Modi govt may ban cheque books to push digital economy: report

21 Nov 2017


The ubiquitous bank cheque will be the next casualty in Narendra Modi's push for a digital economy if reports are anything to go by. With support still pouring in for the demonetisation exercise carried out a year ago, the Modi government is looking at taking the exercise to its logical conclusion – making digital transactions the dominant mode of transaction in the economy.

Media reports now say the Narendra Modi government will go a step further and ban the use of cheques, to help formalise the digital economy.

Though the demonetisation of high value Rs500 and Rs1,000 notes helped increase digital transactions immediately after, the comeback of cash and improvement in liquidity have decelerated the progress of migration to digital transactions.

The latest government move comes in the wake of failure in achieving the complete digitisation of economy.

Reports quoted a senior functionary of the Confederation of All India Traders (CAIT) as saying recently that the centre may withdraw the bank cheque book facility in the "near future" to encourage digital transactions.

"In all probability, the centre may withdraw the cheque book facility in the near future to encourage digital transactions," CAIT Secretary General Praveen Khandelwal was quoted as saying in a PTI report.

Khandelwal also wanted the government to incentivise digital transactions using debit and credit cards.

"The government spends Rs25,000 crore on printing of currency notes and another Rs6,000 crore on their security and logistics.

"Moreover, banks charge 1 per cent on payments through debit card and 2 per cent through credit cards. The government needs to incentivise this process by providing subsidy directly to the banks so these charges can be waived," Khandelwal was quoted as saying in the report.

Khandelwal had said only 5 per cent of the total 800 million ATM-cum-debit cards are used for cashless transactions, while 95 per cent of them are used for cash withdrawals.

At the same time, businesses carry out 95 per cent of their transactions through cash or cheque and banning cheque books will cause great inconvenience to traders and businesses.

While digital transactions have shown mixed trends since demonetisation, overall cashless payments are much higher than in the pre-demonetisation times.              

The `#CashlessIndia' drive has improved visibility of preexisting digital payments and had helped the launch of several new digital payments, including A2A electronic fund transfer (NEFT, IMPS, RTGS), mobile wallet (PayTM, PayZapp), credit card and debit card (Visa, MasterCard, RuPay), besides mobile A2A electronic fund transfer (BHIM) and interoperable QR code POS payment (Bharat QR).

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