Cash-Less Economy results in enormous benefits to the economy, as well as, to the Financial Institutions, and do note that these benefits are not only restricted in monetary terms but rather extend to the managerial and procedural aspect, as well. So, there is no second thought that the Financial Institutions are definitely going to reap long-term benefits flowing from Cash-Less Economy. However, the big question is that are the Financial Institutions considerate enough to help our economy move towards Cash-Less zone or not? Let us discuss this alarming issue in this blog.
When the Government of India (GOI) realized that the Demonetisation step taken at their end would not fetch the expected results, then they very smartly twisted the motive behind demonetisation itself and started pitching it as a step towards Cash-Less Economy. However, regardless of the differences in opinion about the demonetisation step or the reason behind it, one thing could not be denied that moving towards Cash-Less Economy is a good step and it has more of positive sides then the negative sides.
For India, this step towards Cash-Less Economy is a paradigm shift as our economy, as of now, is majorly a cash-dependent economy. If our country seriously wants to reach anywhere near to Cash-Less Economy, then the Finance Sector has to play a critical role in this GOI’s initiative. In fact, the Finance Sector has to be one of the major contributors for this dream to come true. Hence, the Reserve Bank of India (RBI), along with the Financial Institutions has to make a proper framework and gear up for this upside-down situation.
Few months have passed since the first talk about moving towards Cash-Less Economy started in our country. Since then some radical changes have been brought by the GOI, RBI and the Financial Institutions with the very objective of controlling the cash transactions and persuading people to shift towards card and digital payment mode. Now, let us see if the steps taken till date, by the GOI, RBI and the Financial Institutions are actually intended to ‘help’ our country move towards Cash-Less Economy or not.
Some of the key measures adopted by the GOI in this regard are the introduction of Digital Payment App called Bharat Interface for Money (BHIM), providing subsidy (incentive) on digital/card transactions as against cash transactions, levying of penalty of an amount equal to the amount of cash transaction which is over and above Rs. 2,00,000/-, etcetera.
All these measures adopted by the GOI clearly portray the seriousness of the GOI in moving towards Cash-Less Economy. Further, two important motives are reflected from these measures i.e. restriction on cash transactions and “incentivizing” the digital/card transactions. So in my personal view, the GOI has passed the test of “considerate enough” for moving towards Cash-Less Economy.
Now, let us talk about the key measures adopted by the RBI and Financial Institutions in this matter. Herewith, I would like to quote the following lines extracted from my other Blog “Moving towards Cash-Less economy – Was it the right time to take this step?” – “In order to meet the political ambition, the RBI and Banks started working towards the Cash-Less economy. Various guidelines are being issued on a timely basis restricting the number of cash transactions, imposing charges on withdrawal of cash exceeding a specified limit or number of transactions, as well as, imposing penalties on non-maintenance of minimum balance in the saving accounts, etcetera”.
Anyone who goes through the above-mentioned measures “with plane eyes”, will find that all these measures adopted by the RBI and Financial Institutions are an effort towards restricting the usage and flow of cash in our economy. But there is a twist in here. The Financial Institutions have introduced a lot of charges with regard to cash transactions that somewhere it makes me think that whether their motive is only to earn revenue from this opportunity or what?
Mind it, this is not a baseless thought because anyone who compares the measures adopted by the GOI against those introduced by the Financial Institutions can very well vouch that there is a vast difference in their approach. As a general practice, whenever any drastic changes are required to be promoted or implemented in any field, then some incentives are offered to the users so that they get motivated to opt for that change. However, the story is different when it comes to Financial Institution’s approach in this matter.
On one hand, the GOI is providing subsidy (incentive) on digital/card transactions to promote cashless transactions, while on the other hand, the Financial Institutions didn’t even care to reduce their charges on online transactions to such an extent that at least their charges doesn’t exceed the subsidy (incentive) provided by the GOI, so that the customer doesn’t end up paying more amount for any transactions via online mode as compared to the cash payment for similar transactions.
Herewith, I would like to justify my point with the following example – If you book a Liquefied Petroleum Gas (LPG) cylinder via online mode then you will end up paying an amount of more than Rs. 1/- per transaction, as against the payment made in cash and that too when the GOI is providing a subsidy of an amount of Rs. 5/- per transaction. So forget about incentivizing the customers, the Financial Institutions are de-motivating them because the common man wouldn’t like to pay the extra amount on any transaction done via digital/card mode especially at the time when we are still in a nascent stage of digital payment era for the masses.
From the above discussion, it seems that at the time when the Government of India (GOI) is pitching hard towards Cash-Less economy, the Financial Institutions does not seem considerate enough for moving towards Cash-Less Economy rather they are busy filling their pockets by introducing a number of new charges/penalties. Further, this approach of the Financial Institutions is somehow negating the incentives that the GOI is providing to the masses for moving towards Cash-Less Economy.
I do hope that the GOI and RBI take note of this alarming issue and further take necessary steps in this regard so that the Cash-Less Economy does not remain a dream forever. I wish that the Financial Institutions take this opportunity to build a solid framework towards the much-needed destination of our time i.e. Cash-Less Economy and in turn, this process will definitely grant them enough benefits to reap from.
I wish that the Almighty give good sense to each one of us.
Stay in touch.
God bless you all!