RBI’s new moto ‘cash is king, but digital is divine’

PTI, Feb 25, 2020, 10:52 AM IST

Mumbai: With ‘cash is king, but digital is divine’ moto, the Reserve Bank on Monday said its endeavour will be to make digital payments a divine experience for the users after being buoyed by over Rs 3.5 lakh crore reduction in the notes in circulation (NIC) post demonetisation.

In its assessment of the progress of digitisation from cash to electronic, the RBI said while there is no accurate measure of cash payments in the country, the progress of various digital payments can be measured accurately.

Overall, the digital payments in the country have witnessed a growth (CAGR) of 61 per cent and 19 per cent in terms of volume and value, respectively over the past five years, demonstrating a steep shift towards digital payments.

“Cash still rules but is increasingly seen as a way to store value as an economic asset rather than to make payments,” it said.

It further said NIC increased at an average rate of 14 per cent between October 2014 and October 2016.

Assuming the same growth rate, NIC would have been Rs 26,04,953 crore in October 2019.

“NIC, however, was Rs 22,31,090 crore, indicating that digitisation and reduction in cash usage helped reduce NIC by over Rs 3.5 lakh crore,” the central bank said.

Notes in circulation are the currency in circulation (CIC) minus coins in circulation.

The study further said that it is assumed that having high CIC relative to GDP indicates that cash is highly preferred as a payment instrument.

Based on this assumption, India continues to have a strong bias for cash payments.

Demonetisation and an active growth in GDP brought down the cash in circulation as a percentage of GDP to 8.7 per cent in 2016-17,” it said.

“This increased to 10.70 per cent in 2017-18 and to 11.2 per cent in 2018-19 which, however, is less than the pre-demonetisation level of 12.1 per cent in 2015-16. The rate of increase is lower indicating a perceptible shift away from cash,” it said.

The RBI said a large population of the country historically lacked access to personal bank accounts and credit lines.

Digital payment methods have played a large role in helping them manage their personal finances leading to their being financially included.

“Speed, convenience and competition are shaping the future of payments. Our endeavour is to make digital (payments) a divine experience to the users Cash is King, but Digital is Divine,” the study said.

India’s growing use of retail digital payments, along with the radical reconstruction of its cash economy, indicates a shift in its relationship with cash.

This is evidenced by the steep growth observed in retail digital payments.

Increasing acceptance and convenience of digital payments vis-vis cash is also reflected in a decrease in average value per digital payment transaction,” the RBI said.

The government had demonetised the prevailing high-value denomination notes of Rs 500 and Rs 1000 in November 2016 with an aim to check black money and move towards a less-cash economy.

Udayavani is now on Telegram. Click here to join our channel and stay updated with the latest news.

Top News

PM Modi congratulates Shinde, Fadnavis on becoming CM, DyCM

Maharashtra: Eknath Shinde sworn in CM, Fadnavis takes oath as Dy CM

K’taka topped in ease of doing business due to progressive reforms: Minister

Udupi rains: DC declares holiday for schools, colleges on July 1

ISRO successfully launches PSLV-C53 with three Singapore satellites onboard

Kangana Ranaut takes swipe at Shiv Sena after Uddhav Thackeray resigns as Maha CM

Guj: Cong leaders take out foot march to Jagannath temple, seek blessings for victory in Assembly polls

Related Articles More

Karnataka Bank raises deposit interest rates

Ban on single-use plastic items: Demand jumps up for wooden cutlery, trays, stirrers, ice cream spoons 

GST’s half-a-decade journey: tech usage to plug revenue leaks, Rs 1.3 lakh cr monthly tax ‘new normal’

Determining of embedded value likely to be completed by July 15: LIC

Stocks halt 4-day winning run, Sensex down 150 pts on weak global markets


Banana cultivation : Success story of a farmer

Heavy rains lash Mangaluru

How much ghee can I eat a day?

NEWS BULLETIN 29-06-2022

Monkey Funaral Ceramony at Kunigal

Latest Additions

‘GST on horse-trading’: Cong’s jibe over Sitharaman’s slip of tongue

PM Modi congratulates Shinde, Fadnavis on becoming CM, DyCM

Maharashtra: Eknath Shinde sworn in CM, Fadnavis takes oath as Dy CM

K’taka topped in ease of doing business due to progressive reforms: Minister

Fadnavis will be part of new Maharashtra Cabinet, says Nadda

Thanks for visiting Udayavani

You seem to have an Ad Blocker on.
To continue reading, please turn it off or whitelist Udayavani.