More than two weeks after Prime Minister Narendra Modi announced demonetisation of high-value notes of Rs 500 and Rs 1,000, HDFC Bank managing director in a letter to clients has said that the step for necessary to root out counterfeit notes from the country. He added that the step was also done to make the country move towards reduced usage of cash. After the demonetisation step by the government, the country, on almost daily basis, is seeing long queues in banks and ATMs, in the hope of exchanging or withdrawing cash. Even the Parliament is also seeing regular adjournments on the issue after the start of the winter session on November 16.
Read the top 5 highlights of Aditya Puri letter to clients:
“It is necessary that we all understand that the country is moving towards reduced usage of cash. Going forward, ‘Digital’ banking is a joint effort between the Government, banks and customers.
Fundamentally, the aim is to ensure that a customer is not inconvenienced on account of not carrying cash. We, at HDFC Bank, feel this is a laudable objective which will provide benefits to the economy and people in the long run.
Just to list out a few:
1.Demonetisation is almost a necessity to root out counterfeit notes which have a direct correlation with terror funding and other fraudulent activities.
2. If a country is to progress we cannot have less than 10% of the population paying Income Tax. An effort is being made to ensure that people conduct their business in a fair and transparent manner. Increased ‘Digital’ transactions will not only provide convenience to the customers but will also root out corruption and bring down the cost of banking services.
3. It is imperative that the savings of individuals and businesses are used to spur investments. It is further necessary that most of the currency in circulation is moving through the banks rather than being stored at various places in an unproductive manner. This will give banks the capacity to lend and also to bring interest rates down in order to spur investment and be competitive.
4. A study by MasterCard shows that the cost of using cash i.e. printing, transporting, storage, soiled notes, etc. is almost 1.5% of GDP. The move to ‘Digital’ transactions, through the Banking System will not only benefit the customer but also the economy through lowering of cost.
5. We also need to bring to semi-urban and rural India the convenience of dealing ‘Digitally’ and getting services/ loans at competitive rates.
I would like to conclude by saying that we must recognize the direction in which banking and payments is moving and it is in your interest, as well as, of all institutions and the country, to actively use ‘Digital’ services.