- Recently, the Reserve Bank of India (RBI) has announced the creation of a Rs. 500-crore Payments Infrastructure Development Fund (PIDF).
- 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 centres and north eastern states.
- The fund will be governed through an advisory council but it will be managed and administered by the RBI.
- It has a corpus of Rs. 500 crore in which the RBI has made an initial contribution of Rs. 250 crore. The remaining will come from the card-issuing banks and card networks operating in the country.
- Recurring contributions
- 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.
- Need :
- Most of the PoS terminals in the country are concentrated in tier 1 and 2 cities because of the high cost of merchant acquisition and merchant terminalisation.
- It will give a push to digital payments across India.
- Reduce demand for cash over time.