Cashless economy

indian Cashless Economy

1. CASHLESS ECONOMY

2. What is Cashless Economy ?? Cashless economy is an economic system where small amount of cash is used in transactions. Cashless economy is based on transactions made by credit cards, debit cards, wallets or digital modes. Cashless economy is cost effective, growth friendly, business friendly, pro-financial inclusion, etc Cashless economy requires robust digitalization.

3. Introduction and Background There is a worldwide tremendous interest among policy makers, academicians, and commercial enterprises to explore the possibilities of moving towards a cashless economy. It is widely believed that the movement from cash to cashless economy has significant benefits Economy has always moved through period of transformation from time immemorial. “The age of mercantilism which witnessed trade through exchange of gold transformed into barter system. Barter system, process in which exchanges done through commodities. Later with the arrival of industrialization, size of economy expanded which resulted into invention of money or cash(Consist of coins and currency notes).”

4. Literature Survey According to Moody’s Analytics study, greater usage of electronic card payment products added $983 billion in real U.S. dollars to the GDP of 56 countries they studied from 2008 to 2012. Card payment has raised consumption by an average of 0.7% across the 56 countries. The real global GDP grew by an average of 1.8% during that time period (Zandi et al. 2013). India is embracing cashless economy gradually by moving towards less cash society. This is what manifested in demonetization that was announced on November 8 2016 wherein 86% of existing currency from circulation was withdrawn in order to curb the menace of cash-driven economy. Sweden is the most cashless economy of the world. According to Payment Habits in Sweden ( Risbank 2018) cash now accounts for just 13% of payment stores. Vietnam announced a bold initiative to become 90% cashless retail economy by 2020. “ The road of cashless society leads to cashless economy which itself passes through the heart of robust digital economy. ”

5. India’s Approach towards Cashless Economy

6. Objectives To study the concept of Less-cash society; cashless economy and digital economy. To evaluate the change in economy in pre-demonetization and current scenario. To evaluate cost –benefit analysis of cashless economy. To curb shadow economy, corruption, terror -financing, human and drug trafficking, counterfeit-currency etc. “We want to have one mission and target: Take the nation forward –Digitally and Economically” Narendra Modi(Prime Minister of India)

7. RBI-A CASHLESS ECONOMY VISION 2018 “Building best of class payment and settlement systems for a ‘less-cash’ India through responsive regulation, robust infrastructure, effective supervision and customer centricity” Broad contours of Vision-2018 revolve around the 5 Cs: Coverage – by enabling wider access to a variety of electronic payment services Convenience – by enhancing user experience through ease of use and of products and processes Confidence – by promoting integrity of systems, security of operations and customer protection Convergence – by ensuring interoperability across service providers Cost – by making services cost effective for users as well as service providers

8. Steps towards cashless economy Incentives for encouraging electronic payments. Direct benefit transfer of subsides through Aadhar card integration. Mandatory use of PAN card in sale transactions of more than 1 lakh. Opening up of various payment banks across the country.

9. Various E-Payment Methods Payment banks Electronic Fund Transfer Systems Mobile Wallets Internet Banking (includes NEFT, RTGS, IMPS, ECS) Banking cards Banks pre-paid cards Point of sale Mobile Banking

10. Steps taken by RBI and Government towards Cashless Transactions: On digital transactions up to rupees 2000, Service Tax of 15% waived off Digital purchase of fuel through credit cards, mobile wallets or e-wallets, discount of 0.75% Free accident insurance worth rupees 10 lakh on account of online ticket buyers On purchase of new LIC policies online via its site, 8% discount is offered. Government has introduced various technologies like BHIM (Bharat Interface for Money) app to transact between each other as well as with other merchants.

11. Challenges in India for making a Cashless Economy Transactions are mainly in cash ATM use is mainly for cash withdrawals and not for settling online transactions Limited availability of point of sale terminals. (pos machines) Mobile Internet penetration remains weak in rural India Though bank accounts have been opened through Jan Dhan Yojana, most of them are lying unoperational The low literacy rates in rural India & lack of infrastructure Since, India is dominated by small retailers; therefore they don’t have enough resources to invest in electronic payment infrastructure.

12. Benefits of Cashless Economy Crub Black Money – Hawala transfers can’t be made without paper currency. No Transaction can’t go unaccounted Crub Illegal trades Reduced Printing Cost – Cost of printing and reprinting of Billions of notes in circulation. New Initiatives – Direct benifit transfer of Subsidies for LPG, fertilizers and many more. Economic Growth. Way Forward. Time Saving

13. Difficulties and Disadvantages In Cashless Economy No Privacy – Every Transaction is being recorded with Banks/Govt the sense of a privacy of what we buy is lost. Security – A small loop hole in security could lead your or the entire country’s money at Risk. Technical for Common Public – Only 1.6% indians have credit cards and 7% uses E-Wallets, with 65% population below 35 still the country’s Youth is not tech savvy to understand digital India initiatives. Huge amount Investment – To make sure everyone could be a part of Cashless Economy, Govt/RBI need to make sure even a small Tea Seller have a basic Net connection, Debit/Credit/UPI Gear before he commences his business. No Room For Uneducated. Overspending

14. THANKS