Daijiworld Media Network

New Delhi, Nov 21: Modi government which is mooting for a cashless society may next ban cheque books to boost digital transaction, reports suggest.

This was indicated by a senior functionary of a prominent trade body. "In all probability, the Centre may withdraw the cheque book facility in the near future to encourage digital transactions," said Praveen Khandelwal, secretary general of Confederation of All India Traders (CAIT).

Talking to the reporters at the launch of 'Digital Rath', a joint initiative of the CAIT and Mastercard, Khandelwal said the government needs to encourage the use of debit and credit cards, "The government spends Rs 25,000 crore on printing of currency notes and another Rs 6,000 crore on their security and logistics. Moreover, banks charge 1 percent on payments through debit and 2 percent through credit cards. The government needs to incentivise this process by providing subsidy directly to the banks so these charges can be waived."

If the government proceeds with the move of banning cheque books, it could be a big disruption for Indians, similar to the demonetisation. According to experts, 95 percent of the transactions currently take place via cash or cheques.

Cheques are fairly popular in SME payments. By taking a PDC (post-dated cheque) against the delivery of goods, a supplier secures payments due in future from its customer. People pay by cheques while buying land and house. Many landloards prefer their tenants pay rent via cheque. Even for retail and commercial payments, people usually pay via cheque incase of large-value payments.

Following demonetisation, digital wallets, quick response (QR) codes, near field communication (NFC) technology, sound wave systems, virtual cards, unified payment interface (UPI) and Aadhaar Pay have been encouraged to push cashless transactions.

However, in spite of 80-crore ATM-cum-debit cards only 5 percent use the debit cards for cashless transaction. The rest 95 percent use it for cash withdrawals, says Khadelwal.

Digital transactions have shown mixed trends after demonetisation, but overall cashless payments are much higher than in the pre-demonetisation months.

While cash in circulation at Rs 16.3 lac crore is still at 91% of the pre-note ban days of Rs 17.9 lac crore, digital transactions rose 31% from November last year to September this year, according to provisional RBI data. Digital transactions in September reached 877 million, down from the peak of almost 1 billion in December last year.

However, to meet the government’s goal of 25 billion digital payments by end of this financial year, cheque books could be the next target.