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After note ban, will Modi govt now ban cheque books for its digital push?

CAIT Secretary General Praveen Khandelwal said the government needs to encourage the use of debit and credit cards

BS Web Team  |  New Delhi 

Cheque book
Photo: Shutterstock.com

After deciding to revoke the legal tender of Rs 500 and Rs 1,000 currency notes in November last year, the -led central government might now be working on another disruptive step to boost digital transactions — banning the A senior functionary of the Confederation of All India Traders (CAIT) on November 16 said the Centre might withdraw the bank facility in the "near future" to encourage digital transactions.

CAIT Secretary General Praveen Khandelwal said the government needed to encourage the use of debit and credit cards. "In all probability, the Centre may withdraw the facility in the near future to encourage digital transactions," he said.

Impact of facility withdrawal

was a big disruption for most Indians, right from poor labourers to big industrialists. Now, the withdrawal of the facility could have a massive impact as well. Most business transactions are conducted through cheques. According to experts, 95 per cent transactions currently take place via cash or cheques.

Since cash transactions have declined, transaction by cheque might have increased after  

Use of cheque in India

Cheques are fairly popular in SME payments. By taking a PDC (post-dated cheque) against the delivery of goods, a supplier secures payments due in future from its customer. People pay by cheques while buying land and house, too.
 
Many landlords now take rent from tenants via cheque. Since November 8, 2016, digital payments like BHIM have grown. However, their sweet spot has been small-value payments (two to three figures). The retail and commercial payment usage strongly suggests that cheque is a very compelling method of payment for large-value payments (four figures and above).

Growth of digital transactions

The Narendra Modi-led BJP government has been pushing for a less-cash society. While digital transactions have shown mixed trends since demonetisation, overall cashless payments are much higher than in the pre-months.

Centre's #CashlessIndia drive has multiplied visibility of preexisting digital payments and led to the launch of several new digital payments. Among the former category were web A2A electronic fund transfer (NEFT, IMPS, RTGS), mobile wallet (PayTM, PayZapp), credit card and debit card (Visa, MasterCard, RuPay). Among the latter category were mobile A2A electronic fund transfer (BHIM) and interoperable QR code POS payment (Bharat QR).

First Published: Tue, November 21 2017. 14:47 IST
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