Cashless transactions boom
With the advent of technology, people turning toward cashless transactions are on a rapid rise.
The INR crisis that hit the country in 2012 contributed to the popularity of cashless transactions since Bhutanese shop in bordering Indian towns. Post-demonetization, the trend shot up, with lack of access to INR denominations 500 and 1000.
Now, with more financial institutes promoting easy and convenient cashless transactions, banks are also cashing in on the business. If banks cannot provide enough INR, people prefer cashless transactions whereby they can deposit and withdraw from Indian ATMs.
Cheques, Demand Drafts (DD), e-payment system and ATM card swiping
have enhanced customer service. For instance, B-wallet facilities from Bank of Bhutan (BOB) facilitate easy fund transfer and recharging of call vouchers without using paper vouchers.
An official from the Druk Punjab National Bank (DPNB) said that DD and Real Time Gross Settlement (RTGS) for Indian businessmen top cashless transaction services.
Since Bhutanese land up paying in Ngultrum (Nu), banks would suffer as hundreds of Indian merchants visit them for exchange of Nu with INR. Bhutanese thus landed paying up to 10% extra for the goods if paid in Nu.
However, since January 2016, the Royal Monetary Authority (RMA) authorized financial institutes to facilitate Indian merchants with INR through RTGS or DD. Now, every bank can approve RTGS up to Nu 50,000 to a customer with a valid voter identity card. Above this limit, they have to produce PAN card for the facility. More than Nu 5mn a day is transacted via these services in DPNB. The charge ranges from Nu 35-15,000 per DD depending upon the amount.
Cashless transactions offer some advantages to both bankers and customers. Most importantly, every transaction remains recorded so there is limited scope for tax evasion. “It ultimately helps the government,” said the DPNB official.
Also, cashless transactions are secured processes without direct dealing with cash, which could otherwise be robbed anytime. Other benefits are saving time and energy.
But the question of payer credibility through cheque is pertinent as chances of cheque bounce exist. “Though the central bank has regulations put in place to curb such practices, people can be fooled by others,” said a bank official.
Meanwhile, BOB has many online banking facilities like MBOB and B-wallet services among others. BOB’s MBOB users have reached 56,000. “The numbers of online transactions are increasing daily and it is a challenge to handle them,” BOB’s Chief Executive Officer, Pema N Nadik said.
Up to Nu 1.3mn is transacted a day in terms of mobile top up for both B-Mobile and T-Cell. Likewise, fund transfer reaches up to Nu 40mn a day. “People keep on using cashless transactions. We need to work more in the branch offices to provide the services to the people,” said Pema N Nadik.
BOB has also introduced ‘INR Prepaid card’, which allows customers to take deposits up to INR 50,000 a month and withdraw from any Indian ATM without transaction fees.
For Bhutan Development Bank Limited (BDBL) in Phuentsholing, cashless transactions have risen overtime. Now more customers prefer online banking facilities, according to BDBL’s Assistant Branch Manager, Tandin Dorji.
BDBL has also opened Gewog banking System (GBS) reaching the facilities to people’s doorsteps. The bank has mobile banking system in place for the customers.
T- Bank limited is also in the process of going 100% cashless transactions through internet banking. Most of the facilities are already in place for online transactions and banking while the remaining facilities for making e-payments will be launched soon, according to T-Bank’s Chief Banking Operator, Laxmi Prasad Giri.
T-Bank offers internet banking, mobile banking and ‘Point of Sale’ services, a system combined of software and hardware allowing merchants to make key transactions. “We are in the process of digitalizing financial services within the next few months,” said Laxmi Prasad Giri. Going cashless, he said, could save the government cost of printing cash and other associated costs.
For T-Bank also, customers opting for online banking are on the rise.
Though the government and RMA are encouraging people to avail cashless transactions, financial literacy in rural areas is yet to improve. The Chief Banking Operator said going cashless would also secure the people and the nation from threats like terrorism.
For people, online or cashless banking system has helped them immensely. A private employee, Tshering Tashi, 35, said that using facilities like MBOB and other e-payment systems has brought about a revolution in the financial services sector. “Now the banks are not as much crowded and monthly utility bills can be paid online.”
Indian merchants have also benefitted hugely through cashless transactions in Bhutanese banks by enhancing trade with Bhutanese customers. Now, they do not have an issue accepting Nu since they can get INR after visiting Bhutanese banks through RTGS. “Otherwise it was a problem for everyone. We did not accept Bhutanese currency and they did not have INR,” said an Indian businessman.