Nanda Nilekani-led committee — set up by RBI to delve deeper into India’s digital finance state — said that about 100 million people make digital payments at least once a month and this number is supposed to rise by 2021. The committee also made numerous recommendations in order to improve digital payments in India.It has suggested a target for additional growth of 10x in per capita transactions in next three years. Also, it recommended on targeting the growth of users to 300 million within this three years period. “This growth will be driven by a shift from high value, low volume, high cost transactions to low value, high volume, low cost transactions. Over a longer period, this will eventually lead to a decline in cash requirements”, the report said.

The Reserve Bank of India (RBI) had setup a five-member committee, the High Level Committee on Deepening of Digital Payments, headed by Infosys Co-founder Nandan Nilekani to review the condition of digital payments in India. This committee recently presented its report to the Governor of RBI.

The committee recommended that consumer to government transactions should not be charged with a convenience fee. It went on to suggest that it should be ensured that the acceptance infrastructure is expanded. Every merchant should accept at least one type of digital payments mode. “Reduce the ‘overall’ cost to the consumer such as KYC process at multiple stages of the transaction and service charges for digital payments’, the report said. The government should take initiative towards increasing consumers confidence in digital transactions. It added that new solutions should be developed for users which have no access to smartphones.

It stressed on the creation of a widespread and robust cash-in/cash-out network. If consumers are confident that they can cash-out their money when required it would provide them with a safety net and they would reduce cash transactions, said the committee.

Although, multitude of recommendations were made in the report, the committee refrained from commenting upon the topic of a separate regulating body for transactions and taking it away from RBI.The banking regulator objected this move saying that payments are an integral part of banking scheme.

Along with the government, the role of banks has also been highlighted in the report. The committee suggested that in order to make India a digital nation, micro transactions should also be made seamless through digital payment mode include ticketing, high transit payments, low value transactions as well as recurring payments such as EMI or subscriptions. To tackle fraud, the committee recommended keeping a fraud register and grading it with every transaction recorded, to keep track of fraud activities and prevent them in future.

According to the report, ‘digital transactions must be a part of serving the customer’ which is why no additional charges should be levied on digital transactions by banks. It stressed upon educating the consumers, roles of debit and credit cards and improving the infrastructure of micro ATMs. In all 73 different recommendations have been made by in the report.

It would be interesting to see what suggestions will be implemented by the central bank in the next two years while the three years growth target lies in front of RBI.