The RBI Digital Payments Index: Tracking India's Digital Payment Progress

What is the RBI Digital Payments Index (DPI)?

The RBI Digital Payments Index (DPI) is an extensive metric that evaluates the level of digitization of payments in India. Launched by the Reserve Bank of India (RBI) in January 2021, it aims to monitor the advancement and penetration of digital payments throughout the nation.

What are the key components of the RBI-DPI?

The RBI-DPI consists of five essential parameters:

• Payment Enablers (25% weight): This includes elements that facilitate digital payments, such as internet and mobile penetration, the number of bank accounts, and Aadhaar adoption.
• Payment Infrastructure - Demand-side (10% weight): This covers demand-side factors like the number of credit and debit cards in circulation.
• Payment Infrastructure - Supply-side (15% weight): This includes supply-side factors such as the availability of bank branches, ATMs, POS terminals, and QR codes.
• Payment Performance (45% weight): This measures actual payment activities, such as the volume of digital transactions, cash withdrawals, and the amount of currency in circulation.
• Consumer Centricity (5% weight): This focuses on aspects related to consumers, including awareness of digital payments, fraud prevention measures, and grievance redressal mechanisms.

How is the RBI-DPI calculated?

The RBI-DPI is formulated as a composite index with March 2018 serving as the base period (DPI score of 100). The index is derived by aggregating the five parameters along with their respective weights. A higher DPI score signifies an increased level of digitization in payments.

When is the RBI-DPI published?

The RBI-DPI is released semi-annually, specifically every March and September.

What is the current value of the RBI-DPI?

As of September 2024, the RBI-DPI registered a score of 465.33, reflecting substantial growth in digital payments since the base period.

Why is the RBI-DPI important?

The RBI-DPI acts as a vital resource for policymakers, researchers, and industry stakeholders to:

• Monitor the advancement of digital payments in India.
• Identify areas that require further attention and investment.
• Track the effects of policy interventions on digital payment adoption.
• Encourage greater financial inclusion and efficiency within the payment ecosystem.

In summary, the RBI-DPI offers a thorough and quantitative analysis of the digital payments landscape in India, aiding in a better understanding of the progress and challenges faced in the pursuit of a less-cash society.