As a sign of people moving to electronic mode of fund transfer, the number of cheques processed in 2008-09 fell 5 per cent after growing at 7 per cent and 11 per cent in the past two years, respectively.
According to data released by the Reserve Bank of India (RBI) in its annual report, 1.14 billion cheques were processed in 2008-09, using Magnetic Ink Character Recognition (MICR) compared to 1.20 billion in 2008-09.
The value of cleared cheques declined by 3 per cent in the period.
According to RBI, apart from migrating to electronic means of fund transfer, the general slowdown in the economy was also responsible for the lower volume of cleared cheques.
Payment system indicators - annual turnover
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On the other hand, retail electronic transactions grew 28 per cent to 280 million in 2008-09. Real Time Gross Settlement (RTGS), an electronic means of transferring funds of over Rs 1 lakh, saw a 27 per cent growth in transactions in 2008-09 to 35.2 million from 27.7 million in 2007-08.
To promote electronic payments, the apex bank has extended the waiver on charges for processing electronic payments product for a period of one year up to March 31, 2010.
The use of card-based payments rose by 22.3 per cent in volume and by 19 per cent in value during 2008-09 mainly due to growth in debit card transactions.
“One notable trend in the context of the economic slowdown was that while the growth in value of credit card transactions decelerated in 2008-09, the growth in the value of debit card transactions continued to remain strong as in previous years,” RBI said in its report.
After facing heavy losses on their credit card portfolios, banks cancelled inactive cards and went slow on new issuances in 2008-09. Credit card transactions grew 13.7 per cent in 2008-09 in volume terms compared to 34.6 per cent growth seen in 2007-08. In value terms, it grew 12.7 per cent in 2008-09 compared to 40.2 per cent last year.
On the other hand, debit card transactions grew 44.6 per cent in volume terms in 2008-09 compared to 46.7 per cent in 2007-08. In value terms, debit card transactions grew 48.1 per cent in 2008-09 compared to 53.2 per cent last year.