New Delhi: Digital transactions, which gained prominence post demonetisation, have started declining with pick up in remonetisation, indicating return of people’s preference for cash.
As per the latest data of the Reserve Bank of India (RBI), as many as 9,575 lakh transactions were made through various digital modes, like credit/debit cards, UPI (Unified Payment Interface), USSD (an innovative payment mode which does not require Internet or smart phone), and mobile banking in December last year, the second month of demonetisation effected on 9 November.
The digital transactions were valued Rs104.05 lakh crore in December. However, the number of transactions fell to 8,704 lakh in January and further to 7,630 lakh in the following month. The value of monthly transactions too fell accordingly.
Transactions through debit and credit cards on PoS at merchant establishments also declined in January and February. The transaction through the USSD, however, increased in January over December, before declining in February.
On the other hand, transactions through th UPI appears to be increasing. In December, UPI transactions were at 20 lakh, which increased to 42 lakh in January. It further rose to 42 lakh in February. Post demonetisation, the government has been focusing on increasing digital payments and even incentivising people to move away from cash payments.
On 9 November, the government had demonetised old Rs500 and Rs1,000 notes, which together accounted for about 87% of the currency in circulation with an aim at checking black money, counterfeit notes and terror financing.
The move had lead to severe cash crunch in the country and people were seen lining up before banks to exchange the defunct notes. The RBI placed restrictions on cash withdrawals from bank accounts as well as ATM.
However, all the limits have been removed and the only restriction on withdrawals from savings bank account will also go away on 13 March. The RBI maintains that remonetisation is picking up at a fast pace and expected to be completed in next 2-3 months.