Reserve Bank of India Governor D Subbarao stressed the need for India to shift from cash to non-cash i.e. electronic payment systems.
“The large value payment systems have mostly shifted to the electronic mode, possibly because of the regulatory fiat. Disappointingly, retail payment systems continue to be paper-centric and electronic systems have not penetrated deep enough,” Subbarao said at the IDBRT Banking Technology Awards function here on Friday.
Only 63 ATMs and 497 Point of Sale (PoS) terminals are available for every one million population in India, which is considered one of the lowest compared to other emerging economies, the RBI Governor said.
Also, only a small fraction of the over 10 million retailers in India have card payment acceptance infrastructure.
“Though the usage of mobile banking and internet banking is growing, a significant percentage of the customer base is not covered,” Subbarao observed.
To plug this gap, RBI has allowed entry for non-banks into another payment space - ATMs besides allowing the deployment of ATMs, especially in the smaller centres, non-bank entities are now permitted to set up, own and operate ATMs, styled as “White Label ATMs” (WLA). The Interbank Mobile Payment Service (IMPS) launched in November 2010 is expected to give a further boost to the growth of mobile payments.
When compared to other emerging markets like Brazil, Mexico and Russia, the value of banknotes and coins in circulation in India is high at 12% of the gross domestic product (GDP). The number of non-cash transactions per person in India stands at just 6 per cent year, which Subbarao termed as very low.
Meanwhile, the RBI Governor launched the Indian Banks’ Technology Consortium (IBTC) and inaugurated the mobile banking security lab at IDRBT.