Payments Infrastructure Development Fund (PIDF) scheme

GS Paper III

News Excerpt:
The Reserve Bank of India (RBI) has announced an extension of the Payments Infrastructure Development Fund (PIDF) scheme until December 2025.

About the news:

  • Initially launched in 2021 for a three-year period, this extension aims to continue fostering financial inclusion and supporting the country's payment infrastructure.
  • Under this extended scheme, beneficiaries of the PM Vishwakarma Scheme nationwide have been incorporated as merchants eligible for deployment under PIDF.
  • This move aims to diversify and broaden the range of supported payment acceptance infrastructure.
  • Additionally, the subsidy for specific focus areas, including the North Eastern states and Union Territories of Jammu & Kashmir and Ladakh, has been standardised at 90% of the device cost, irrespective of the device type.
    • This uniform subsidy allocation aims to boost infrastructural development in these regions.

About PIDF scheme:

  •  The Payment Infrastructure Development Fund (PIDF) is a fund set up by the Reserve Bank of India (RBI), in consultation with major authorized card networks.
  • The RBI is responsible for operationalizing the scheme, with the Chairman of the Payments Council of India at the helm.
  • PIDF shall be governed by an ex-officio Advisory Council (AC).
  • The PIDF scheme is designed to offer financial aid to banks and non-bank financial companies (NBFCs) for the deployment of point-of-sale terminals and other payment acceptance infrastructure.
  • It will facilitate the development of payment acceptance infrastructure in tier-3 to tier-6 cities and North-Eastern states of India.
  • The UTs of Ladakh and J&K will also get special focus under the scheme.
  • This scheme is a part of the Government of India's efforts to promote digital payments and reduce cash transactions.
  •  It aims to provide financial assistance to eligible entities for setting up, extending and modernizing payment infrastructure across the country.
  • The scheme is expected to benefit both consumers and businesses by making digital payments more accessible and convenient. 
  • Payment methods that are not inter-operable shall not be considered under PIDF.

  Objective of the PIDF scheme:

  • This government initiative will allow merchants engaged in services such as transport and hospitality, government payments, fuel pumps, public distribution system (PDS) shops, healthcare and kirana shops to accept payments through debit and credit cards.
  • The PIDF is generously funded by the RBI to the tune of Rs. 250 crores and card networks contributing Rs. 95 crores, bringing the total corpus to Rs. 345 crores.
  • To ensure that the fund keeps growing, card networks have agreed to contribute 0.01 paisa per rupee of transaction each year, along with other contributions from card-issuing banks.

About PM Vishwakarma Scheme: 

  • It is a Central Sector Scheme launched by the Ministry of Micro, Small and Medium Enterprises.
  • It aims to provide holistic and end-to-end support to artisans and craftspeople through access to collateral free credit, skill training, modern tools, incentive for digital transactions and market linkage support.
  • Key components:
    • Recognition: PM Vishwakarma Certificate and ID Card
    • Skill Upgradation
    • Toolkit Incentive
    • Credit Support
    • Incentive for Digital Transactions
    • Marketing Support
  • Objective:
    • Strengthen and nurture the Guru-Shishya parampara or family-based practice of traditional skills by artisans and craftspeople working with their hands and tools.
    • Improve the quality, as well as the reach of products and services of artisans and craftspeople and to ensure that the Vishwakarmas are integrated with the domestic and global value chains.

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