Demonetisation impact: Cheques use, cash transactions plunge after note ban order

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Mumbai | Updated: November 25, 2017 5:43 AM

Paper noted that the average monthly volumes and values in retail electronic payment systems and card payments at POS terminals were significantly higher during the demonetisation period than earlier and remained at the same level during the demonetisation and post-demonetisation period

Demonetisation impact, RBI, cash transactiosn, note ban order, Sasanka Sekhar Maiti, POS terminals, indian economy, retail electronic paymentsThe paper noted that the average monthly volumes and values in retail electronic payment systems and card payments at POS terminals were significantly higher during the demonetisation period. (IE)

The use of cheques has been on a decline and cash transactions too have fallen on a sustained basis since demonetisation, the Reserve Bank of India (RBI) said in a research paper released on the Mint Street Memos section of its website on Friday. “RBI’s interventions on promoting electronic modes of payment appear to have facilitated a reduction in the usage of paper-based instruments, such as cheques,” the paper stated, adding that demonetisation impacted the inter-bank payment and settlement systems significantly in moving cash transactions to non-cash modes of payments, in three modes: retail electronic payments, card usage at point of sale (POS) terminals and cheques. The increased usage of these three instruments during the demonetisation period has been sustained in the post-demonetisation period as well, suggestive of a fundamental shift being underway in payment habits of the Indian economy,” noted the paper, authored by the central bank’s Sasanka Sekhar Maiti.

The paper noted that the average monthly volumes and values in retail electronic payment systems and card payments at POS terminals were significantly higher during the demonetisation period than earlier and remained at the same level during the demonetisation and post-demonetisation period. “This implies that the sudden increase in the usage of retail electronic payment systems and cards at POS terminals during demonetisation persisted in the post-demonetisation period,” it said. While the average monthly volume of cheques during the demonetisation period was significantly higher than that before the event, it was equal during demonetisation and post-demonetisation, the paper observed.

“However, the average monthly value of cheques was equal for all the time buckets. This implies that during the demonetisation period, there was a sudden increase in cheque volume, though cheque values did not increase significantly, suggesting that a large amount of small value cash transactions moved to non-cash mode of payments through cheques. The increased volume of cheques is sustained in the post-demonetisation period,” said the paper.

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