Govt, RBI need to share cost of maintaining UPI infrastructure: Report

 

The IIT-Bombay report further said UPI as a digital payments platform increases efficiency towards tax compliance, and provides overall convenience for public good.

The government and the Reserve Bank of India need to share the cost with banks associated with maintaining UPI infrastructure as it reduces the demand for cash and helps in curtailing expenditure on printing and managing currency notes, according to a report prepared by IIT-Bombay.

Observing that about Rs 5,000 crore is spent annually on printing cash alone and even more on managing it, the report said, "The expenditure towards maintaining Unified Payment Interface (UPI) may be much lower and could even curtail the expenditure on cash."

The report further said UPI as a digital payments platform increases efficiency towards tax compliance, and provides overall convenience for public good.

"With the government's vision of no direct or indirect charge on payments using UPI, an appropriate sharing of cost burden by the government and the RBI is called for (with UPI being the simplest alternative to cash in this era of mobile phones)," the report added.

Currently, banks are bearing the cost of UPI transactions.

BHIM-UPI is powered by the National Payments Corporation of India (NPCI) that engineered to make it a giant payment infrastructure of the country. NPCI has not put any business restrictions onto the banks for P2P (peer-to-peer) payments using BHIM-UPI other than years of moral suasion to keep the charges zero, it said.

In this context, it may be noted that in the approved minutes of a meeting of banks with NPCI dated February 14, 2020, the UPI Steering Committee of NPCI concurred to limit free P2P fund transfer transactions to 20 per month, it said.