A Study on the Impact of Cashless Policy on the Development of Banking Sector of India

Cashless economy is an economy where maximum transactions are done without using the physical cash or the means of hard cash. It is the economy where economic transactions are done with the facilities like credit card, debit cards and on-line transactions by means of fund transfer and using e-wallets. The new policy of demonetization and the stress of the government on cashless transaction is a clear message towards the good economic growth in the country. The demonetization policy has increased the use of online banking services, cheque and e- wallets. It has not only reduced the threat of theft and loss of money on the one side but also facilitated the risk-free transactions. Cashless societies are free from the curse of corruption, has considerably less amount of black money in circulation. It also paves the ways for the employment opportunities, high living standards and equal growth in the economy. The present paper aims to study the impact of demonetization and cashless society in the country. The research indicates the overall development of the market and society. It also studies the challenges faced by the government to establish the cashless economy. With limited cash in hand and an indefinite crunch in sight, most people are rushing to cashless transactions. Digital transactions bring in better transparency, scalability and accountability. The world is rapidly moving towards digitalization, and there’s no denying its presence in almost all fields of our lives. Whether it is shopping, education, banking, groceries, bill payments, tax filing or any legal documentation. Even money has gone digital, with more and more people preferring to use digital cash payment methods rather than carrying hard cash around. Reducing the economy’s dependence on the cash and making it more deviated towards these mediums would result into the betterment of the country and the economy. It will help in curbing the generation of black money. The cashless economy has attacked the parallel economy. People who hoard money under their bed, people who launder money bypassing banking channels, terrorist who need money to finance their terror will find difficulty in cashless economy. Cashless economy will boost consumption as people would not be attracted towards keeping money in banks.