Something for all: More credit for farmers; no MDR charge on debit cards
New Delhi: The Government on Wednesday announced more steps undertaken to ease the hardships faced by the common man due to demonetisation and instructed the RBI to ensure that enough cash is made available to the rural poor and farmers across the country.
Economic Affairs Secretary Shaktikanta Das said 1.5 lakh post offices would be supplying cash to villages across the country. He said RBI, banks, NABARD have been instructed to make available cash to cooperative banks to ensure farmers get credit and certain amount in cash.
"The new denomination notes has been made available in 1,55,000 post offices across the country to help rural people. New measures have been adopted with farmers in mind, and also with the idea of digitising banking and payment," Das said.
The government also said that service charges will be waived off on debit card payments till December 31.
Public sector banks and some of the private sector banks, and some of the service providers who provide switching services, have agreed to waive the service charges on the use of debit cards up to December 31, 2016," Das said.
As of now, Rupay debit cards have already waived the switching charges. Other debit cards which operate international card network companies like Mastercard and Visa, currently charge transaction charges.
So far, customers bear the transaction cost commonly known as merchant discount rate (MDR) on payments made to the government.
"The MDR charges on use of debit cards, the charges being levied by the banks and the switching charges will stand completely waived. So, there will be no charge on use of debit cards.
"I take this opportunity to appreciate the gesture of public sector banks, and some of the private sector banks who have already agreed. And others are expected to agree and issue their own circulars," Das said.
He said the intention behind this decision is to ensure greater penetration of digital transactions into our economy and to ensure that more and more people migrate towards digital transactions.
The Reserve Bank in 2012 had capped the MDR for debit card transaction at 0.75 per cent for transaction values up to Rs 2,000 and at 1 per cent for transaction values above Rs 2,000. However, there is no RBI cap on MDR on credit card payments.
In order to move towards 'less-cash' society by developing a card acceptance infrastructure, the RBI had in March came out with a concept paper to encourage card transactions and sought public opinion.
As of October 2015, there were 61.5 crore debit card users and 2.3 crore credit card holders in the country.
The Task Force on promotion of payments through cards and digital means has flagged issues with respective government departments.
Das said all digital transactions through feature phones will also not be levied with service charges till December 31 and announced that all govt organisations, PSUs and agencies have been advised to use digital payment for paying salaries and other expenses.
