Efforts are on to bring down the usage of cash
Stating that the circulation of a large amount of cash in the economy leads to many problems, including corruption, Reserve Bank Deputy Governor H. R. Khan, on Thursday, said the central bank was focused on bringing down the cash component in the economy.
“We want that we should move towards a less cash society. There is a need for the predominant cash in the society to go down,” Dr. Khan told reporters at the sidelines of an event here.
He said if the cash component in the society went down, it would help solve a lot of problems such as the rampant corruption, monetary policy transmission issues and cash management for banks at the operational level.
At present, the amount of cash circulating in the system was up to 14 per cent of the GDP, which made the country one of the highest markets that had cash circulation, he said, stressing the need to bring down the ratio.
Only Japan had such high levels of cash, he said, without giving a target on the ratio.
Dr. Khan’s observations come at a time when there is a widespread angst in the society over rampant corruption, with repeated reports from the statutory auditor on alleged corruption only doubting the credibility of the government.
Dr. Khan said implementation of information and communication technology (ICT) solutions such as mobile and online banking, core banking and electronic fund transfers could help bring down the reliance on cash. The government and the RBI were taking efforts to bring down the usage of cash, Dr. Khan said, citing the case of compulsory use of electronic fund transfers for all transactions above Rs.25,000 adopted by the government. — PTI