Cashless transactions and the poor

Abstract

The year 2015 will be seen as an important year in the history of banking in India for the bold moves that the Reserve Bank of India has undertaken—to roll out two new universal banks, of which one has had a background of being a grassroots microfinance institution and to grant 21 new licences to two categories of differentiated banks. While these banks might not by themselves bring in the volumes to disrupt the way banking is done, these will definitely bring in practices that will disrupt the market.

The policy on new banks follows the recommendations of the Nachiket Mor Committee which looked at the issue of inclusion, one is not very sure if the differentiated banks will indeed address the issue of inclusion very effectively. From early indications of what the payments banks would do, it appears that they would largely expand the mobile wallet and prepaid instruments business. Already 40 institutions have been given permissions to operate as prepaid instrument providers and six of them are going to be payments banks. The difference for these six would be in making two-way (cash) transactions as against the existing policy of having only one-way transactions by the account holder. The penetration of the mobile wallets and prepaid instruments show that they are being used for on-the-net purchases and certain types of payments. Read more at: https://www.livemint.com/Opinion/S6yWm5lUrQh6APraAOaTPI/Cashless-transactions-and-the-poor.html