In order to map the penetration of cashless economy, the Reserve Bank of India launched the Digital Payments Index (DPI) on January 1 to capture the extent of digitisation of payments across the country. The move is especially important as there has been a significant rise in digital transactions in the recent past.
The RBI and government have been pushing for digital transactions to bring in more transparency and efficiency in the financial system. Keeping in mind the sharp rise in digital transactions, the RBI-DPI has been constructed with March 2018 as base period and the DPI score for the same was set at 100. The scores for March 2019 and 2020 are calculated to 153.47 and 207.84, respectively, indicate appreciable growth.
RBI said in the release that the numbers will be published on its website on a semi-annual basis from March 2021 onwards with a lag of four months.
The five parameters based on which the RBI will measure the penetration of digital payments include payment enablers, payment infrastructure – demand-side and supply-side factors, payment performance, and consumer centricity.
Each of these parameters have sub-parameters which, in turn, consist of various measurable indicators. For instance, payment enablers like mobile, internet, Aadhaar, bank accounts, participants and merchants, all these constitute over 25% of the overall index.
In case of payment infrastructure, the demand-side aspects will account for 10 percent of the index score while the supply side will account for 15 percent of total DPI score. The major weightage is given to payment performance at 45 percent.
The latest RBI date states that digital transactions exhibited a sustained recovery and gained momentum in November 2020, supported by both wholesale and retail transactions. In the retail segment, NEFT (national electronic funds transfer) transactions volume was up 24.6 percent year-on-year in November 2020. This was 13.9 percent more than what was recorded a month ago.
UPI transactions surged to approximately 2.2 billion in November 2020, maintaining momentum in both volume and value terms.