“Peo­ple need a se­cure al­ter­nate to cash”

Governance Now - - CONFERENCE REPORT -

if we have a 100 per­cent suc­cess rate of an al­ter­nate to Cash, peo­ple would surely stop us­ing Cash and switch to dig­i­tal. the atm pen­e­tra­tion through­out the Coun­try has en­cour­aged peo­ple not to store a pile of Cash in their wal­lets

Union Bank of In­dia MD & CEO Ra­jki­ran Rai talked about peo­ple’s de­pen­dance on cash and the need for se­cure dig­i­tal bank­ing sys­tem. He said as long as the au­thor­i­ties don’t ad­dress the is­sue of ne­ces­sity of peo­ple to have cash, they will never be able to re­duce cash in the sys­tem.

“Cash is used for pay­ments and stor­age of value. In In­dia, pay­ment sys­tem did not evolve for a long pe­riod be­cause of which cash was be­ing used and con­tin­ues to re­main as a ma­jor pay­ment and set­tle­ment mode in our sys­tem. We need to ad­dress this is­sue. Dig­i­tal tech­nolo­gies are mul­ti­ply­ing man­i­fold but still we are not able to take out cash from the sys­tem,” Rai said.

He said that even af­ter the de­mon­eti­sa­tion, the way it is be­ing mon­e­tised, the coun­try is reach­ing to the same level of mon­eti­sa­tion be­cause peo­ple still feel the ne­ces­sity of keep­ing cash. We need to go deeper into this is­sue and an­a­lyze why peo­ple are com­fort­able with cash, he added.

“Cash is de­pend­able and com­fort­able to use. But have we found an al­ter­nate mech­a­nism as de­pend­able as cash? If we have a 100 per­cent suc­cess rate of an al­ter­nate to cash, peo­ple would surely stop us­ing cash and switch to dig­i­tal. The ATM pen­e­tra­tion through­out the coun­try has en­cour­aged peo­ple not to store a pile of cash in their wal­lets. How­ever, if I want to buy some­thing in the mar­ket, I def­i­nitely carry some cash in case of any even­tu­al­ity,” he said.

He said that in­fra­struc­ture has to evolve to a level where the coun­try can have 100 per­cent dig­i­tal trans­ac­tion and peo­ple will not have to carry cash.

“Cash over a pe­riod of time has be­come a stor­age of value like gold and eq­ui­ties. When de­mon­eti­sa­tion took place, it came as a shock to ev­ery­one and sud­denly peo­ple re­alised that cash does not have good stor­age of value be­cause its value got de­stroyed overnight. Some­where, we have shaken the con­fi­dence of peo­ple that cash is not a good for stor­age. It needs to be taken for­ward,” he said.

ra­jki­ran rai g, MD & CEO, union bank of in­dia

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