Push digital banking to reduce paper money: FM to banks

New Delhi: Finance Minister Arun Jaitley on Thursday asked banks to promote digital banking in "mission mode", saying the principal objective of the government's reform is to curtail the use of physical currency.

After a meeting with heads of banks including private sector, he said a committee under Additional Secretary in the Finance Ministry is being set up to promote digital banking.

Referring to the outcry over demonetisation in Parliament, Jaitley said the politicians need to accept that habits of the people are changing and they are frequently using cards for payments.

"Some of the banks have already had a lot of success, contrary to argument which is made within the political system that Indians are not well adapted to this mode. I think political life of India has to accept that right under our nose, people are changing as far as their habits are concerned," he said.

Giving out details of digital outlets in the country, the Finance Minister said there are 14 lakh POS machines which are there at retail level and this figure has to be expanded manifold.

These machines are not manufactured in India, they are imported, he added.

"Additionally, with regard to banks' existing customers, debit cards and prepaid cards, e-wallets as well as mobile apps, are going to be utilised by them. They are ready with their infrastructure," he said.

Noting that one startling figure that came out in the course of meeting on Wednesday is that there are already 80 crore cards in circulation, of which 40 crore are being actively used by people, he said this is a change which is already happening and therefore this has to be used as a great opportunity to further catalyse this change.

"One of the principle single agenda for the meeting was to expand digital banking itself...objective of this meeting was to appeal to the banking system and prepare them in mission mode for expediting this entire exercise," he said.

Defending the demonetisation drive, the Finance Minister said one of the principal objectives of the reform that has been undertaken by the government is that physical currency must shrink.

The economy, he added however, has to expand and the trade has to expand and therefore what shrinks has to be substituted and further expanded by the digital mode.