The Reserve Bank of India (RBI) has recently launched a programme to adopt 75 villages and convert them into ‘digital payment enabled’ villages, known as the ‘Digital Villages Programme’. This initiative has been launched under the ‘Har Payment Digital’ mission amid the ‘Digital Payments Awareness Week (DPAW) 2023’. The programme aims to improve awareness and onboard merchants for digital payments in these villages.

Adoption of 75 Villages

To initiate the 75 Digital Villages programme, village-level entrepreneurs will also be involved. Payment system operators (PSOs) will adopt these villages across the country and conduct two camps in each of these villages. The camps aim to educate villagers about digital payments and enable them to use them for daily transactions.

RBI Policy Initiatives

The RBI has taken four major policy initiatives to promote digital payments in the country. These are as follows:

  1. Storage of Payment System Data – This initiative allows all payment system operators (PSOs) to store data related to their payment systems within India. This ensures data security and helps to reduce the risk of data breaches.
  2. Rationalization of Merchant Discount Rate – The Merchant Discount Rate (MDR) is the fee charged by banks for providing digital payment services to merchants. The RBI has rationalized the MDR to promote the adoption of digital payments.
  3. Master Directions on Prepaid Payment Instruments (PPIs) – The RBI has issued master directions on PPIs to provide a regulatory framework for the issuance and operation of PPIs in the country.
  4. National Electronic Funds Transfer (NEFT) system – Settlement at half-hourly intervals – The NEFT system is used for electronic transfer of funds from one bank account to another. The RBI has reduced the time taken for NEFT transactions to settle to half-hourly intervals.

Digital India Initiatives

The Government has taken up many initiatives under the Digital India campaign to promote digitalization in the country. Here are a few important initiatives:

  1. BHIM – Bharat Interface for Money is an app that makes payment transactions simple, easy and quick using Unified Payments Interface (UPI). BHIM has made digital payments accessible to millions of Indians, even in rural areas.
  2. E-Pathshala – Developed by NCERT, e-Pathshala showcases and disseminates all educational e-resources including textbooks, audio, video, periodicals and a variety of other print and non-print materials through the website and mobile app. This initiative aims to provide easy access to educational resources to students across the country.
  3. E-Hospitals – It is a Hospital Management Information System (HMIS) which is a one-stop solution for connecting patients, hospitals and doctors through a single digital platform. Till February 2021, as many as 420 e-Hospitals had been established under the Digital India campaign. This initiative aims to improve access to healthcare services and reduce the burden on the healthcare system.
  4. DigiLockers – This flagship initiative aims at the ‘Digital Empowerment’ of the citizen by providing access to authentic digital documents to the citizen’s digital document wallet. This initiative aims to make it easier for citizens to access important documents, such as Aadhaar cards, driving licenses, and educational certificates, from anywhere, at any time.

MCQs on Digital Payments and Awareness

  1. What is the name of the flagship initiative aimed at providing access to authentic digital documents to the citizen’s digital document wallet?
    A. DigiLockers
    B. BHIM app
    C. E-Hospitals
    D. E-Pathshala
    Correct Answer: A. DigiLockers
    Explanation: DigiLockers is a flagship initiative under the Digital India campaign aimed at the ‘Digital Empowerment’ of the citizen by providing access to authentic digital documents to the citizen’s digital document wallet.
  2. Which payment system operators (PSOs) are involved in adopting the villages for the Digital Villages Programme?
    A. Payment system operators across the country
    B. Payment system operators in urban areas
    C. Payment system operators in rural areas
    D. Payment system operators in selected states
    Correct Answer: A. Payment system operators across the country
    Explanation: Under the Digital Villages Programme, payment system operators (PSOs) across the country are involved in adopting the villages and conducting camps to improve awareness and onboard merchants for digital payments.
  3. Which of the following is not a policy initiative taken by the Reserve Bank of India (RBI)?
    A. Storage of Payment System Data
    B. Rationalization of Merchant Discount Rate
    C. Master Directions on Prepaid Payment Instruments (PPIs)
    D. Implementation of Goods and Services Tax (GST)
    Correct Answer: D. Implementation of Goods and Services Tax (GST)
    Explanation: The Reserve Bank of India (RBI) has taken four major policy initiatives, namely, storage of Payment System Data, rationalization of Merchant Discount Rate, Master Directions on Prepaid Payment Instruments (PPIs), and National Electronic Funds Transfer (NEFT) system – Settlement at half-hourly intervals. Implementation of Goods and Services Tax (GST) is a separate initiative taken by the Government of India.

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