In News:

The Reserve Bank of India’s (RBI) Digital Payments Index (DPI) rose to 465.33 as of September 2024, up from 445.5 in March 2024, indicating a sustained increase in the adoption and penetration of digital payments across India.

About the RBI-DPI

• Launched: January 2021
• Constructed by: Reserve Bank of India
• Purpose: To measure the extent and progress of digitisation of payments in India.
• Base Period: March 2018 (DPI Score = 100)
• Frequency of Publication: Semi-annually (March and September)

Significance of the Index

• Acts as a quantitative tool to monitor India’s progress in achieving a less-cash economy.
• Provides stakeholders, policymakers, and researchers a composite view of digital payment trends.
• Helps identify policy focus areas and gaps in digital infrastructure and adoption.
• Supports the goals of financial inclusion, innovation, and digital public infrastructure.

Recent Trends

• September 2024 DPI Score: 465.33
• March 2024 DPI Score: 445.5
• Implication: Demonstrates continued momentum in digital payment adoption, driven by improved payment infrastructure and payment performance nationwide.

Structure of the RBI-DPI

The index is composed of five broad parameters, each with defined weightages and sub-indicators:

Parameter                                                               Weightage         Description

1. Payment Enablers                                              25%                   Internet/mobile penetration, bank account ownership, Aadhaar usage.

2. Payment Infrastructure – Demand Side          10%                  Number of debit/credit cards, user demand for digital options.

3. Payment Infrastructure – Supply Side            15%                  Availability of POS machines, ATMs, bank branches, QR codes.

4. Payment Performance                                      45%                  Actual volume and value of digital transactions, currency usage trends.

5. Consumer Centricity                                        5%                    Digital payment awareness, fraud prevention, grievance redressal.

Each parameter is further broken down into measurable sub-indicators, offering a comprehensive framework for assessment.

Why RBI-DPI Matters for India

• Digital Transformation: Encourages the shift from cash to digital payments, aligning with the goals of Digital India.
• Policy Impact Assessment: Evaluates the effectiveness of regulatory and policy interventions in the payment ecosystem.
• Infrastructure Development: Reflects the outreach of digital payment infrastructure, aiding targeted investments.
• Financial Inclusion: Helps assess how digital modes are reaching the underserved and unbanked populations.
• Data-Driven Governance: Facilitates evidence-based decision-making in financial sector reforms.