Tamil Nadu, Karnataka, Andhra Pradesh, and Telangana — states where the Bharatiya Janata Party (BJP) has the weakest footprint — registered over 25 per cent year-on-year growth in proportion of the saving bank accounts using debit cards at point of sale (PoS) machines in FY17, compared with BJP strongholds Madhya Pradesh, Uttar Pradesh, and Rajasthan, which registered less than 15 per cent growth.
According to the report published by Boston Consulting Group, Indian Banks’ Association, and Ficci, titled Hidden Treasure: How Data Can Turn the Fortunes for Indian Banks, Bihar, and Jammu & Kashmir have the least proportion of bank account holders using debit cards at PoS machines at nine per cent and five per cent, respectively. As much as 32 per cent of account holders in Telangana use debit cards at these machines — the highest in India. (The report excludes three medium public sector banks from the analysis, whose names were not specified.)
Though digital modes of payment have prospered, each with varying degrees, after demonetisation, stark regional disparities still exist, said the report. In October 2012, the Reserve Bank of India (RBI) had used the phrase ‘less cash’ — and set it as its goal — for the first time in its 2012-15 vision document for payment systems in the country. The same goal was carried over in the 2018 vision document, published in June 2016, 139 days before the demonetisation move was announced.
PoS machine: The clear winner
Apart from the growth in the usage of individual payment modes, the proportion of PoS machines, internet banking, and mobile banking doubled in FY17 over FY16, according to the report.
PoS usage was clearly the winner among the three — starting from a higher base, it registered 100 per cent growth (see chart).
Individual prepaid payment instruments were excluded from the current analysis since these started from a low base, though Unified Payments Interface, Unstructured Supplementary Service Data, and e-wallets registered highest growth rates among all cashless modes.
Most cashless modes saw growth spike in the immediate months after demonetisation but subsided in the
following months. However, PoS machines bucked the trend — its year-on-year growth has not subsided, and touched 100 per cent growth in July and August 2017 (see chart).
Growth in value transacted in five cashless modes most used by public at large — National Electronic Funds Transfer, Immediate Payment Service, cheques, debit cards at PoS, and prepaid payment instruments that include e-wallets and apps like BHIM — is nearing at a rate which was achieved months before demonetisation. Growth in volume, however, has doubled after note ban. While volume of usage of debit cards at ATMs reduced from 800 million before demonetisation to 700 million after demonetisation, usage at PoS machines doubled from roughly 140 million to 265 million.