Indian economy moving towards a less cash system: RBI

The share of electronic payments in non-cash payments have shown an upward trend with electronic payments constituting 91 per cent in terms of value by the end of the year 2011-12, against 88 per cent in 2009-10. In volume terms, electronic payments accounted for 48 per cent by the end of fiscal 2011-12 against 35 per cent in 2009-10, RBI said.

The share of bank cheques, although still the dominant mode of payment across all transactions, both retail and large value, has come down from 65 per cent to 52 per cent in volume terms and from 12 per cent to 9 per cent in value terms, RBI said while unveiling its `vision document'.

However, RBI said, cash remains the predominant payment mode in the country as the value of banknotes and coins in circulation as a percentage of GDP stands at 12.04 per cent, which is very high compared to other emerging markets, like Brazil, Mexico and Russia.

The cash to GDP ratio in India has remained range-bound over the last three years. Similarly, the number of non-cash transactions per citizen is also very low in India (6 transactions per inhabitant) when compared to other emerging markets.

While no specific study has been carried out, the presence of a well established network of treasuries/currency chests and over 1,200 clearing houses across the country may have contributed to the slow turnaround and adoption of modern electronic payment products, RBI said.

RBI said the payment system initiatives taken by it have resulted in deeper acceptance and penetration of non-cash payment modes.