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72% of financial transactions conducted via digital channels: Govt

The government announced on Tuesday that roughly 72 percent of financial transactions by public sector banks (PSBs) are currently conducted through digital channels, with the number of consumers using digital channels increasing from 3.4 million in 2019-20 to 7.6 million in 2020-21. Minister of State for Finance Bhagwat K. Karad said in a written reply to Rajya Sabha that the Reserve Bank of India (RBI) has informed him that it is not exploring a distinct licensing category for digital banks at this time. Minister of State for Finance Bhagwat K. Karad stated in a written reply to Rajya Sabha that the Reserve Bank of India has informed him that it is not exploring a distinct licensing category for digital banks at this time.

The PSBs have already begun to spend substantially on technology and are planning to continue doing so. PSBs have collected a total of 4.52 lakh crore from defaulters in NPA and written-off accounts during the last five years, and a total of Rs.20, 334 crores from willful defaulters through March 2021, according to Karad. Concerning the scheme's impact, the minister announced that an impartial impact assessment study would be conducted in 2019-20.

Key developments that are expected to have a transformational influence on Indian banking include artificial intelligence, blockchain technology, and robotic process automation. Cognitive technologies have been developed as a result of artificial intelligence research. Technological advancements are improving the performance of particular activities that were previously performed solely by people. PSBs may choose to concentrate their efforts on these technologies. Customer comprehension and personalization may be improved with the use of analytics. Many PSBs are in the process of implementing technology that will improve bank and customer interactions.

According to RBI data, digital payments grew by 30.19 percent in the year ended March 2021, demonstrating the country's adoption and deepening of cashless transactions. The newly created Digital Payments Index (RBI-DPI) climbed to 270.59 at the end of March 2021, up from 207.84 the previous year. "In recent years, the RBI-DPI index has seen a substantial increase, reflecting the growing acceptance and depth of digital payments across the country," the RBI stated. The Reserve Bank of India has previously announced the creation of a composite Reserve Bank of India - Digital Payments Index (RBI-DPI) using March 2018 as the base to reflect the level of digitalization of payments in the country.

The RBI-DPI contains five main parameters that may be used to track the depth and penetration of digital payments in the country over time. These parameters are - Payment Enablers (weight 25 per cent); Payment Infrastructure - Demand-side factors (10 per cent); Payment Infrastructure - Supply-side factors (15 per cent); Payment Performance (45 per cent); and Consumer Centricity (5 per cent).

The margin money requirement for loans under the scheme has been reduced from "up to 25%" to "up to 15%" based on the study's findings, consultation with stakeholders, and an announcement made by Finance Minister Nirmala Sitharaman in her Budget Speech for 2021-22, he said. Activities allied to agriculture have also been included in the scheme. In response to a second query, Karad stated that the StandUp India Scheme had sanctioned over 1.17 lakh loans totalling over Rs. 26,391 crore to SC/ST and woman borrowers, resulting in the employment of over 6 lakh persons.

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