RBI has decidedly moved in favour of reducing the size of cash economy in India, according to governor Raghuram Rajan who termed the Pradhan Mantri Jan Dhan Yojana (JDY), the biggest recent development in this direction. On its part RBI has introduced two-factor authentication for credit cards to ensure safety in card payments and to promote the use of plastic money.
While explaining the benefits of universal financial access through JDY which includes increased financial access and empowerment of the masses through Direct Benefits Transfer (DBT), Mr Rajan spoke about the boost this scheme will provide to the domestic card network Rupay, being run by National Payment Corp of India (NPCI). It is expected that by next year the number of users with Rupay will quadruple as under the JDY scheme new account holders will automatically get a Rupay card.
However, for financial inclusion to lead towards cash less economy financial literacy is imperative. Mr Rajan stressed on the need to ensure that JDY is saved from turning into mere camps handing out material. “Closer engagement on inculcating savings, investment, and security habits, and even basic business sense is needed,” he said.
Mr Rajan also spoke about the expenses involved in withdrawing funds from ATMs of banks where a particular customer does not have an account and why such practices need to be curbed. According to Mr Rajan it costs banks about Rs 75 per transaction when a customer uses other bank ATMs. “Ultimately, those who transact more are subsidized by those who transact less,” he said.
