Demonetisation has resulted in a wider adoption of non-cash modes of payments, as per the Reserve Bank of India (RBI) report Mint Street Memos.
The report points that there has been a reduction in the usage of cheques prior to demonetisation; and since demonetisation, cash transactions have moved in a sustained manner to non-cash mode of payment systems via retail electronic payment systems, point of sale terminals and cheques.
Within the ambit of inter-bank payment and settlement systems, paper based interbank cheque clearing system is the oldest non-cash mode, albeit with the highest settlement time lag and inherent credit and liquidity risks. Therefore, RBI has attempted to reduce the usage of cheques and facilitate increased usage of electronic payments.
The RBI has intervened to reduce the usage of paper-based instruments on several dimensions. Effective April 1, 2008, it mandated the use of electronic modes of payment for Rs 10 million and above in regulated markets and by regulated entities, which was further reduced to Rs 1 million with effect from August 1, 2008.
Monthly data on the number and amount of inter-bank payment system transactions are published in the monthly bulletin of the RBI. Non-cash interbank payment systems have been grouped into four categories -- paper-based, retail electronic payment systems, cards at point of sale (POS) terminals and the RTGS system.
Even as retail payment systems, card transactions at POS, and the RTGS system have been growing steadily, cheque volumes and values have shrunk from 2008-2009 to 2016-2017 except for 2012-2013 in value terms and 2016-2017 in volume terms.