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New Delhi: Amid speculations that Narendra Modi government might consider doing away with cheque facility in banks to foster digital payments, experts, including Pronab Sen, former adviser to the Planning Commission and the first Chief Statistician of India, have termed it a bad idea.
“It sounds like a bad idea. There might be growth in numbers as far as digital payments are concerned, but the key difference in cheque payments and that of digital is there is a 1.5% to 2% transaction charges involved in every digital transaction. In order to foster digital payments one cannot impose additional cost burden,” said Sen.
Earlier, Press Trust of India reported Secretary General of Confederation of All India Traders (CAIT), Praveen Khandelwal saying, “In all probability, the Centre may withdraw the cheque book facility in the near future to encourage digital transactions.”
The industry body also talked about the need to encourage debit and credit card transactions in order to move towards a cashless economy.
“These decisions are not taken in a jiffy. If the government is planning to remove cheques then there needs to be an alternative as universal as cheques. Digital payments are not as famous in a lot of sections of the country,” said D K Shrivastava, chief policy advisor, EY, a consultancy.
Modi government has been trying to move towards a cashless economy post demonetisation in order to widen the tax base and generate more revenue for the exchequer.
According to Reserve Bank of India, the number of cheque transactions has been on the decline. However, the catch is that the number of transactions using point of sale machines has also been falling with an increase in ATM transactions essentially hinting at cash making a comeback, a big jolt for the ruling government’s ambitious plan of eliminating cash from the economy.
It is important to note that many business transactions are carried out through cheques. At present, more than 95% transactions happen via cash and cheques.
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