The Growth of
Over the past two decades, India has pushed hard to become a less–cash society. In the early 1990s, the Reserve Bank of India spearheaded the development of technological infrastructure that facilitated the creation of a payment and settlement ecosystem. In 2007, the Indian Parliament passed the Payment and Settlement Systems Act, after which the central bank released a series of vision documents for the periods of 2009–12, 2012–15, and 2015–18. These papers were supplemented by initiatives to promote wider acceptance and deeper penetration of electronic payments in India.
The Government of India has encouraged the shift to a less–cash society with its push for digital payments through the JAM Trinity: the Prime Minister’s Jan-Dhan Yojana, Aadhaar, and mobile connectivity. We welcome the government’s efforts, including the short and medium-term measures outlined in the Office Memorandum of February 29, 2016, to accelerate the adoption of digital payments.
To understand better how the country might benefit from increased digitisation of payments, this study endeavours to estimate the cost of cash to the Indian economy, and the possible gains from reducing the cost of cash over the next five years. The report also discusses policies and practices adopted by countries like Indonesia, South Korea, the United Kingdom, and Uruguay to help transition to a less–cash society. Based on these experiences, and taking into account the proposed measures and state of play, we propose a roadmap for India to achieve its goal of increasing the penetration of digital payments in the future. In doing so we layout stretch aspirations for the country.
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