Arundhati Bhattacharya, the head of country’s largest bank State Bank of India, has said that the government should find ways to disincentivize cash transactions after normalcy is restored in banking operations following the demonetization move. Disincentivizing cash transactions will help in moving towards cashless economy. Ms Bhattacharya suggested that it can be done by adopting steps such as imposing a charge or levy above a specified limit or threshold of cash transaction.
According to Arundhati Bhattacharya if India wants to de-emphasise cash, there should not only be an incentive for people to move towards a cashless economy but also a disincentive for transacting excessively in cash, while leaving out small-ticket transactions. In an interview to Indian Express, “Cash imposes a huge burden. We don’t understand it as it is not immediately visible. It is a huge burden on society. Why should a country have to take on itself a huge burden of managing a totally cash economy? It is not cheap and the physical infrastructure to maintain cash is not cheap,” she said.
According to Bhattacharya, with the increased spread of banking and, going by the latest survey that shows 91 per cent of households have bank accounts, the time may be opportune now for a charge or levy. “People are used to cash and getting them out of that is going to be a long and tough exercise. We have to continue to do something to keep up this push,” she said. Bhattacharya said that even after the withdrawal of high-value notes, leading to a scramble for cash at bank branches, SBI was opening 1 lakh accounts a day, including those for financial inclusion.
“This cost is something that will impact us immediately. The cost is something that the government should look at and help us. This is where the government can do a little hand-holding… that would be much appreciated,” she said. Bhattacharya said that the current withdrawal restrictions may be lifted only when there was an adequate amount of bank notes in the system. She also said that the impact of demonetization on the economy was reflected in consumers deferring discretionary spending and in lower demand.
Source : Indian Express