“People need a secure alternate to 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
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