Nifty99000 100%

Sensex99000 100%

Article rating: No rating
Article rating: No rating
Article rating: No rating
Article rating: No rating
Article rating: No rating
Article rating: No rating
Article rating: No rating
Article rating: No rating
Article rating: No rating
Article rating: No rating
Article rating: No rating
Article rating: No rating
Article rating: No rating
Article rating: No rating
Article rating: No rating
Article rating: No rating
RSS

News

Did cash transactions trump cashless payments?

Author: Kavita Mallya/Wednesday, November 8, 2017/Categories: Economy

Did cash transactions trump cashless payments?

When demonetisation was announced by Prime Minister Narendra Modi, it took India by storm. Two high value notes of Rs 1,000 and Rs 500 were demonetised in an ostensible bid to combat black money.

Prior to demonetisation, 85% of the country’s transactions were dealt with in cash. Post November 8, 2016, the country faced a severe cash crunch. There was a massive surge in non-cash transactions after almost two-thirds of the currency out of circulation. This phenomenon gave rise to the popularity of e-wallets. From remote villages to 3-tier cities; from a small fruit vendor to a big supermarket, everyone has opted for cashless transactions. Companies were also able to keep a track of customer’s preferences thus creating a loyal customer base.

Amidst all these advancements, has India managed to trump cash transactions entirely? Reports say that those who dealt in cash earlier went back to their old habits as soon as new notes were in circulation. The months of November, December 2016 and January 2017 saw the highest amount of transactions via debit and credit cards. In October 2016, debit card transactions were at Rs 21,941 crores and those of credit card at Rs 29,942 crores. In December 2016, debit card transactions saw a hike to Rs 58,000 crores and credit card at Rs 31,150 crores.

However, 10 months down the line, August 2017 transactions for debit card and credit card dropped down to Rs 36,000 crores.

As cash flow increased, many smaller stores stopped keeping online payment options and started dealing entirely in cash.

The major disadvantage faced by mobile payments apps is that a majority of India’s population don’t have access to either smartphones or internet. Thus a crucial segment of the population is out of reach.

P.S.M Rao, deputy general secretary of Andhra Pradesh and Telengana Bank Employees Federation, said, “Demonetisation was not at all well planned. The government had not printed the quantum of notes when announcing demonetisation. Thus there was a shortage of cash. There was credit and debit card usage but as soon as cash inflow increased, people switched back to cash. The public lost faith in the government as there were several restrictions imposed upon transactions.”

“Before demonetisation, small and big traders would deposit several lakhs of rupees in cash on a daily basis in current accounts. But after the government imposed Rs 3 lakh daily withdrawal restrictions, the traders stopped depositing cash as a result of which banks are now starving for cash. Banks ended up not having enough cash to supply to the customers and ATMS as well”, he said.

Another bank official said, “After demonetisation, people opted for cashless transactions due to shortage of cash. The government has issued rules and regulations promoting online transactions but has not announced any guidelines regarding exemptions on digital transactions. Banks took advantage of this situation and started imposing heavy digital transaction charges.”

Print Rate this article:
3.0

Number of views (318)/Comments (3)

Kavita Giridhar Mallya

Kavita Mallya

Other posts by Kavita Mallya
Contact author

3 comments on article "Did cash transactions trump cashless payments?"

Thota Ramu

11/9/2017 9:50 AM

Your article is very exactly correct. Govt is encouraging common people but no where announcing exemptions on digital transactions it leads to big shots growth like paytm etc


Sahasra

11/9/2017 12:15 PM

Demonetization is just trash..


Girish

11/9/2017 1:38 PM

Good Article

A point to note:Govt did give rebates to card transactions& in fact being given till date

Leave a comment

Name:
Email:
Comment:
Add comment

Name:
Email:
Subject:
Message:
x

Videos

Ask the Finapolis.

I'm not a robot
 
Dharmendra Satpathy
Col. Sanjeev Govila (retd)
Hum Fauji Investments
 
The Finapolis' expert answers your queries on investments, taxation and personal finance. Want advice? Submit your Question above
Want to Invest
 
 

Categories

Disclaimer

The technical studies / analysis discussed here can be at odds with our fundamental views / analysis. The information and views presented in this report are prepared by Karvy Consultants Limited. The information contained herein is based on our analysis and upon sources that we consider reliable. We, however, do not vouch for the accuracy or the completeness thereof. This material is for personal information and we are not responsible for any loss incurred based upon it. The investments discussed or recommended in this report may not be suitable for all investors. Investors must make their own investment decisions based on their specific investment objectives and financial position and using such independent advice, as they believe necessary. While acting upon any information or analysis mentioned in this report, investors may please note that neither Karvy nor Karvy Consultants nor any person connected with any associate companies of Karvy accepts any liability arising from the use of this information and views mentioned in this document. The author, directors and other employees of Karvy and its affiliates may hold long or short positions in the above mentioned companies from time to time. Every employee of Karvy and its associate companies is required to disclose his/her individual stock holdings and details of trades, if any, that they undertake. The team rendering corporate analysis and investment recommendations are restricted in purchasing/selling of shares or other securities till such a time this recommendation has either been displayed or has been forwarded to clients of Karvy. All employees are further restricted to place orders only through Karvy Consultants Ltd. This report is intended for a restricted audience and we are not soliciting any action based on it. Neither the information nor any opinion expressed herein constitutes an offer or an invitation to make an offer, to buy or sell any securities, or any options, futures or other derivatives related to such securities.

Subscribe For Free

Get the e-paper free