Rapid financial inclusion envisaged by the Government under the ‘Jan Dhan Yojana’ will lead to a decline in the usage of cash in India in line with developed countries, according to State Bank of India Chairman Arundhati Bhattacharya.
Referring to the magnitude of the challenge under financial inclusion, whereby only 58.7 per cent of households in India avail of banking services, the SBI chief said against this background, the launch of the Jan Dhan scheme by the Government is a welcome step.
In his Independence Day speech Prime Minister Narendra Modi announced a major new scheme — Jan Dhan Yojana — to universalise banking access and financial inclusion.
This scheme will provide for a bank account, a debit card and an insurance amount of Rs 1 lakh to poor families.
Bhattacharya, in a statement, said with such rapid financial inclusion, the use of cash in India will decline in line with developed countries such as the UK (2 per cent), Australia (3 per cent), and Japan (6 per cent) going forward.
According to an RBI empirical study, alternative payment channels such as cheques, credit/ debit cards and Internet banking are not only more efficient than paper currency, but also leave paper/ electronic trails, facilitating tax audit. Usually, such payment mechanisms act as partial substitutes for high-value currency.
The SBI chief said the positive spillover from this structural transformation (via financial inclusion) in the long-run would be enormous. This apart, the move towards digital India would make good use of cost-effective cellular technology in future banking growth.
Further, the launch of the Sansad Adarsh Gram Yojana will encourage the development of smart villages that can effectively co-exist with smart cities as underlined in the Budget, she added.