FM asks banks to push for cashless transactions
Finance Minister Arun Jaitley has asked banks to push for cashless transactions by promoting digital banking in mission mode. Post demonetisation, the government not only aims to weed out black money but also encourages digital payments to steer the Indian economy increasingly towards digital transactions. Banks have been advised to focus on alternative banking channels such as NEFT, mobile wallets, pre-paid cards, QR codes, payroll cards, debit and credit cards, and Unified Payments Interface (UPI). Banks have already begun to convince merchants to switch to their apps or to the Unified Payments Interface (UPI).
UPI is a payment system developed by National Payments Corporation of India (NPCI) that allows easy, quick and hassle free money transfer between any two parties. UPI has an added advantage over mobile wallets as it allows direct transfer of funds within bank accounts.
In order to promote digital banking, the Finance Minister has also announced setting up of a committee under the additional secretary in the finance ministry. Already, the Finance Ministry has constituted 11 members high-level committee headed by Principle Adviser for social sector in NITI Aayog and former Finance Secretary Ratan P Watal to suggest steps to promote card payments with an aim to discourage cash transactions.
Cashless Economy is when the flow of cash within an economy is non-existent and all transactions have to be through electronic channels such as credit and debit cards, electronic clearing etc.