PAYMENT transactions contracted by a massive 46 per cent in value in April over the previous month as the nationwide lockdown affected economic activity across the board.
Latest data from the Reserve Bank of India (RBI) shows that transactions and payments through various banking channels — cheque payments, ATM withdrawal, NEFT and RTGS, fell between 26 per cent and 71 per cent in April over March, depending upon the mode of transaction.
The sole exception was direct benefit transfer (DBT) payments by the government using the Aadhar-enabled platforms, which recorded a 138 per cent jump.
Transactions through issuance of cheques – a paper instrument – saw the sharpest contraction of 71 per cent in April to Rs 1.63 lakh crore from Rs 5.65 lakh crore in March.
The RBI-operated Real Time Gross Settlement (RTGS) system, the largest mode for online high value transactions, recorded a contraction of 46.5 per cent in value to Rs 64.43 lakh crore in April from Rs 120.47 lakh crore in March.
Among the other highly used online payment mode, the National Electronic Fund Transfer (NEFT) recorded a fall of 42.7 per cent in transaction value to Rs 13.06 lakh crore in April, down from Rs 22.83 lakh crore in March.
Together, RTGS and NEFT account for a little over 90 per cent of total payments in the country. Transactions under RTGS are processed continuously on real time basis, whereas NEFT transactions are processed in half-hourly intervals.
With a lockdown in force, ATM withdrawals through debit cards slumped to Rs 1.27 lakh crore from Rs 2.49 lakh crore — a contraction of 49 per cent. Peoples’ need for cash dropped since it was used mostly for buying essential items or meeting health needs. This also suggests people hardly spent on discretionary items.
The data show that other digital modes of payment also witnessed sharp fall in value transacted during the month.
Transactions through IMPS — or immediate payment service — also fell by 40 per cent to Rs 1.21 lakh crore in April from Rs 2.01 lakh crore in March. Unique payment interface or UPI transactions fell 26.8 per cent during the same period.
Point-of-sale (POS) machines or POS-based credit card transactions value contracted by 69.7 per cent to Rs 26,656 crore in April from Rs 8,052 crore in March.
The exception was APBS (Aadhaar Payment Bridge System), which is used by the government to transfer funds/subsidies under various heads directly into Aadhaar-enabled accounts of beneficiaries. Value transacted under APBS jumped by 138 per cent to Rs 18,996 crore from Rs 7,951 crore. The RBI started capturing the APBS data separately from November 2019.
This could be because of government transferring funds to beneficiaries’ accounts under the Pradhan Mantri Garib Kalyan Yojana that was announced on March 26 to provide income support to the poor during the lockdown period.
As part of the Rs 1.7 lakh crore of relief package, the government had announced that 2.40 crore women Jan Dhan account holders will be given Rs 500 per month for three months. First instalment of Rs 2000 due to farmers in 2020-21 was also paid in April, among other measures.
The RBI’s payments data for April mirrors the industrial production data released by the government for the same month last week, which showed that factory output contracted by a record 55.5 per cent in April. Industrial activity had contracted 16.7 per cent in March.
These data sets point out that the Gross Domestic Product for April-June quarter will be severely impacted.
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