Digital payment logic to drive banks to adopt new technology: Ravi Shankar Prasad

We are not saying the economy becomes completely cashless, but the stress should be more on digital payments, said Ravi Shankar Prasad.

Written by Pranav Mukul | Published: January 2, 2017 12:31:27 am
digital transaction, cashless economy, demonetisation, digital payment, ravi shankar prasad cashless transaction, paytm, bhim aap, digital banking, india news Ravi Shankar Prasad said the digital payment drive is similar to the mobile revolution or internet revolution in the country. (Express Archive Photo)

The lack of appropriate back-end infrastructure in the country to support the surge in digital payments after the Centre’s November 8 announcement to demonetise high-denomination currency notes will not be a hurdle to its policies on creating the digital ecosystem, Minister of Law & Justice and Electronics & Information Technology Ravi Shankar Prasad told Pranav Mukul in an interview. Edited excerpts:

Several metrics have shown that after November 8, there has been a surge in traffic on digital payments platform. Is there enough physical infrastructure such as servers, data centres and security systems available in the country to support this growth?

The government’s policymaking will not fall victim to infrastructure deficit. I have already told the Secretary, IT, to study in detail whether we need to reinforce the legal architecture for ensuring safety and security. We have also set up a separate Digital Payments division in CERT-In (Indian Computer Emergency Response Team), with more cyber-auditors, more drills should also be there. Banks have been requested to immediately furnish details of any unusual movement on their side. It is similar to the mobile revolution or internet revolution in the country. Competition in the huge market will drive both content and platform. A platform that is more secure and safe will earn more results.

In this competitive scenario, the government-backed apps and services haven’t fared well. Platforms such as Unified Payments Interface (UPI) only received interest from some major banks only during November…

The logic of digital payments would drive the conventional banking industry to adopt new technology just as conventional money order gave way to digital money order. It is all a part of that process. Indians are tech-savvy, and once there is a realisation digital ecosystem is building, they will quickly adapt.

How does the government plan to ensure that this growth in digital payments is sustainable, particularly considering the convenience factor of cash transactions?

We are not saying the economy becomes completely cashless, but the stress should be more on digital payments. Indians are very tech savvy, 1 billion-plus phones, 500 million internet connections, 350 million smartphones and new modes of digital payments are going to create a new paradigm of digital development in India. Once the Aadhaar enabled payments start, there is going to be a metamorphosis of the digital payments ecosystem in the country. We are already in talk with the Ministry of Food and Civil Supplies to make all the 5.5 lakh ration shops Aadhaar enabled. We are finalising the strategy.

Is some part of this strategy to promote digital ecosystem also trickling down to the rural areas of the country?

India is changing on the ground, we need to recognise it. We have two lakh common service centres (CSCs). They are the front-end shoulders of Digital India in the hinterland. They make Aadhaar cards, do digital payments. There are also 12,000 banking correspondents, and some of them also do railway ticket booking. I have asked them to become the agents of digital literacy. I am contemplating asking my department to get in touch with the banking industry to enable all of these CSCs to become banking correspondents.

What would be the one key impact of pushing digital payments?

This is also a very exciting development to enlarge the tax kitty of the government for development purposes. Once more payments begin happening digitally, there will be more accountability and more sources of funding will be revealed. This will result in an increase in tax earnings of the government. And the higher is the tax collection, more will be the financial robust discretion available to the government. And obviously once the tough action against the corrupt and corruption goes on, India will be a better society.

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