The note-ban has resulted in a ‘fundamental shift’ in the payment habits in the economy-a move away from cash payments to and a wider adoption of retail electronic payments, card usage at merchant terminals and cheques, an RBI study has found.
The government had on November 8 last year surprisingly cancelled all the banknotes in the Rs 1,000 and 500 denominations, which was around 86 per cent of the money in circulation, with multiple objectives.
‘The increased usage of these instruments during the note-ban period has been sustained in the post-ban period as well, suggestive of a fundamental shift being underway in the payment habits,’ said the study conducted under the guidance of Sasanka Sekhar Maiti of RBI’s Department of Statistics and Information Management.
As per the study, cheque volumes and values contracted during the pre-demonetisation period but recorded positive growth during demonetization as well as post-note-ban months.
‘The increase in usage of cheques could be an effect of demonetization as cash availability was restricted and cheque became a convenient instrument to transfer funds, which takes one or two days given the substantial reduction in settlement cycle on account of implementation of cheque truncation system,’ it explained.
There was a sharp growth in card transactions at points of sale terminals for both demonetization and post- demonetization periods, it added