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The decline in digital transactions during the Covid-19 lockdown indicates the integration of the digital economy with the real economy, said the Annual Report 2019-20 of the Reserve Bank of India, adding that transactions are expected to pick up as the economy recovers.
“Digital transactions are expected to pick up when economic activity gathers momentum, with enabling conditions for uninterrupted growth of digital payments such as spread of seamless digital connectivity within consumers, local traders, distributors, producers and other stakeholders,” said the report which was released on Tuesday.
Currency with the public
RBI data revealed that the growth of currency with the public in India grew to 21.3 per cent as on June 19, 2020, from 11.2 per cent on February 28 and 14.5 per cent as on March 31 this year. At the same time, the cumulative value of digital transactions during January-May 2020 declined by 25.5 per cent (year-on-year) when compared to a strong growth of 20.6 per cent a year ago.
“Apart from low demand during the lockdown, the suspension of operations by leading users of digital payments such as e-commerce and BigTechs could have contributed to a decline in small-value digital payments,” the report noted.
Overall, in FY20, payment and settlement systems grew by 44.1 per cent in terms of volume and by 5.4 per cent in terms of value.
“The share of digital transactions in the total volume of non-cash retail payments increased to 97 per cent during FY20, up from 95.4 per cent in the previous year,” the report said.
Among the electronic modes of payments, transactions under the RTGS system expanded by 10.3 per cent, with their value at ₹1,311.6-lakh crore, however, dipping by 3.3 per cent from the previous year, largely due to decline in large value transactions of corporates in line with slowdown in economic activity.
The RBI has said it would try to further expand digital payments to the excluded sections of the society with state-of-the-art technology and payment systems based on an efficient regulatory environment and robust consumer protection.
For the agenda for the current fiscal, the report identified goalposts mentioned in the ‘Payment and Settlement Systems in India: Vision 2019-21’, including recent announcements such as offline payments systems, online dispute resolution, and a self-regulatory organisation.
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