Letters: Speak in one voice

At times, the different mouths of the state speak in different languages. While the government wants a Digital India to the point of forcing people away from cash/cheques, the Reserve Bank of India (RBI) is not making it any easier (RBI stays firm on MDR revision, 14th December).
 
Without getting into the debate as to who gains more — the customer freed from carrying exact cash or the bank which can reduce its staff cost, cashless transactions should be encouraged though on a voluntary basis. It is true that the banks have to incur some cost in front-end ATM or IT facilities, but once that cost is incurred, the marginal cost of one additional transaction is close to zero. It is fair that banks are allowed to recover part of this investment and maintenance cost, which is fixed in nature and does not fluctuate directly in proportion with the value of the transaction.

 
This is especially true for debit card and e-wallet type operations where there is no extension of credit. These transactions therefore should have a fixed charge, with a maximum of Rs 200 (for beyond  Rs 100,000) and a floor of Rs 10, within which the fee can be set at 20 bp. After all the variable cost is mostly the internet connection cost. Comparison with other countries can be done, keeping in mind the earning power of the middle 60 per cent of the population. This charge should be free of GST, as no GST gets involved when a customer withdraws cash from a branch teller and pays it to another person. Artificial limits like maximum number of free ATM withdrawals need a review if one seeks to reduce the cash holding by the public. P Datta Kolkata

S Kumar New Delhi

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