Digital payments get huge leg-up in India’s new budget. Here’s the low-down.
By Nivedita Bhattacharjee for TechInAsia
India is getting super serious about promoting a cashless economy.
The government just announced a host of initiatives geared towards pushing digital transaction, including a bold move that says cash donations to political parties will be capped at just US$30 from a single source, down from the earlier US$300. The minister also moved to ban cash transactions above around US$4,000.
“A digital economy helps in cleaning up the system, has transformational impact, energizes private investment through low cost credit, and benefits the common man,” Jaitley said.
This is all on top of the sweeping demonetization scheme that the country is still coming to terms with.
“Digital economy is a mission statement for the government,” Prime Minister Narendra Modi said in a televised statement addressing the country after the finance minister delivered the budget in the parliament.
Under the new proposal, post offices and fair price shops will be used to promote cashless transactions. This allows for last mile connectivity, especially in rural areas. The finance minister also announced two new schemes to boost the adoption of BHIM (Bharat Interface for Money) digital payment app.
“Nearly 12.5 million people have adopted the BHIM app. The government will launch two new schemes — a referral bonus for consumers and a cash-back scheme for merchants — to promote the use of BHIM,” the minister said.
The BHIM app was developed by the National Payments Corporation of India, which was set up to create e-payment systems. UPI, which is the technology supporting BHIM, removes the need for consumers to input data like account number, IFSC codes, and beneficiary details for digital payments.
The Unified Payments Interface (UPI) is a technology that allows bank-to-bank and bank-to-mobile wallet transfers with minimal identification. It is open source, which means competing banks can include it in their apps and transfer money between each other. The UPI was launched last year as part of the Indian government’s push towards a cashless society.
The minister also proposed making all government spends beyond a stipulated limit to be made electronically. And to top it all, the central Reserve Bank of India is to have a brand new payments regulatory body, replacing the existing board of regulations and supervision of payments and settlements.
Currency converted from Indian Rupees. 1USD = 67.61 INR
First appeared at TIA