Written by Talent KAS

Related Topics: Indian Economy, Payment Systems Vision 2021


In an effort to promote widespread use of card payments in the country, the Reserve Bank of India (RBI) has proposed to set up an ‘Acceptance Development Fund’.

What is Acceptance Development Fund (ADF)?

  • The Fund will be used to ensure growth of card acceptance infrastructure such as swipe machines across the country particularly in Tier III and Tier VI cities.
  • This means that using credit and debit cards in smaller towns and cities will become easier once the infrastructure expands as planned.
  • The government and the banking regulator have been taking several steps to increase digital payments and reduce the dependence of cash, a move that is aimed at making payments transactions transparent.
  • RBI’s Payment System Vision, 2021 report released on May 2019, had suggested creation of an ADF to ensure acceptance more PoS (point of sales) or card acceptance infrastructure in tier III to tier VI centers.
  • This would to help facilitating innovation and reducing cost of such transactions.
  • Setting up ADF framework was also recommended by Nandan Nilekani headed panel on Deepening of Digital Payments.
  • The framework will be operationalised by December 2019.

Need for the Fund

  • Currently, while card acceptance infrastructure is well set up in large cities, it has not penetrated as much into smaller, Tier IV towns.
  • Consequently, people living there and those travelling to those towns find it difficult to use cards for their transactions.
  • Once infrastructure to accept and enable card payments (i.e., digital payments) becomes widely available even in smaller towns, it will become easier for individuals to adopt cards/digital methods as their main means of payment.

[Source: Livemint, Economic Times]

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Talent KAS

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