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Letter to BS: India continues to have a strong bias for cash payments

The frequent occurrence of various online banking frauds is perhaps one of the key inhibiting factors

Business Standard 

cash

This refers to “Cash is still king in India, but digital payments rising sharply: RBI” (February 25). It was interesting to learn that India continues to have a strong bias for cash payments. This fact is reportedly based on an internal study of the RBI which points out that cash is still king in India, but there has been a perceptible shift in favour of digitisation in recent years. Statistically put, the cash in circulation as a percentage of GDP stood at 8.70 per cent in 2016-17.

This followed the surprise announcement of demonetisation of some currency notes in No­vember 2016, but it later increased to 10.70 per cent in 2017-18 and to 11.2 per cent in 2018-19. It is still lower than 12.1 per cent of 2015-16.

Such a shift can be termed marginal given that cash withdrawals from ATMs kept increasing over the past five years, showing people’s preference for cash. Electronic or digital modes of payment are used when you have a big payment to make or when there is no option. Given all this, the government’s much cherished goal of ushering in a cashless economy in India may remain a distant dream. The frequent occurrence of various online banking frauds is perhaps one of the key inhibiting factors.


Kumar Gupt, Panchkula

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First Published: Tue, February 25 2020. 23:02 IST
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