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Modi's banknotes' diktat will help India's move to cashless economy

Prime Minister Narendra Modi eradicated the use of Rs 500 and Rs 1000 bank notes from the economy in the government's fight against black money and terror funding.

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Financial services companies Mastercard and Visa have hailed Prime Minister's move to ban high value currency notes in the BJP government's fight against black money and terror financing, saying that it will boost the government's push to move towards a cashless economy. The view was supported by several financial tech and digital payments start-ups, who are all 

PM Narenda Modi, in a televised address to the nation, announced the removal of Rs 500 and Rs 1,000 banknotes effective from November 8, with new Rs 500 and Rs 2,000 notes coming into the system soon. While temporary withdrawal limits have been imposed for people, banks and ATMs remained shut on Wednesday and ATMs will remain shut on Thursday too, for retail operations, while the now-invalid notes are pulled out of the system and replaced with lower denominations like Rs 50 and Rs 100 notes. 

The BJP government wants to move the Indian economy to digital payments and electronic transactions, essentially make it cashless, to ensure cash transactions remain at a minimum and money is accounted for. 

Commenting on the development, Mastercard's Porush Singh, Country Corporate Officer India and Division President, South Asia, said, "Mastercard welcomes and supports Prime Minister Modi's announcement regarding the ban on high value currency notes as it fundamentally addresses the underlying 'cash engine' that drives the shadow economy. It will enable further growth in the Indian economy by encouraging cashless transactions and reducing crime rate."

Visa Group Country Manager, India & South Asia, T R Ramachandran, said, "We welcome this bold move by the Government of India towards eliminating black money and accelerating India towards a cashless economy. The Visa report ‘Accelerating Growth of Digital payments in India’ that we published on Oct 5th pegs the cost of cash to 1.7% of India’s GDP. This is one of the most significant steps that we have seen so far towards India becoming a cashless economy." 

Both Mastercard and Visa said they would work with the government to enable India's move to being a digital economy. 

"The PM's bold action and leadership is a critical step in positioning India to be a leader in the global cashless and digital economy movement. Mastercard is committed to working with the government to provide the cashless solutions that combat corruption, create growth, and inclusion for all members of society," Mastercard said. 

Visa said it is committed to expanding access to electronic payments across India providing a safe, convenient and flexible alternative to cash.

Kunal Bahl, Co-founder and CEO, Snapdeal which also owns online recharge company Freecharge, said, We welcome the Government's bold and courageous move to weed out black money, which will have significant long term benefits for the economy. With this, the quantum of India's economy moving through the digital pipes will witness massive growth. Both Snapdeal and FreeCharge are committed to supporting all such initiatives."

 

Kumar Karpe, CEO TechProcess Payment Services

This will give a huge push to cashless payment systems like online payments, mobile payments, Point of Sale terminals, etc. We are expecting a huge surge in digital payment volumes, and our systems are geared to process the expected volume surge in coming days.

Amrish Rao, CEO PayU India

We need to understand that despite the advent of digital payments service providers and mobile wallets, India has predominantly been a cash-dependent economy. While recognising the challenges, we favour the move by the government, since it is essentially meant to curb black money. Besides, we certainly believe that it will inspire and urge more users to opt for digital payments, since they are immune to money laundering and other harms that cash is inherently susceptible to. In less than past 24 hours, our transactions have dramatically increased to 80%. We are further expecting our average daily transactions of 12 lakh to increase to 25 lakhs in the coming months ."

Akshay Mehrotra, Co-Founder & CEO EarlySalary.com

Modi's move will see a new wave of fresh energy in digital payments, transactions and digital banking, which will change the current cash economy. This is a lesson for the younger generation for years to come, to make sure they are transparent in their financial transactions.

Bipin Preet Singh, CEO MobiKwik

This mind-blowing initiative by Modi to curb black money will do down in democratic India's history as more impactful than the 1990's economic reforms. Within a 50-day period, a billion Indians will change their payments' behaviour. It will benefit the growth of digital payments and digital banking in India. We are excited to be a part of this historic moment.

Millions of Indians who never adopted digital payments will now scramble to figure out mobile wallets and debit cards for daily life transactions. 

 

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