The RBI and the Government are making several efforts to reduce the use of cash in the economy by promoting the digital/payment devices including prepaid instruments and cards. RBI’s effort to encourage these new variety of payment and settlement facilities aims to achieve the goal of a ‘less cash’ society. Here, the term less cash society or cashless transaction economy indicate reducing the use of physical cash for payments. Instead of cash, digital payments are made to settle the payments.
Cashless transaction economy doesn’t mean shortage of cash rather it indicates a culture of people settling transactions digitally. In a modern economy, money moves electronically. Hence the spread of digital payment culture along with the expansion of infrastructure facilities is needed to achieve the goal.
On November 8th, government withdrawned Rs 500 and Rs 1000 notes- two highest denominations in circulation. Main objectives were to fight counterfeit money and black money. The action has given tremendous boost to cashless transactions as card based and digital payments were not hindered when all high denomination cash transactions suffered because of absence of high denomination currencies.