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Cheques to be banned? Is PM Modi preparing for another shock?

Cheques to be banned? Is PM Modi preparing for another shock?

New Delhi: After demonetisation last year, the government could now plan to scrap off chequebooks in a bid to increase digital transactions.

Centre’s plan to move towards cashless economy had seen a surge in digital payments after the note ban, but the cash is back again in circulation, as the cheques are. There has been observed an increase in cheque payments after demonetisation, restricting more options for digital transactions.

A high functionary, Praveen Khandelwal, secretary general of Confederation of All India Traders (CAIT) told reporters that “In all probability, the Centre may withdraw the cheque book facility in the near future to encourage digital transactions.”

Khandelwal spoke to the reporters at the launch of ‘Digital Rath’, a joint initiative of the CAIT and Mastercard to encourage traders to adopt digital transactions.

Cheques constitute a considerable share, as most of the transactions are done through them. More than 95% transactions happen via cash and cheques currently, quotes The Economic Times.

“The government spends Rs 25,000 crore on the 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,” Khandelwal said.

India holds a goal of 25 billion digital payments by end of this fiscal year. If chequebooks are banned, India might move closer to its target.