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System not yet ready for cashless economy, RBI Governor tells PAC

‘RBI working on cutting transactions costs on digital payments’

RBI Governor Urjit Patel, who appeared before the Public Accounts Committee looking into demonetisation and its impact on monetary policy, told the panel that the country’s infrastructure is not ready for a cashless economy.
He assured the panel that the RBI is working out ways to reduce transaction costs involved in digital payments.
As was the case when he appeared before the Finance Standing Committee on Wednesday, Patel, did not face any tough questions at the meeting held here on Friday. He was given 15 days to reply to the questions posed by the members.
“We will take a look at his replies and if necessary will call him again,” a member said.
Patel said the cash flow will be normalised very soon and reiterated that the decision will have a short-term impact on GDP growth.
The BJP members in the panel protested over questions being posed to the Governor on demonetisation stating that the agenda of the meeting was the review of monetary policy. However, majority of the questions were on the withdrawal of notes.
“He said infrastructure, including the spectrum, is not ready for digital payments at the moment. He, however, said that the RBI will promote a cashless economy,” another member said. The panel will meet the Finance Ministry officials soon after the first lap of Budget session.
Fake notes issue
In the three-and-a-half-hour-long meeting, there were questions on fake currencies as well.
SP member Naresh Agarwal reportedly came with fake notes of ₹2,000 and urged the Governor to take action. The BJP members said the decision to demonetise certain high value notes is a “bitter medicine” to save the economy.
“Everything will improve after some time,” a BJP panel member said while defending the Modi government.
There were also questions on the controversy about the allegations by the Congress that foreign company De La Rue was allowed to print Indian notes.
Members also expressed anguish over the alleged discrimination against cooperative banks by the RBI.
They wanted to know the exact amount of withdrawn currencies that has been deposited back to the banks. Patel apparently demanded more time to reply to the question.
Sorce The Hindu