New Delhi, Nov 8: As India completes two years of demonetisation today, how Modi changed the fate of the digital payments industry of the country through note ban.
India has now joined other countries in the digital payment revolution a lot faster than the past where we often lagged behind in adopting technology, especially in the f¡nancial sector.
It can be recalled two years ago, Prime Minister Narendra Modi put the entire nation in a frenzy. In one stroke, the government made Rs 500 and Rs 1,000 denomination notes invalid, leaving the country of 1.3 billion in a limbo.
As people queued up outside banks to deposit old currency notes in exchange for new ones, the digital payments industry saw a huge opportunity open up.
In an annual report by the Reserve Bank of India (RBI), said that all payment and settlement systems - NEFT, IMPS, UPI, NACH, card payments, Electronic Clearing Systems as well as Forex and market clearing systems - have seen a 44.6 percent increase in volume in 2017-18 and an 11.9 percent increase in the value of funds transferred.
The digital retail payment infrastructure, which includes card payments, UPI and others increased to 92.6 percent in 2017-18, up from 88.9 percent in the previous year.
The RBI also said the share of paper-based clearing instruments reduced from 11.1 percent in 2016-17 to 7.4 percent in 2017-18, showing a strong trend in favour of digital payments.
This monumental growth is being driven by the widespread acceptance of digital modes of payment, which is expected to reach 80% of the country's urban population and 70% of retail chains over the next 4-5 years.
In 2015, while launching the Digital India week, Prime Minister Narendra Modi had said: "I dream of a digital India where Mobile and E-banking ensures financial inclusion". His vision is gradually coming to life with the new initiatives launched by the Modi-led Government. In addition to this, there are a growing number of innovative fintech companies offering various digital payment solutions, leading the total transaction value approximately to $50 million across digital payments this year, and is expected to reach $700 billion by 2022.
Post demonetization phase in 2016, there have been several policy and digital infrastructure changes including Goods and Services Tax (GST), financial inclusion and new payment systems such as Aadhar-enabled payments & UPI to further boost the digital payments sector.