The Reserve Bank, the central bank, has set a new target of clearing $100 billion worth of cash by end-March next year.
The bank, which was also asked to review how it manages cash balances in the country’s cash economy, said it was clear from its data that there was a need for a cashless payment system and the Reserve Bank should consider this as part of the next steps of the implementation of the Digital India programme.
“Cash transactions are a very important means of payment and one of the reasons why the Indian economy is growing.
We are also looking at cashless payments for the convenience of cash-consuming households, as it is a cost-effective solution,” the central banker said.”
There are certain circumstances under which cashless transactions are not feasible,” he added.
“This is because of a lack of sufficient capacity in the cash economy and the lack of a formal mechanism for managing cash in India.”