In order to prevent the flow of black money into the system, the Government will announce a slew of incentives for cashless transactions. This will, subsequently, boost e-commerce, encourage usage of alternate banking channels and perk up cards usage, thus, driving down costs for the banking sector.

Cost factor

Rajiv Anand, President-Retail Banking, Axis Bank said, “It’s positive for banks from the cost perspective as more and more cards will be used, there will be more fees and less handling of cash. We also see proliferation of more debit cards, credit cards and, more importantly, mobile wallets will become more popular.” Axis Bank plans to come out with a mobile wallet soon.

Arun Jaitley said, “One way to curb the flow of black money is to discourage transactions in cash. Now a majority of Indians has or can have, a Rupay debit card. I, therefore, propose to introduce soon several measures that will incentivise credit or debit card transactions, and disincentivise cash transactions.” 

With the advent of Prime Minister’s Jan Dhan Yojana scheme, over 11 crore Rupay cards have been issued as on January 31. This will definitely help banks to encourage customers to go digital with their transactions. The announcement also compliments the Reserve Bank of India’s efforts to turn India into a cashless economy. The amount of cash floating in the system is estimated at about 18 per cent of the country’s gross domestic product, making India one of the most currency-dependent countries in the world.

Game changers

The Finance Minister said that India has now embarked on two more game changing reforms which are GST (goods and services tax) and the JAM Trinity — Jan Dhan, Aadhaar and Mobile — to implement direct transfer of benefits. The JAM Trinity will allow transfer of benefits in a leakage-proof, well-targeted and cashless manner. TR Ramachandran, Group Country Manager, Visa India, said, “Routing all direct benefit transfers through a centralised channel, leveraging the increased penetration of mobile phones and increasing incentives on spends made through payment cards, will mitigate the risks associated with cash, ensure transparency in government-led citizen benefits’ schemes and enable tax compliance.”

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