Friday, December 23, 2016

Gujarat shock for Narendra Modi: 56 per cent RuPay cards ‘inactive

After announcing his much-debated decision to demonetise Rs 500 and 1000, Prime Minister Narendra Modi has been pitching for a cashless economy. (Reuters Image)

After announcing his much-debated decision to demonetise Rs 500 and 1000, Prime Minister Narendra Modi has been pitching for a cashless economy. To achieve that, the country needs to have a sound banking infrastructure and a strong digital penetration. But a report suggested that PM Modi’s home state Gujarat is lacking at that front. According to a State Level Bankers’ Committee (SLBC) report released Monday, about 56 per cent of the RuPay Cards issued to bank account holders in the state under Pradhan Mantri Jan Dhan Yojana were found to be “inactive”. “After the withdrawal of legal tender character of Rs 500 and Rs 1,000 from November 9, 2016, and various measures initiated by the government to give thrust to cashless and digital economy, the RuPay card distribution and activation has assumed a very high importance,” stated the report that was released after bankers in Gujarat met for the first time after demonetisation, The Indian Express report said.
There are over 90 lakh Jan Dhan accounts in Gujarat. Of these, RuPay cards have been issued against 73.85 lakh accounts. However, the number of people using RuPay Cards linked to these Jan Dhan accounts is considerably low. “Of the 73.85 lakh RuPay cards issued, only 44 per cent or 32.63 lakh RuPay cards are active,” said Vikramaditya Singh Khichi, convener, SLBC, Gujarat. Citing Lack of financial literacy is seen as a major reason for such high volumes of inactive RuPay cards, the report pointed out that despite Gujarat having 49 Financial Literacy Centers (FLC), not one has been opened in rural areas. “Out of the 49 FLCs, one FLC is in metro, 33 are in semi-urban and 15 are in urban areas, whereas no FLC is opened in rural areas,” the report stated.
Besides, of the 5,860 bank mitras or business correspondents engaged by banks in places were bank branches are unavailable, around 1,000 bank mitras were found to be inactive. “After initiation of the demonetisation move, providing banking services to the rural masses through digital mode has become all the more important, therefore, banks are requested to immediately make necessary improvement in their business correspondent model,” stated the report.
Reserve Bank of India data for October 2016 showed the number of debit cards in the country stands at 94.2 crore. People used debit cards for transactions worth Rs 2.63 lakh crore in October but over 90 per cent of these were done at ATMs. Only 8 per cent utilised these cards at POS (Point of Sale) terminals to purchase goods and services. That means nine of ten cards are used solely for cash withdrawals at ATMs. Nearly 50 per cent of the total number of debit cards are being actively used but the utilisation rate for goods and services is much lower — around 6-8 per cent. This is despite the fact that there are 15.12 lakh POS terminals across the country as against a total of 2.20 lakh ATMs.

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