Moving towards a cashless society

India is in the midst of a cash management crisis. But this challenge is an opportunity as well — even thoughmany politicians, economists and opinion leaders have been condemning the move and are vocal about the immediate hardships caused to the common man.

There is no gainsaying that more planned measures were needed, but concern over the secrecy of such a move seems to have weighed more with the Government. It is incumbent on the Government to take adequate and quick steps to alleviate sufferings of the common man. Some steps announced days after the announcement could have been anticipated and the measures implemented from day one.

But none of the armchair critics or politicians has helped the cause with any positive action.

Without concerning oneself too much with the merits or demerits of the policy, it is important to take some action to help people in difficulties. The foremost task is to restore calm and reduce the anxiety levels across the board by providing correct information.

That adequate time is available for depositing the old currency in the accounts is to be stressed. It is sad to see people of means too joining the queues in front of ATMs and banks. Those with ATM/debit or credit cards can conveniently put them to use for their transactions.

Volunteers can help fill up forms or vouchers for the illiterate and ignorant persons, simultaneously educating them on availability of alternate avenues to avoid risks of carrying cash and running from place to place. The major criticism of the ban is that a vast majority of the people, put variedly at 70-80 per cent, have no bank accounts and hence are in distress.

This doesn’t appear to be borne out by facts. According to official figures, more than 25 crore Jan-Dhan accounts have been opened and nearly 20 crore ‘Rupay’ debit cards have also been issued. Taking an average weaker section family unit of parents and minor dependents as only three, the accounts should cover up to 75 crore of population.

These accounts can be activated for depositing the old notes and withdrawal of cash, with lesser stress.

There is also a criticism of lack of banking facilities for the poor and those living in isolated villages, particularly in north east, hilly and tribal areas. Under the policy of financial inclusion the Reserve Bank had made it mandatory for the banks to open branches in every village with 2,000 or more population allocated to them and a large number of such branches in fact have been opened. In addition, a vast network of more than 1,50,000 post offices are spread across the length and breadth of the country. Many of these also have at least one computer terminal installed. Making use of these outlets India Post has made it easier, faster and safer for transfer of money from one corner of the globe to the other.

Many urban and semi-urban post offices have been fully computerised and are inter-connected through a core banking solution. India Post Payments bank is to be launched shortly. To strengthen this institutional network, a large number of banking correspondents are functioning, though with some limitations.

The number of point of sale (PoS) terminals has substantially gone up in the recent past. But the scope is still immense. There are several street corner stores and other retail establishments that do have PoS swiping machines, which are not put to active use for fears about tax liabilities. The traders must be persuaded to use the machines in these difficult times to help their business as well as customers.

There are examples of vegetable vendors and street food carts offering to accept cards with small PoS machines. Banks will do well to aggressively market their ware with awareness campaigns about the availability of machines for free, including their maintenance and the ease of using them. Tax authorities can bring in that subtle persuasion to encourage them. With the bait of tax waiver to customers, traders prefer cash transactions. If customers insist on bills, and more and more customers show their preference for card payments, they will see the futility of continuing with cash transactions.

Several supermarkets are accepting cards even for small amounts. Reduced queues will help people in real need. The super markets that normally keep high volume and value packages should keep smaller packages for the benefit of those who need or can afford only small quantities or numbers. While this may increase the footfalls and work load it would also help business volumes grow.

An important tool available for avoiding the need for cash even for the poorer but literate sections is the mobile payments system. As a movement, most street food and vegetable vendors need to be made aware of the facility and helped to use the system.

The younger generation vendors with access to smartphones should be educated and encouraged to receive and make payments using mobiles. Traders in food grains and farm inputs should be educated and persuaded by agriculture and civil supplies departments of the states to use banking channels and mobile payment systems for their dealings to avoid disruption of agrarian economy and inconvenience to farmers.

No doubt there are some apprehensions about reliability and safety of their usage but over a period, as case of cards and net banking this mode of transactions too will find better acceptance. It is not feasible overnight but determined and sustained efforts by all concerned will help moving slowly but surely towards less and less dependence on cash.

The writer is a former MD of State Bank of Mysore