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India Pushing Towards Digital Payment after Cash Shortage

Cash Shortage IndiaAfter the demonetization of Rs 500 and Rs 1000 notes and circular of new Rs 500 and Rs 2000 notes as announced by India’s Prime Minister Narendra Modi, a large number of ATMs have started suffering from an acute cash shortage. This gives a clear indication that the country wants to adopt cashless transactions.

The main reason for the shortage of cash is because of the limited supply of money supplied by India’s central bank “RBI (Reserve Bank of India)“. According to some senior officials, RBI has made cash remittance of only five times as compared to average 12 times consignment in March 2017.

A top officer from the bank has made the following statement in media:

Banks get a supply of cash from RBI and also in the form of market receipts. The traders and businesses deposit their money from daily activities into banks. But due to the cash crunch and increased digital transactions, the deposits have come down.

According to reports by local media, the supply of the lower denomination notes like Rs 100 and Rs 500 is very much limited. What the remonetisation rolls out is extremely slow after the recent demonetization. As on March 24, 2017, total currency circulating in the market is just Rs 13.12 trillion as compared to Rs 17.97 trillion before demonetization.

The Financial Express

Although many officers of the bank have confirmed that supply of cash has become normal in January and February, the removal of limits on 13th March has affected supply in some cities of India. There are some reports about the drop in the currency production. Some different private banks are thinking about the reduction of ATMs, and a strong decision is likely to be made in coming months. On the other hand, the public sector banks are conservative in their approach and are thinking about the matter before taking a strong decision.

As per the reports by State Bank of India (SBI) which is India’s largest bank has made a statement that cash transactions have not seen a sharp rise in the nation in spite of the removal of withdrawal limits. According to the report, cash withdrawals dropped to a figure of Rs 20 billion after the restrictions were removed.

The research report of SBI further points out that India’s central bank RBI has shown there has been a continuous drop in the cash withdrawals.

The cash withdrawals reached the highest peak on 13th January 2017 at a figure of Rs 528 billion and had come to some Rs 325 million as on 24th March 2017.

The most important reason for the decline might be the scrutiny of cash transactions and a massive push towards digital payments. The Government of India has taken some different measures to convince the citizens to opt for cashless transactions like Digi-DhanMela and prompting people to use apps like BHIM or namely Bharat Interface for Money and other formats like UPI and USSD or namely Unstructured Supplementary Service Data.

Steven Rudford

Steven Rudford

Hello, my name is Steven Rudford. Welcome to Top10FX.net. Follow my website for the most trustworthy Forex broker reviews and last minute financial trading news.

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