Mumbai: After the demonetisation of high-value notes that overnight disrupted the economy, the Centre, in its move towards a “digital economy” may soon ban cheques, media reports suggest.
The Narendra Modi government had in 2016 banned the use of Rs 500 and Rs 1,000 notes that seized 86 per cent of the cash in circulation. The government had done so to move towards a cashless economy, powered by digitisation.
In its latest move towards the same, the government may be planning to ban cheque books. A senior official of the Confederation of All India Traders, Praveen Khandelwal told PTI recently that in all probability, the Centre may withdraw the cheque book facility in the near future to encourage digital transactions.
Khandelwal, while speaking at the Digital Rath initiative, that aims to spread awareness about digital transactions, also said the government needs to incentivise payment through debit and credit cards. "The government spends Rs 25,000 crore on printing of currency notes and another Rs 6,000 crore on their security and logistics. Moreover, banks charge 1 per cent on payments through debit and 2 per cent through credit cards. The government needs to incentivise this process by providing subsidy directly to the banks so these charges can be waived,” he said.
This move may cause severe inconvenience for traders, 95 per cent of whose transactions are via cheques and cash. Moreover, since the demonetisation of Rs 500 and Rs 1,000 notes, the use of cheque books has risen.
Although digital transactions have surged post demonetisation, data shows that people still prefer to use cash more. Khandelwal said only 5 per cent of the total 80-crore ATM-cum-debit cards are used for digital transactions, while 95 per cent of them are used to withdraw cash.
According to Reserve Bank of India data, cash in circulation was Rs 17.9 lakh crore while that post demonetisation is Rs 16.3 lakh crore. Digital transactions rose 31 per cent from November last year to September this year.