MUMBAI, May 21: The Reserve Bank is in discussions with the government on ways to reduce cash usage in the system and will soon be coming out with a paper on the same, its executive director G Padmanabhan said today.
“We are looking at various ways to incentivise cashless transactions, and various aspects are being considered like looking at charges for card payments,” Padmanabhan told reporters on the sidelines of a National Payments Corporation of India event here.
In the comments which come amidst a very charged debate on black money, Padmanabhan said we need to look at solutions which will take into consideration the local conditions and make cashless transactions as easy as cash transactions.
Both the government as well as the RBI are doing many things to promote cashless transactions as much as possible, he said, adding that a discussion paper on the topic will be made public soon.
Citing the case of South Korea, which gives tax incentives for cashless transactions, Padmanabhan said methods have to be devised as infrastructure penetration is low.
He sought to downplay the concerns of the industry, saying that the focus on moving to a cashless economy should not hurt the infrastructure roll-out and industry will be incentivised.
“Initially, we can’t have a solution which will take away the incentives to put up the infrastructure. That is why we are having a prolonged discussion,” he said.
At present, a commission of up to 2 per cent is charged for card transactions, which many feel is a deterrent for the agenda of cashless society.
Padmanabhan said he has also cleared the guidelines for mobility cards and they will be published in a fortnight.
When it comes to usage of electronic methods of transacting, Padmanabhan asked the banking system to devote sufficient attention to safety and security, saying there have been instances of data compromises.
Industry players should also work towards minimising the cost of transaction, he said, hinting that a regulator-prescribed pricing may not be desirable.
The USSD-based framework, which will enable a user of low cost feature phones to use mobile banking services, has overcome the initial hiccups and is now ready for a take-off, Padmanabhan said. (PTI)
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