New Delhi: Ahead of the first anniversary of demonetisation, Finance Minister Arun Jaitley said on Monday that excessive cash in the economy has "its own cost" and India is gradually moving towards digital transactions.
Prime Minister Narendra Modi announced on November 8 last year the scrapping of old Rs 500 and Rs 1,000 notes as part of the government's efforts to fight black money and corruption.
Following that, the Centre has been pushing for digital payments and transactions through the banking channel so as to promote a 'less-cash' economy.
However, the opposition parties have criticised demonetisation and plan to observe November 8 as "black day" across the country.
Jaitley said some people have problem in accepting the fact that transactions through the digital mode and banking instruments are going to witness a rapid growth as compared to cash dealings.
At the inauguration of the new building of Punjab National Bank (PNB) head office here, Jaitley said: "Excessive dependence on cash has its own cost.
"It is not just cost but there is a curse of cash. It has impact on both society and economy."
He said there is a clear change taking place as to how India and Indians are spending money and the change is only in one direction.
It will not happen abruptly but the movement towards a less-cash economy is very clear, he said, adding that it will lead to more deposits with banks, increasing their lending ability at affordable rates.
Banking is the life line of the economy and it will gain further importance in the coming days, he said.
A healthy banking system will help support growth of the economy, he added.
Jaitley also launched two products of the PNB -- Rupay Credit Card and e-Rupaya.
Minister of State for Finance Shiv Pratap Shukla asked banks to focus on rural India and work towards improving customer experience.
He also said that managements of banks should focus on welfare of their employees.
A year on, bankers say note ban has been good for them
Mumbai: A couple of days ahead of the first anniversary of demonetisation, bankers said on Monday that the move was good for them as it resulted in higher deposits and pushed digitisation at a faster pace.
On November 8 last year, the Modi government demonetised Rs 500 and Rs 1,000 notes as part of its drive against black money, counterfeit notes and corruption.
"For the banking sector, I would consider it positive as lots of money has come into the formal banking system. Casa (current account, savings account) deposits have gone up by minimum 250-300 basis points which itself is a big positive," SBI chairman Rajnish Kumar said.
Deposits, which came into the banking sector left banks with trillions of rupees in surplus funds, leading to an overall decline in money market rates.
ICICI Bank chief executive Chanda Kochhar said the note ban led to formalisation of financial savings and increased the flow of funds to mutual funds and insurance. "Post-demonetisation, there was a faster shift towards digitisation. Going forward, the whole approach towards digitisation will continue," Kochhar said.
Although some analysts and a section of people in the government had initially claimed that the move would lead to a windfall gain of at least 20 per cent of the Rs 15.87 trillion (Rs 15.87 lakh crore) of banknotes cancelled, the Reserve Bank in June said as much as 99.1 per cent of the junked bills had returned to the banking system.
This led to widespread criticism of the move and the opposition parties are organising protests on the first anniversary of the demonetisation drive as "black day".
Formalisation of financial savings will increase the ability of banks and other players to reach out to small customers, Kochhar said. In last one year there has been a tremendous improvement as far as the steel sector is concerned, he said.