Narendra Modi government likely to push radical reform for digital economy

After sending the entire country in the state of shock by banning the higher denomination notes of Rs 500 and Rs 1000 last year, the Narendra Modi government might be working on another radical reform to push digital transactions.

A senior functionary of the Confederation of All India Traders (CAIT) on November 16 said the Centre might 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," said Praveen Khandelwal, secretary general of Confederation of All India Traders (CAIT).

The country just got over from a demonetization shock therapy that happened in November last year. Now, if a ban on cheque book happens then it might have a gigantic impact on the economy.

According to experts, 95 per cent transactions currently take place via cash or cheques.

Speaking at the at the launch of 'Digital Rath', a joint initiative of the CAIT and Mastercard, Khandelwal said, "Only 5 per cent of the total 80-crore ATM-cum-debit cards are used for cashless transactions, while 95 per cent of them are used for cash withdrawals."

A year after demonetization, the number of digital transactions witnessed a tremendous increase -- by 80.85% -- in terms of volume.

These digital transactions include National Payments Corporation of India-approved financial transactions such as Unified Payments Interface (UPI), Bharat Interface for Money (BHIM), RuPay, IMPS (immediate payment service), aadhaar enabled payment system (AEPS), among others.

In November 2016, the number of digital transactions stood at 24.13 crore (24.13 billion). Demonetization took the total number to 43.64 crore (billion) till September 2017, showing an increase of 80.85%. The value of digital transactions increased by 52% to Rs 1,47,624 crore (billion) in September 2017 from Rs 96,833 crore (billion) in November 2016, according to the data by the ministry of electronics and IT.

The number of transactions through debit cards and credit cards at point-of-sale (PoS) devices jumped 17.07% to 24 crore (billion) in September this year from 20.5 crore (billion) in November 2016, the data from Reserve Bank of India shows. For the same period, the data in terms of value increased by 35.69% to Rs 47,820 crore (billion) in September, 2017 from Rs 35,240 crore (billion) in November last year.

According to officials from the ministry of electronics and IT, the ministry is taking proactive measures to promote the growth of digital transactions. "Mobile handset firms have been asked to pre-install BHIM apps in the mobile phones," a senior official from the ministry told DNA Money..