The Government seems to be discontent with the transaction preferences of citizens.

And in the foreseeable future, it is likely to dismantle the cheque book facility banks offer.

“In all probability, the Centre may withdraw the cheque book facility in the near future to encourage digital transactions”, said Mr Praveen Khandelwal, Secretary General of Confederation of All India Traders (CAIT).

Does this sound as awful as demonetisation?

Perhaps it does.

But don’t take these predictions lightly.

According to Mr Khandelwal, only about 4 crore debit cards are used for cashless transactions — which is merely 5% of total active debit cards in the country. The rest are merely used to withdraw money from bank ATMs.

These figures are unsettling the Government. It’s been a year since the Government took old high-value notes off circulation. But after the initial spike, the use of plastic money hasn’t gone up much — according to Mr Khandelwal’s claims. In fact, the charts from RBI too exhibit it…

Digital transaction picked up pace, but didn’t sustain

(Source: Reserve Bank of India’s Bulletin)

A cash-oriented transaction system has multiple hidden costs — to your surprise the Government spends nearly Rs 31,000 crore annually to keep the cash economy alive.

Banks charge 1%-2% fees on plastic money and this has been a major deterrent for digital transactions picking up as expected earlier.

The card companies seem to be lobbying the Government to push for digital transactions. Now it’s up to the Government to decide whether to denounce citizens their right to choose their transaction medium.  

Although digital transactions are cheaper and easy-to-perform, it would be unintelligent to completely withdraw cheque book facility. Here are key 4 reasons why:

1. The younger consumers are comfortable with digital transactions, but what about the rest, particularly senior citizens and ones in rural areas. They will certainly feel left out since many of them aren’t comfortable with using digital modes.
    
2. Owning a smartphone is the key to driving digital transactions because swiping your card every time you transact is tedious. But as of now, a majority of Indians don’t own a smartphone. Won’t they be left out? And imagine a person visiting a service centre of a mutual fund house and swiping their debit card to make investments. Doesn’t it sound impractical?
    
3. We Indians need to be extensively educated on safety measures to watch out for while using digital transactions/wallets/money. This isn’t a one-day exercise and may require years to disseminate.
    
4. We need stricter consumer protection laws to safeguard people from fraudulent transactions.

We hope the Government will reconsider taking another Tughlaq-style decision and permit cheque book facility transactions.

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jonnalagaddan@yahoo.com Jan 10, 2018 I think HRA calculation example shown not correct. Rent is calculated on annual basis 3.6 lakh p.a. and 10% basic is calculated monthly basis ( 10% of 600000)

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