What is RBI's Digital Payments Index? (2024)

FAQs

What is RBI's Digital Payments Index? ›

The Reserve Bank of India (RBI) introduced the Digital Payments Index (DPI) in January 2021 to measure the extent of digitization in payments across India. With March 2018 as the base year, the RBI-DPI provides insights into the growth and penetration of digital payments in the country.

“The RBI-DPI index has increased across all parameters driven by significant growth in payment performance and payment infrastructure across the country over the period,” the RBI said. The Reserve Bank of India's Digital Payments Index (RBI-DPI) has increased to 445.50 as against 418.77 for September 2023.

The RBI's Digital Payments Index (RBI-DPI) stood at 445.5 at the end of March 2024, compared to 418.77 in September 2023 and 395.57 in March 2023.

Published every six months, the index has been created using four parameters: payment enablers, payment infrastructure, payment performance and consumer centricity. Sub-parameters include frauds, complaints, unique users, cash withdrawals, bank branches and credit cards.

The central bank publishes the RBI-DPI on a semi-annual basis with a lag of four months.

RBI wishes to bring to the notice of the general public that non-cash digital payment options (like NEFT, IMPS, UPI and BBPS) are available round the clock to facilitate fund transfers, purchase of goods / services, payment of bills, etc.

Which country is using the maximum transaction digitally? India has retained the top spot in the world with 25.5 billion real-time payment transactions, followed by China with 15.7 billion transactions.

It is projected to dominate the payments system in the country as the NPCI, established as an initiative by the RBI and the Indian Banks' Association (IBA), aiming for 15-20 billion monthly digital transactions by volume. It is expected to facilitate over half of all digital payments in India by the end of 2024.

RBI is going to launch pilot project for inter-bank borrowing using digital rupee from October 2023. In the retail sector usage of the Digital Rupee, the RBI has achieved its goal of one million daily transactions on 27 December 2023.

According to Redseer Strategy Consultants, digital lending is projected to account for 5% of all retail loans by FY28, up from 1.8% in FY22 and approximately 2.5% in FY24. This growth is expected to follow a compounded annual growth rate of 40%.

What are the five parameters of digital payment index? ›

About the Digital Payments Index:

Payment Enablers (weight 25%) Payment Infrastructure - Demand-side factors (10%) Payment Infrastructure - Supply-side factors (15%) Payment Performance (45%)

Such a payment, sometimes also called an electronic payment (e-payment), is the transfer of value from one payment account to another where both the payer and the payee use a digital device such as a mobile phone, computer, or a credit, debit, or prepaid card.

The Digital Index is a comprehensive tool that assesses an organization's digital maturity across all its functions on five key dimensions — digital platform, analytics, structure and systems, data, and customer experience — to generate an overall ranking.

India has topped the list for digital payments and recorded 89.5 million transactions in 2022, according to a report. Interestingly, India's payments are more than the digital payments made in the next four leading countries combined.

Total transaction value in the Digital Payments market is projected to reach US$11.53tn in 2024. Total transaction value is expected to show an annual growth rate (CAGR 2024-2028) of 9.52% resulting in a projected total amount of US$16.59tn by 2028.

Payments Indicator is a measurement of the online payment cycle, specifically observing the regulations that affect the online payments architecture, including the security of the system, the protection of consumers' rights and data, and the quality and speed of online payment services.

The Payment Index (PI) is a numeric measure of the businesses payment habits, and is calculated strictly on the distribution of the total owing amounts across the aging periods. This is accomplished by multiplying the percentage of the total owing in each aging period by a weighting factor.

RBI is planning to introduce a lightweight payment and settlement system (LPSS) that can operate from anywhere with minimal staff. The LPSS will be activated on a need basis and will operate independently of existing payment systems, such as RTGS, NEFT, and UPI.

The consumer price index (CPI) reflects the inflation people at large face and therefore, globally CPI or Retail Price Index (RPI) is used for inflation target by the Central Banks as well as for providing inflation protection in IIBs.