After note ban, will Modi govt now ban cheque books for its digital push?

CAIT Secretary General Praveen Khandelwal said the government needs to encourage the use of debit and credit cards

After deciding to revoke the legal tender of Rs 500 and Rs 1,000 currency notes in November last year, the Narendra Modi -led central government might now be working on another disruptive step to boost digital transactions — banning the cheque book. A senior functionary of the Confederation of All India Traders (CAIT) on November 16 said the Centre might withdraw the bank cheque book facility in the "near future" to encourage digital transactions.

CAIT Secretary General Praveen Khandelwal said the government needed to encourage the use of debit and credit cards. "In all probability, the Centre may withdraw the cheque book facility in the near future to encourage digital transactions," he said.

Impact of cheque book facility withdrawal

Demonetisation was a big disruption for most Indians, right from poor labourers to big industrialists. Now, the withdrawal of the cheque book facility could have a massive impact as well. Most business transactions are conducted through cheques. According to experts, 95 per cent transactions currently take place via cash or cheques.

Since cash transactions have declined, transaction by cheque might have increased after demonetisation.

Use of cheque in India

Cheques are fairly popular in SME payments. By taking a PDC (post-dated cheque) against the delivery of goods, a supplier secures payments due in future from its customer. People pay by cheques while buying land and house, too.

Many landlords now take rent from tenants via cheque. Since November 8, 2016, digital payments like BHIM have grown. However, their sweet spot has been small-value payments (two to three figures). The retail and commercial payment usage strongly suggests that cheque is a very compelling method of payment for large-value payments (four figures and above).

Growth of digital transactions

The Narendra Modi-led BJP government has been pushing for a less-cash society. While digital transactions have shown mixed trends since demonetisation, overall cashless payments are much higher than in the pre-demonetisation months. (more)

Two years of Narendra Modi's foreign policy: more misses than hits

Two years of Narendra Modi's foreign policy: more misses than hits

In year one of his tenure, Prime Minister Narendra Modi surprised all who had doubted his ability to negotiate the esoteric world of international diplomacy. Modi came across as a conjurer with a bag of tricks, the likes of which were seldom seen from his predecessors, making even his worst critics reassess their opinion of the former Rashtriya Swayamsevak Sangh (RSS) pracharak. But, foreign policy reverses in year two have given his political rivals an opportunity to point not at the conjurer’s magic trick but his sleight of hand.

In the past two years, Modi’s visits across the world, including the surprise one to Pakistan, have garnered much social and mainstream media coverage. He has also successfully reached out to the substantial Indian diaspora, particularly the wealthier sections living in Europe and North America. There is, however, little to show in terms of brass-tacks — whether geopolitically or investment-wise. But, the PM has continued undeterred to beguile with his foreign policy initiatives, the element of surprise being the leitmotif of his foreign policy.

His inviting South Asian leaders to his swearing-in ceremony, his subsequent visits to the neighbouring countries, the rapturous reception he received from the Indian diaspora in the US and other countries, the surprise invite to US President Barack Obama to be the chief guest at the Republic Day and the audacious visit to Pakistan in end-December — all were delivered with the finesse of a master at work. Modi, as he completed two years, has continued to surprise — this time with his West Asia outreach. His visits to the United Arab Emirates (UAE) in August, Saudi Arabia in April and to Iran in May, and his forthcoming visit to Qatar have again left foreign policy wonks intrigued. Year three of Modi’s tenure is likely to see some more surprises — a historic first visit by an Indian PM to Israel is in the works as is a multi-nation visit to the African continent, including to such countries with significant presence of the Indian diaspora such as South Africa and Kenya.Read more.