Some reports suggested that the government may withdraw the cheque book facility in order to boost digital transactions.
Bank cheque books have been an integral part of the Indian banking system. However, there were some reports that suggested that the government may withdraw the cheque book facility in order to bid to boost digital transactions. But the government recently clarified that it has no such plans. The government is committed to push for digital transactions and a less-cash economy but cheques are an integral part of the payments landscape, the Ministry of Finance said in an official release.
Here are five things that the Finance Ministry said in response to reports that the cheque book facility may be withdraw:
1. There is no proposal to withdraw the bank cheque book facility.
2. The government is committed to transform India into a less cash economy and to promote digital and electronic transactions through multi-pronged initiatives.
3. Cheques are an integral part of the payments landscape, and form the backbone of trade and commerce, by being negotiable instruments, which often serve as the security for underlying trade transactions.
4. In a section of the media, it has appeared that there is a possibility that the Central Government may withdraw bank cheque book facility in the near future, with an intent to encourage digital transactions.
5. In fact, the Union Finance Minister, in the Budget Speech 2017-18, had announced, “As we move faster on the path of digital transactions and cheque payments, we need to ensure that the payees of dishonoured cheques are able to realise the payments. Government is therefore considering the option of amending the Negotiable Instruments Act suitably.”
Earlier, a senior functionary of industry body CAIT said the Centre may withdraw the bank cheque book facility in the “near future” to encourage digital transactions.
Confederation of All India Traders (CAIT) Secretary General Praveen Khandelwal said the government needs to encourage 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.
In the months after Prime Minister Narendra Modi’s surprise announcement on November 8 to outlaw Rs. 500 and Rs. 1,000 currency notes, the government did aggressively encourage digital transactions.
Digital transactions spiked after demonetisation, but have dropped to pre-demonetisation levels, – both in terms of the number of transactions, and their value – showed the Reserve Bank of India data.
While the volume of transactions rose from 671 million in November 2016 to 957 million in December 2016, the number of digital transactions dropped to 862 million in July 2017.
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