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The proposal to set up an Acceptance Development Fund (ADF) for expanding the card acceptance infrastructure in the country may remain on paper, say bankers.
No contribution Banks seem to have developed cold feet to the idea as the Reserve Bank of India (RBI) as well as the government have so far not indicated their contribution to the Fund.
An RBI concept paper (March 2016) on expanding the card acceptance infrastructure in the country had suggested that besides card issuers (banks) and card payment networks (such as Visa, MasterCard and RuPay), the government and the RBI too consider contributing to the ADF.
While the government’s contribution to the ADF could be routed through the Financial Inclusion Fund (FIF), which is operated by the National Bank for Agriculture and Rural Development (Nabard), the RBI’s contribution could come from the Depositors’ Education and Awareness (DEA) Fund.
As of March-end 2016, the balance in the FIF was ₹2,453, while the balance in the DEA Fund was ₹10,585 crore on June 30, 2016.
Point of sales terminals
In the context of the government asking banks to collectively install 10 lakh additional POS terminals by March-end 2017, the twin burden involved in the latter incurring expenditure for setting up the POS terminals and also contributing to the ADF has been brought to the notice of the regulator, said a senior State Bank of India official. A PoS terminal is an electronic device which processes card (debit and credit) payments at merchant locations.
It is used for cashless transactions, both for making payments and disbursing cash.
Going digital In a bid to expand the digital payments eco-system and facilitate the move towards cashless transactions in the wake of scrapping of the old ₹500 and ₹1,000 bank notes, the government wants banks to ramp up installation of PoS terminals.
These terminals will be deployed with small and big merchants and enterprises, healthcare centres, utilities, public distribution system and markets / kirana stores / convenience stores.
Earlier this month, Nabard said it will extend about ₹120 crore directly to banks for deployment of two PoS terminals, each in one lakh villages with a population of up to 10,000. While this funding will bankroll deployment of two lakh PoS terminals, banks still have to dip into their coffers to deploy eight lakh more terminals by March-end 2017.
The country currently has about 15 lakh PoS terminals deployed across different merchants to facilitate card-based payments.
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