With the government placing emphasis on digital payments following demonetisation of Rs 500 and Rs 1,000 currency notes, the National Bank for Agriculture and Rural Development (Nabard) on Thursday said it will extend about Rs 120 crore to banks for deployment of two point-of-sale (PoS) terminals each in one lakh villages with a population of up to 10,000.
The move is aimed at taking rural India closer towards cashless payment systems, Nabard said in a statement.
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 or disbursing cash.
As part of the plan to expand the digital payments eco-system and facilitate the move towards cashless transactions, the government has decided that an additional 10 lakh new PoS terminals would be installed by March 31, 2017.
Towards this end, banks have already placed orders for six lakh PoS machines and another four lakh machines are likely to be ordered in the next few days.
The country currently has about 15 lakh PoS terminals across different merchants to facilitate card-based payments.
EVM chip, Kisan card
Further, to encourage adoption of new-generation secure technology among farmers who are already on RuPay KCC (Kisan Credit Card) platform, Nabard said it will now support procurement of EMV chip and PIN-based RuPay Kisan Cards by both regional rural banks and rural cooperative banks.
Nabard will spend about Rs 108 crore towards this. It will cover around 4.32 crore KCC holders. EMV is a technical standard for smart-card based payment systems created jointly by Europay, MasterCard and Visa.
KCC cards seek to provide need based and timely credit support to farmers for their cultivation needs as well as non-farm activities in a cost-effective manner.
According to Harsh Kumar Bhanwala, Chairman, Nabard, following demonetisation, there is a pressing need to move towards digital transactions, especially in the rural economy.
“At Nabard, we believe that these two initiatives will have a positive impact in easing the transition to digital transactions,” he said.
Financial Inclusion Fund
A senior Nabard official said the funds for deployment of PoS and procurement of EMV chip and PIN-based RuPay Kisan Cards will be made available to banks from the Financial Inclusion Fund (FIF).
The total balance in the FIF was Rs 2,453 crore as on March-end 2016. At the end of 2015-16, cumulative sanctions under FIF stood at Rs 1,611 crore and cumulative disbursements at Rs 671.55 crore, of which Rs 25.92 crore was refunded.
The fund supports ICT interventions of rural financial institutions so as to enable them to bring the disadvantaged population under the umbrella of financial services.