptance device).
    • Merchants engaged in services such as transport and hospitality, government payments, fuel pumps, public distribution system (PDS) shops, healthcare and kirana shops may be included, especially in the targeted geographies.
    • The fund will be used to subsidize banks and non-banks for deploying payment infrastructure, which will be contingent upon specific targets being achieved.
  • Time Period: The fund will be operational for three years effective from 1st January, 2021 and may be extended for two more years.
  • Management: An Advisory Council (AC) under the chairmanship of RBI deputy governor BP Kanungo has been constituted for managing the PIDF.
  • Fund Allocated:
    • The PIDF presently has a corpus of Rs. 345 crore, with Rs. 250 crore contributed by the RBI and Rs. 95 crore by the major authorised card networks in the country. The authorised card networks shall contribute in all Rs. 100 crore.
    • Besides the initial corpus, PIDF shall also receive annual contributions from card networks and card issuing banks.
    • For example, Card networks will have to chip in 0.01 paisa per rupee of transaction.
    • The role of a card network is to facilitate transactions between merchants and card issuers. E.g. Mastercard, Visa.
  • The implementation of targets shall be monitored by the RBI with assistance from card networks, the Indian Banks’ Association (IBA) and the Payments Council of India (PCI).
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