In its ongoing efforts to drive the use of electronic payments, the government will encourage public sector banks and non-banking institutions to enhance point of sale (PoS) terminal networks substantially, to enhance the total PoS terminals in India to five million by 2017.
At present, India has around 1.2 million PoS terminals with 693 machines per million people while China and Russia have 4000 POS machines each per million.
On Monday, the government had put out draft proposals to boost electronic payments by giving income tax rebates by waiving off surcharge on various goods and services like railway ticket bookings, convenience charge while booking an airline ticket, surcharge on petrol among other benefits.
Sunil Srivastava, deputy managing director, State Bank of India, told DNA: "The cash-to-GDP ratio in developed countries is less than 5%, but in India, the ratio is 12%. To discourage the use of cash, we are encouraging customers to move towards digital banking. Handling, printing currency is an expensive process. So, plastic money and electronic transactions will be the focus of the bank during the year."
SBI is already planning an exponential expansion in its PoS terminals with a planned increase of terminals by 1, 50,000 during the financial year. The bank has about 2, 20,000 terminals.
AP Hota, chief executive the National Payment Corp of India (NPCIL), said: "For a country like India, electronic payments are easier to handle than cash. The country has 1.2 million PoS terminals, which is quite inadequate. We need to get at least 5 million such terminals across the country so that electronic transactions can increase and use of cash decrease."
According to latest RBI data, the total number of POS terminals in India are 1,125,675 as on April 2015 compared to 560 million debit cards and 210 million credit cards.
As per the latest report by Ernst and Young, India has 693 machines per million while similar emerging economies like Brazil has 32,995 terminals per million people. China and Russia each have around 4000 terminals per million people.
Bank of India is also planning to increase its PoS terminals by nearly 25,000 terminals during the financial year, which will take its total to about 30,000, the report said.
A senior BoI official said: "All banks are looking at digital banking in a big way, so that the traffic can be diverted away from the brick-and-mortar branches to alternative channels like Internet banking, ATMs, PoS. the use of plastic money is also being encouraged by the government which will be beneficial for the banks as it will get cost-effective."