The RBI Digital Payments Index (DPI) was launched in January 2021 to measure the level of digitization of payments in India. It is published biannually (twice a year) and tracks the progress of digital payment adoption across the country. The base year of the index is March 2018 (DPI Score = 100).
Objective of the DPI
• To quantify the growth of digital payments in India.
• To provide a benchmark for policymakers and stakeholders in the digital finance ecosystem.
• To analyze trends in different aspects of digital payments, including infrastructure, consumer behavior, and transaction volumes.
Composition of the DPI Index- The DPI is calculated based on five key parameters, each assigned a different weightage:
1) Payment Enablers (25%)
• Includes internet penetration, mobile banking usage, fintech innovations, Aadhaar-based payments, and regulatory initiatives supporting digital transactions.
2) Payment Infrastructure - Demand-side (10%)
• Measures the availability of digital payment access points for consumers, such as ATMs, POS terminals, mobile wallets, and banking correspondents.
3) Payment Infrastructure - Supply-side (15%)
• Evaluates the availability and expansion of banking and financial infrastructure, including bank branches, NBFCs, digital payment service providers, and financial institutions.
4) Payment Performance (45%) (Highest weightage)
• Analyzes the volume and value of digital transactions, including UPI, RTGS, NEFT, IMPS, debit/credit card transactions, and mobile banking activity.
• Key growth drivers in 2024:
• Rapid expansion of UPI and FASTag adoption
• Increased use of digital lending platforms
• Government schemes promoting digital transactions
5) Consumer Centricity (5%) (Lowest weightage)
• Focuses on consumer awareness, grievance redressal mechanisms, and security measures to enhance trust in digital payments.
• Includes factors such as fraud prevention systems, cybersecurity measures, and customer support services.
Study Notes
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