Centre approved ₹2,600 crore as incentive for banks to promote digital payments
The Union Cabinet on 11 January approved a ₹2,600 crore scheme for promoting RuPay debit cards and low-value BHIM-UPI transactions.
An overview of the news
Under the scheme, banks will be given financial incentives in the current financial year 2022-23 to promote 'Point of Sale' (PoS) i.e. payment machines and e-commerce transactions using RuPay and UPI.
The Cabinet has approved this incentive scheme to promote small amount transactions between individuals and merchants through RuPay Debit Cards and BHIM-UPI.
This will further strengthen India's progress in digital payments. Finance Minister Nirmala Sitharaman had said in the last budget, will continue to provide financial help to increase digital payments.
India has remained a cash-dependent economy since independence. India's Cash to GDP ratio is 13% while the global average is at most 8%.
Significance of the Incentive Scheme
The government had approved an incentive scheme in pursuance of the budget announcement for FY 2022 to promote digital transactions.
As a result, total digital payment transactions registered a year-on-year growth of 59 percent.
This increased from ₹5,554 crore in FY21 to ₹8,840 crore in FY22.
BHIM-UPI transactions registered a year-on-year growth of 106 per cent, from Rs 2,233 crore in FY21 to Rs 4,597 crore in FY22.
This incentive scheme will promote as a digital payment solution and enable further deepening of digital payments in the country.
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