Is India late or right on time?
With demonetizing rolling out, the government pushed forward the proposal of the cashless economy in the nation. There were concerns voiced as for whether the cashless transition is too early for the nation. For many, the shift to cashless means was kind of time traveling into the futuristic century? But is it? Is cashless transition of economy pretty soon for India?
Judging by the theme around, actually, India has been a little late to the party. A cashless party that started years ago. We here depict India’s cashless transition and seek answers as to whether its late onto the scene or not. Join in.
India’s Banking Roots
Banks have a large role to play when it comes to the cashless economy. It was rightful that we start off with the banking regimes of India for our piece.
India had its banking roots set in the 18th Century. Yup, you read that right. The banking structures had been in place since the latter decades of the 18th Century. But that’s for the history buffs. Recalling the last time when the banking structure proved more than cash depository and loan offeror was when the banking sector was approved for liberalisation in the early 1990’s.
The start of Cashless Journey of India
The liberalization of banking sector opened the doors to further avenues which saw the added features like Electronic Funds Transfer, ATM-cum-debit card along the way. The debit card feature laid the benchmark for further card-based offerings like credit card and POS terminals.
With banking cards in the circulation, sellers and more offered the option for customers to pay via card with POS terminals. The credit card offered a great option for people wanting to trade off the cumbersome nature of physical hard cash.
The Foreign Influence on Cashless Option
Going by what the world had already seen, options like PayPal and more was a good choice for cashless economy. The world was booming with its different sorts of digital wallet services and more. In fact, even the Vodafone’s M-Pesa, the one that created such a buzz in the developing world had been around since 2007. Vodafone’s M-Pesa had become the best mobile based payment platform by the end of 2010, such was the usage stats.
The Impending Arrival of Cashless Option in India
As aforementioned, the launch of ATM-cum-Debit Cards, Credit Cards and the succession of POS terminals was the first instance of the cashless economy in the nation. Then came the added option of digital wallets across the nation that further remarked the slow yet visible transition from a card-based to cashless one.
If you glide through the dates, Paytm, the impromptu digital wallet ranked on the top at current was first founded in 2010. Similarly, the Mobikwik had been there in the functioning from 2009, a year before Paytm. Freecharge too had its founding date set around 2010. Vodafone’s M-Pesa, the one we talked of above was launched in India in 2011.
RBI in its Vision statement for the year 2012-2015 had laid down plans for a cashless society and had prioritized on increasing the access to banking sectors. Its statement read as to make the society and economy as a whole less burdened on the cash with cashless being the prioritized option.
That tells quite a bit about the cashless option that was available in the market even before the demonetization set in. But why did the nation hold so long before announcing their stretch towards a cashless economy? We’ll look on the other side of the story too down below.
The barriers to the cashless Economy in India
The prime reason why the nation lays claim not to shift towards the cashless economy earlier is the minority reach to the banking stream. In a nation, where 22% of its population live under the Below Poverty Line, expecting the nation to transform itself into a cashless economy overnight was a tiresome task.
A report cited by the PWHC in 2015 showcased India’s population without banking reach at 233 million. However, Pradhan Mantri Jan Dhan Yojana helped around many in getting bank accounts later on.
Is India late onto the cashless scene?
To say the least, the plans have been there since 2010 itself. The nation saw the emergence of digital wallets, mobile payment platforms and more in the years coming by. Even RBI on its behalf had planned the thing out in its Vision Statement during 2012.
It differs to reason, but India had the means to transition itself into cashless economy earlier than it did. A compulsion of the transition to cashless economy brought on by the demonetizing does seem a little late to the scene.
India for its part should have entered earlier into the cashless party but as things stand, they choose to be one of the late arrivals. Nevertheless, for India and its economy, the cashless party isn’t finished yet.
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