Scrapping cheque book facility could be counterproductive

The Modi government seems to be in a tearing hurry to usher in Digital India. After demonetisation and GST, the government is contemplating scrapping cheque book facility offered by the banks. The move is supposedly aimed at encouraging digital transactions.

The government proposed initiative comes on the back of demonetisation and roll-out of GST, both of which have not achieved the desired results yet. Post-demonetisation, there was a spike in the use of plastic money (debit and credit cards), but the growth in usage of debit and credit cards has petered out, which has not gone well with the government’s vision of making India a digital economy. Hence, the proposed move to scrap use of cheques altogether.

Now, even today, a large chunk of day-to-day banking transactions happen through cheques. If this facility is scrapped, many of the banks’ retail customers would simply revert back to cash transactions, which would defeat the very purpose of ushering in a digital economy. This is because a vast swathe of the populaceis still not conversant or comfortable with digital transactions, especially the older generation and illiterate and semi-literate urban and rural populace. These sections have just began to understand the niceties and nuances of banking transactions, including depositing cash in the bank and withdrawing money from the ATMs, issuing cheques to make payments and depositing cheques received by them from others. All this spread of banking literacy has been possible, thanks to the government’s Jan DhanYojana.

However, the government’sproposed move to scrap cheque book facility and push them directly into the digital world may leave this section of the populace in a quandary. As a result, they might simply opt for cash transactions, rather than doing things they are not conversant with.

Moreover, digital banking needsadoption of adequate safety and security measures to avoid being duped by unscrupulous elements stalking the cyberworld. Forcing the illiterate, semi-literate andsenior citizens to adopt digital mode of banking wouldexpose these people to the fraudulent activities of these unscrupulous elements who are always on the look out to dupe gullible people of their hard-earned money. To avoid this, it is necessary to conduct a concerted campaign on safety and security measures to be adopted while transacting through the digital mode.

In view of the above, the government’s proposed move to scrap cheque book facility couldprove to be counterproductive, if not disastrous.