A STUDY TOWARDS CASHLESS ECONOMY

WITH REFERENCE TO COIMBATORE CITY

CHAPTER ​I

​INTRODUCTION

Cash is like water a basic necessity without which survival

is a challenge. Nevertheless, cash use doesn't seem to be waning
all that much, with around 85% of global payments still made
using cash. One of the main reasons is that there is nothing to
truly compete with the flexibility of notes and coins.

Of course, the digital era is something to embrace, and new

methods of payments will continue to be introduced.

A cashless transaction refers to an economic setting whereby

goods and services are transacted without cash, either through
electronic transfer or cheque payment. The introduction of
electronic banking, online transactions and mobile banking in
India has paved way for a new era of development where the use
and demand for physical cash is gradually declining. These

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recent evolution of technology in the India financial institutions
posses interesting questions for economist, financial institutions,
business analyst and the government regarding the current
economical status, logistics, and availability of instruments to
guarantee economic growth and stability, efficiency and
effectiveness of the cashless policy.
Since the inception of humanity, various payment methods
have been used to purchase goods and services starting with the
trade by barter. The trade by barter method of transaction has
been the foundation for the introduction of money and coins to
solve the problem of double coincidence of wants and
divisibility faced by trade by barter. The use of money/coins was
introduced after the use of trade by barter method, and it has
solved various challenges associated with trade by barter, but the
use of money as an exchange medium has its own challenges
and disadvantages and can still be replaced with a better
payment system-the cashless policy.
Various advantages enjoyed by more developed nations have
prompted the Reserve Bank of India (RBI) to adopt the cashless

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policy. India’s aim to be among the biggest economy by 2020
has driven her to gradually move from a pure cash economy to a
cashless policy. Since India gained her independence in1947,
there have been different constitutional reforms, change in
economic and banking policies mainly aimed at stabilizing the
economy, enhancing social welfare and enhancing economic
growth and development.
In view of being one of the best and biggest economies in 2020,
the RBI has started implementing the cashless policy/banking in
some major states in India. The RBI have asserted reduction in
crime rates, minimized risk associated with carrying huge sums
of money, reduction in political corruption, reduction in banking
cost, improvement on monetary policy in management of
inflation and the overall growth and development of the
economy of India as advantages associated with the
implementation of the cashless policy. The advancement of
information technology has facilitated innovation in electronic
payment where goods and services are traded without the use of
physical cash. A cashless payment eliminates the usage of

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money as a medium of exchange for goods and services by
allowing electronic transfer payments or non-electronic payment
via cheques. Adopting cashless payment has numerous
advantages. Unlike traditional cash transaction, cashless
payments discourage robbery and other cash related crimes.
When people opt for other alternative modes of payment, they
tend to hold less physical cash when they shop. Thus, it
eliminates the incentive for robbers to commit cash related
crimes. As for vendors, the ease of transaction through various
payment modes will increase their revenue; improve operational
efficiency and lower operating cost.

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1.1 STATEMENT OF THE PROBLEM
“Necessity is the mother of invention” goes an old adage. Every
policy is an off-shoot of previous policy drawbacks and is
usually anchored on the need to either cushion the negative
effect(s) or to outright expunge it within legislative framework.
In India, the financial system consists of the formal and informal
sectors. While the formal sector is regulated and controlled
using legislations and other instruments of governments, the
informal sector remained largely unregulated. The nature and
operation of the informal financial sector makes it difficult to be
regulated and/or control. The consequence is that, financial
leakages are high making it difficult to access funds for
investment purposes. This impedes economic growth and
development. ​The quest for global relevance and sustainable
development had led to wide exploitation of the benefits of
cashless policy in payments system of Indian banks. The study
examines the impact of cashless policy on the profitability of
banks in India .It has become necessary for researchers to make
use of values and figures obtained in the cashless services such

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as Automated teller machine (ATM), Point of sale (POS), and
web based transaction (WBT) to examine its impact on the
aggregate return on equity (ROE) of deposit money banks in
India with a view of identifying the effect of this cashless policy
on profitability of Indian banks. The internet cost in India is still
substantially high. Internet connectivity is needed even for the
e-wallets .In order to convince people to do cashless
transactions, the cost of the internet should be lowered and free
Wi-Fi should also be provided at public places. Since the day
demonetization was announced, people are trying to use more of
card transactions to save that dreaded trip to the bank and to
save the last penny of the hard cash in hand. However, a sudden
surge in card transactions has led to connectivity issues. Several
people have faced trouble while standing in line to pay for a
transaction at a shop when the card machines have stopped
working due to an overload on the network. Connectivity issues
must be resolved before dreaming about a cashless society.
Consequently, these losses and economic leakages vis-à-vis
other drawbacks of the cash based economy triggered – off

6
agitation for change among the stakeholders in the financial
sector. A critical appraisal of their position led to the Reserve
bank of India (RBI) policy on “Cash-less economy” for India.
This was pilot tested in Lagos from November 9 2016. The
intent was to ascertain India readiness for a full implementation
across the country. This research therefore seeks to find out the
extent of readiness of India for cash-less economy. If there are
any challenges; what are they? Are there any prospects for
cashless economy in India? The stage is now set.

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 1.3 OBJECTIVE OF THE STUDY
The main objective of the study is to examine the impact of the
cashless policy on the economy of India and how it affects
economic growth. Specific objectives of the study include:

i.The aim behind this study is to assess the behavior towards

Cashless Transaction System and how far they are adapted to
this new world of cashless society.

ii.To examine the various challenges associated with the

implementation of the cashless policy/banking.

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1.4 SCOPE OF THE STUDY
In pursuance of the objective of the study; attention shall be
focused on electronic banking among other electronic commerce
implementation. In order to conduct an empirical investigation
into the adoption of Electronic banking in India​. The study will
give various insights into the various implications the
introduction of the cashless policy will have on the economy of
India. Through examining various economic indicators such as
the gross domestic product (GDP) and inflation, the study will
examine and compare growth trends and changes to determine
whether the cashless policy introduced by the RBI has a
negative or positive effect on the economy of India.
Various challenges and prospects identified in the study will
also enable various stakeholders to tackle these challenges
effectively by making policies that will address them and boost
the economy of India.

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1.5 RESEARCH METHODOLOGY
Methodology is a plan of action for a research project and
explains in details how data to be collected and analyzed and
presented so that they will provide meaningful information.
This section is to give enough background on the technical
aspects of the study to allow the reader to appraise the quality of
the information obtained.
● RESEARCH DESIGN
The descriptive research is used to identify the satisfaction and
expectation of consumer and its impact brand preferences. The
questionnaire found to be the most suitable type of research
instrument to collect the data from the retailers and consumers.
As lot of information has to collect for this study, personnel
interview relied upon with a structured questionnaire.
● Sampling size
The sample size for the consumer’s survey 150.
● Sampling method
The convenience sampling method was adopted for study with a
sample size of 150 respondents from the customers.

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● Sampling method
Convenience sampling techniques has been used to select the
respondents. Sampling design is non probability from the
customers.
● Data collection
Two types of data are collected.
➢ Primary data
Primary data are collected by conducting direct structured
interview by using questionnaire, it means all respondents are
asked the same questions in the same fashion and they are
informed the purpose of the study.
➢ Secondary data
Secondary data’s collects from internet and journals.

● QUESTIONNAIRE DESIN
​A questionnaire is an assembly of carefully questions, designed
to collect facts and options from the respondents. It is an

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important tool of the market researcher’s trade, as it is used to
generate the raw data on which the findings were based.

● STATISTICAL TOOLS USED

Analyze the data and interpret the result by using percentage
analysis.

Simple percentage method

Simple percentage analysis refers to a ratio. With the help of

absolute figures it will be difficult to interpret any meaning from
the collected data, but when percentage are found out then it
becomes easy to find the relative difference between two or
more attributes.
Percentage = No. of respondent’s × 100
Total number of respondent’s

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1.6 LIMITATIONS OF STUDY

This study on the impact of cashless policy on profitability of

commercial banks in India will cover the level of profit made by
commercial banks before and after the implementation of the
cashless policy in India.

Financial constraint Insufficient fund tends to impede the

efficiency of the researcher in sourcing for the relevant
materials, literature or information and in the process of data
collection (internet, questionnaire and interview).

Time constraint The researcher will simultaneously engage in

this study with other academic work. This consequently will cut
down on the time devoted for the research work.

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CHAPTER SCHEME

The study has been prepared in five chapters, which

are described below.

CHAPTER I: INTRODUCTION AND DESIGN OF

THE STUDY

This chapter includes introduction, statement of the

problem, objectives, methodology and limitations of the study.

CHAPTER II: REVIEW OF LITERATURE

This chapter presents the Review of Literature,

which refers the research of previous studies.

CHAPTER III: OVERVIEW OF THE STUDY

This chapter deals about the Introduction and

Profile of the company.

CHAPTER IV: DATA ANALYSIS AND

INTERPRETATION

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 This chapter deals with Data Analysis and Interpretation.

CHAPTER V: FINDINGS, SUGGESTIONS AND

CONCLUSION

This chapter shows the main findings of the study

and provides valid suggestions and conclusions.

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 CHAPTER ​II

LITERATURE REVIEW

Review of literature is essential for every researcher to carry on

the investigation successfully. Once a topic has been decided
upon, it has a bearing on the topic. In fact, review of literature
begins, with a search for a suitable topic and continues
throughout the duration of the research work. A throughout
review of literature will expose the researcher to the previous
research conducted. Their area of study which in turn would
help the researcher to decide upon the areas not studied upon
and that which the research study should concentrate on. A
careful checking should be made that present study has not been
previously carried out by someone else. The review of literature
helps to gain a firsthand know ledge about the parallel w ork
done by others. It helps the researcher to decide upon the topic,
objectives and methodology and to have a comprehensive
understanding of the present study.

Ashish Das, and Rakhi Agarwal, (201s0) in their article

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“Cashless Payment System in India- A Roadmap” Cash
as a mode of payment is an expensive proposition for the
Government. The country needs to move away from cash-based
towards a cashless (electronic) payment system. This will help
reduce currency management cost, track transactions, check
tax avoidance / fraud etc., enhance financial inclusion and
integrate the parallel economy with main stream.

Annamalai, S. and Muthu R. Iiakkuvan (2008) in their article

“Retail transaction: Future bright for plastic
money” projected the growth of debit and credit cards in the
retail transactions. They also mentioned the growth factors,
which leads to its popularity, important constraints faced by
banks and summarized with bright future and scope of plastic
money.
Alvares, Cliford (2009) in their reports “The problem regarding
fake currency in India.” It is said that the
country's battle against fake currency is not getting easier and
many fakes go undetected. It is also stated that counterfeiters
hitherto had restricted printing facilities which made it easier to

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discover fakes.

Simon and Victor (1994), “Customers’ Risk Perceptions of

Electronic Payment Systems” finds that one reason for the slow
adoption rate of electronic fund transfer at point-of-sale
(EFTPoS) is that consumers perceive that EFTPoS has a higher
level of risk than other traditional payment methods. Study
shows that EFTPoS has the lowest physical risk and highest
financial risk, the credit card has the lowest psychological risk
and highest time loss risk, while cash has the highest physical
risk and lowest performance risk. Physical risk, financial risk
and time loss risk for cash payment are significantly higher
when purchase is large while performance risk for EFTPoS and
credit card payment is significantly higher when the purchase is
small. Users of EFTPoS have a significantly higher level of
perceived financial and time loss risk than non-users, while
non–users have higher level of psychological risk. Article
suggests that in order to reduce customer’s fears and worries, it
is also appropriate to consider introducing some risk reduction
techniques. e.g. endorsements by key people in society

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(reducing psychological risk), money-back guarantee (reducing
financial risk) and live demonstration and free trial (reducing
time loss risk). Research indicates that technological excellence
cannot dictate success; a good marketing mix, prompt service
support, sufficient legal protection and educational efforts, etc.
are also relevant.

Worthington (1995), “The cashless society” paper describes the

cashless society, where clumsy and expensive-to handle coins
and notes are replaced by efficient electronic payments initiated
by various types of plastic cards is a tantalizing prospect for the
twenty-first century. Some of the interested parties stand to gain
more than others if the cashless society becomes a reality. Paper
outlines the rationale of those who are keen to promote the
cashless society and the implications for marketers charged with
winning consumer acceptance for payment by plastic card.
Commencing with a European-wide view of the European
plastic card market, focuses on recent developments within the
UK, one of Europe’s leading countries in the use of plastic
Review of Literature cards as a means of payments. The plastic

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card payment product is analyzed under the three headings of
pay later, pay now and pay before and a view is offered as to the
future prospects for each type of plastic card in contributing to
the development of the cashless society.

​Jain, P.M (2006) in the article “E-payments and e-banking”

opined that e- payments will be able to check black money.
Taking fullest advantage of technology, quick payments and
remittances will ensure optimal use of available funds
for banks, financial institutions, business houses and common
citizen of India. He also pointed out the need for e-payments
and modes of e-payments and communication networks.
Nayak, Tapan Kumar and Manish Agarwal (2008) in their
paper “Consumer’s behavior in selecting credit
cards” discussed about the factors influencing the selection of
credit cards among consumers. The major factors points out
by them are service offers, promotional offers, interest benefits,
cash benefits, ease of payments, payment charges, card
benefits and time benefit.

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R. Shenbagavalli, A. R. Shanmugapriya, and Y. Lokeshwara
Chowdary​, in their studies “Risk Analysis of
Credit Card Holders” time has come were the customers need to
know the degree of risk involved in the usage of plastic
money, and the study had helped to identify the factors and the
degree of risk exposed and the protective measures
available to minimize the financial and operational risk. It’s
clear from the study that the awareness of the customer is
comparatively less and the credit card issuing banks are
processing a strategy to educate the users of credit card.
Reddy, Ramakrishna (2006) in his article “Card products in
India”, commented about the reasons for not
attaining full growth potential among card products and suggest
remedies for growth in this field for the benefit of all
players.

Saha, Tapash Ranjan (2006) in the article “Debit cards

overtaking credit cards in India”, provided comparative
features of both credit cards and debit cards and its volume of

21
transactions from 1995 to 2005, shows that debit cards
growth is out placing the credit cards.

​Srinivas, N. (2006) in his study “An analysis of the defaults in

credit card payments”, has tried to analyses the
socio-economic profile of the defaulters of credit cards, to
identify the set of factors which contributed to such defaults and
suggest relevant measures to minimize the default cases.
Analysis of reasons indicated that economic hardship is the
major reason identified by majority of the sample units follows
by rigid payment structure and loss of job/business. The main
suggestion is that the banks concerned should redesign the
payment structure of credit card defaulters in a flexible and
affordable installment.

​Al-Laham (2009) in his research “Development of Electronic

Money and its Impact on the Central Bank Role and Monetary
policy” asserts that, in recent years there has been considerable
interest in the development of electronic money schemes.
Electronic money has the potential to take over from cash as the

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primary means of making small-value payments and could make
such transactions easier and cheaper for both consumers and
merchants. Electronic money is a record of the funds or “value”
available to a consumer stored on an electronic device in her
possession, either on a prepaid card or on a personal computer
for use over a computer network such as the internet. This paper
argues that electronic money, as a network goods, could become
an important form of currency in the future. Such a development
would influence the effectiveness and implementation of
monetary policy. Author feels that, if an increased use of
e-money substantially limits demand for central bank reserves, it
would require changes in the operational target of the central
bank and a closer coordination of monetary and fiscal polices.

V. Vimala​, in her studies “The Impact of Credit Cards on

HDFC Bank Customers in Shimoga – An Evaluative
Study” the role of credit card services and its impact in the
development of credit card services was analyzed. The banking
products and services is the key activities for the development of
the Banking sectors. The study contributes to increase the

23
quality services and usefulness from the innovations of banking
products in India.
Pinto and Beth ​(2005), “Information learned form Socialization
Agents: Is Relationship to Credit Card Use.” Shows that credit
card use among college students has reached at unprecedented
level. As a result, there is a movement to educate college
students for usage credit card in a better way. This research
examines the credit information provided by four socialization
agents (parents, peers media and schools). In addition, it
assesses the relationship between these socialization agents and
the credit usage behavior of college students. Using paired
sample ‘t’ tests, the results indicate that the amount of credit
information given by parents is significantly greater than the
information from the other three sources (Schools, Peers and
media). The more information provided by parents, the lower
the outstanding balance carried by students on their credit cards.
Media sources, educational sources and peer sources of
information showed no significant relationship with credit use

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REFERENCES

1. Annamalai, S. and Iiakkuvan R. Muthu. (2008). Retail

Transaction: Future Bright for Plastic Money, Facts of You,
May, pp. 22-28.

2. Alvares, Cliford,(2009) “The problem regarding fake

currency in India.” Business Today; 3/8/2009, Vol. 18 Issue 5,
p24-24.

3. Ashish Das, and Rakhi Agarwal,(2010) Cashless Payment

System in India- A Roadmap Technical Report 2010

4. Bansi Patel, Urvi Amin(2012) Plastic Money : Roadmay

Towards Cash Less Society PARIPEX - INDIAN JOURNAL
OF RESEARCH Volume : 1 | Issue : 11 | November 2012 ISSN
- 2250-1991

5. Jain, P. M. (2006). E- payments and E- Banking. Indian

Banker, March. pp. 108-113.

6. Nayak, Tapan Kumar and Manish Agarwal.(2008).

Consumer’s Behavior in Selecting Credit Cards. Journal of

25
Services Marketing, 4, December, pp. 49-59

7 . R. Shenbagavalli, A. R. Shanmugapriya, and Y. Lokeshwara

Chowdary , Risk Analysis of Credit Card Holders, International
Journal of Trade, Economics and Finance, Vol. 3, No. 3, June
2012

8. Reddy, Ramakrishna. (2006). Card Products in India. Indian

Banker, March. pp. 133-134.

9. Saha, Tapash Ranjan. (2006). Debit Cards Overtaking Credit

Cards in India, Professional Banker. Janauary, pp. 43 - 45.

10. Srinivas, N. (2006). An Analysis of the Defaults in Credit

Card Payments, Southern Economics . July. pp. 19 -21.

11. V. Vimala, The Impact Of Credit Cards On Hdfc Bank

Customers In Shimoga – An Evaluative Study, ABHINAV,
VOLUME NO.2, ISSUE NO.7 ISSN 2277-1166

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 CHAPTER​ ​III

OVERVIEW OF THE STUDY

The cashless transfer is soon becoming the most preferred

option and there are number of benefits of going cashless .the
digital or electronic transactions of the capital by using a net
banking. credit cards etc. is called cashless transfer. people ca
easily pay their bill online ,shop and schedule transaction and
manage all the finances using their laptops or smart phones.
going cashless not only eases one’s life but also authenticate and
formalize the transactions that are done. this helps to curb
corruption and the flow of black money which results in an
increase of economic growth. The expenditure incurred in
printing an transportation of currency notes is reduced. In a
nation like India, cashless transactions are not wide spread and
this is due to technology gap and the lack of proper education.
though these are matters of concern, the government or the
financial institutes need to address them to create a strong
cashless economy. A ​cashless economy​ describes an economic

27
state whereby ​financial transactions​ are not conducted with
money in the form of physical ​banknotes or coins, but rather
through the transfer of digital information (usually an electronic
representation of money) between the transacting
parties. Cashless societies have existed, based on ​barter​ and
other methods of exchange, and cashless transactions have also
become possible using ​digital currencies​ such as ​bit coin​.
However this article discusses and focuses on the term "cashless
economy" in the sense of a move towards, and implications of, a
society where cash is replaced by its ​digital equivalent​ - in other
words, ​legal tender​ (money) exists, is recorded, and is
exchanged only in electronic digital form. ​Such a concept has
been discussed widely, particularly because the world is
experiencing a rapid and increasing use of digital methods of
recording, managing, and exchanging money
in ​commerce​, ​investment​ and daily life in many parts of the
world, and transactions which would historically have been
undertaken with cash are often now undertaken electronically.
Some countries now set limits on transactions and transaction

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values for which non-electronic payment may be legally used.

REQUIREMENT OF CASH

The magnificence of cash is that -- it just works; even in the

isolated whereabouts of India, where the government might not
be present physically with its paraphernalia, its injunction runs
in the form of legal tender that public uses for business on an
everyday basis. A large informal economy that supports a major
part of Indian population and their livelihoods also runs in cash.
This is why Cash is yet King. The ground reality reveals, a
majority of transactions in Kirana stores, the go-to shop for daily
purchases in India are cash based transactions, because these are
generally small ticket transactions. The customers, as well as
Kirana store owners feel more comfortable in dealing with cash
for small transactions, while these merchants also provide credit
facility to customers.

However, the governments drive to incentivize consumers and

merchants alike to move to electronic modes of payments has

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not found many takers because our cash driven economy is
fuelled through rampant corruption in society and black money.
The modus operations for corruption are cash so unless we rid
our society of corruption at all levels this will be a huge task.
Imagine paying a corrupt official through your e-wallet it will
never happen.

PILLARS OF DIGITAL ECONOMY

There are pillars are those which are going to give a moral
support platform for the implementation of this grand idea
which is:

● Availability and spread of internet connections to all parts

of India; even too remote and inaccessible villages of India
● Focus on the spread of mobile connectivity throughout
India so that it is easier for the public to perform their
government service, banking , financial transaction activities
easily using mobile applications
● Public access to all the Government services , documents
and data resources through the internet

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● Training of engineering students mainly in aspects of
Information Technology as it has become very much useful in
this competitive world and also for this program’s success
● Enabling software applications such as use of bio-metric
applications for attendance taking, making transactions, etc
● Emphasis on development of electronic gadgets such as
smart cards, microatms, micro mobiles, etc
● Decisions and new ideas to be implemented by the
government will be told to the public using social media such as
face book, twitter, etc or published in a common public
accessible website called MyGov.
● Electronic governance is adopted to prevent conspiracy
issues
● Promotion of electronic delivery of services of any kind
such as health, education, financial, justice, legal enforcement
and agriculture.

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BENEFITS OF CASHLESS TRANSACTION
Cashless transfer is nothing but electronic/digital transaction
of your capital with the help of net banking, credit card, etc. You
can shop, pay your bills, schedule transactions and manage all
your finances from home, office or wherever you are with your
smart phone. It not only ease our life but also authenticate and
formalize our transactions. Electronic transactions also help in
curbing corruption and black money flow which in result
ameliorate economic growth. Digital payments indirectly
reduces expenditure in manufacturing currency notes and its
transportation. It's ingeniosity is only questionable only when it
comes to cyber fraud and hacking. In a third world country,
cashless transaction system is not that widespread due to lack of
education and technology gap which is actually a matter of
concern and must be addressed by government or financial
institutions.

● Cashless transaction does away with any hassle to carry

cash.

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● It is in keeping with the worldwide trend. People need not
carry any cash in various countries around the world as most of
the transactions there are done electronically.
● In digital transactions, you can view history of your
expenses at one go which helps you to manage your budget
easily.
● Since cashless transactions are traceable, they invite
payment of taxes, wherever applicable, thus ruling out use of
black money.
● As tax collections become easy through the cashless mode,
it accelerates the pace of economic development, making it
easier for the government to spend on education, health care,
employment generation, infrastructure and the overall welfare of
the people.
● Increased tax collections lead to reduction and
simplification of the tax structure.
● Transfer of monetary benefits to the poor and the needy
through bank transfer rules out their exploitation by the
unscrupulous middle men.

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● Cashless transactions deal a body blow to counterfeit
currency or distribution of black money through Hawala
channels. It also cuts the supply of unaccounted money used in
funding of criminal and terrorist activities.
● It saves the government substantial costs in printing and
circulation of currency notes.
● Increased liquidity of money with the banks makes them
lower their interest rates puts the huge amounts of cash
deposited with them to some productive use.
● To provide high speed ​Internet all over India even in
inaccessible remote villages
● Teach and promote the benefits of E-banking to people at
remote villages
● To help illiterate people learn how to use mobiles and bank
accounts for effective financial transaction handling
● No conspiracy involved in providing the government
services to people
● To ease the availability of government services both online
and in mobile applications

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 ● To help medical care to be provided to all parts of India
with the help of Telemedicine
● To enable the usage of all government data resources
available on the CLOUD application to all citizens of India

Moving towards a Cashless Economy: Here are the

advantages
● Cost of handling cash reduces
● Brings transparency
● Help curb the creation of black money
● Will increase the tax base and add to tax revenues.
Highlights of the incentives announced by Indian
government-
1) Discount on fuel Purchase
0.75% discount on buying petrol and diesel through debit cards,
credit cards and e-wallets.

2) POS Machines in Village:

Currently, there are 6.5 lakh Point of Sale (POS) machines

35
across the country. Villages with a population of up to 10,000
will get 2 Point of Sale machines free of cost and that one lakh
villages will be selected for this scheme of availing free Point of
Sales machine.

3) Ceiling on Monthly Charge on POS Machines

Monthly rental for POS terminals/Micro ATMs/mobile POS
given by banks will be capped at Rs 100. This is aimed at
bringing small merchants on board the digital payment
eco-system.

4) Discount on Suburban Railway tickets:

Discount of 0.50% for purchase of Sub-urban railway monthly
and seasonal tickets from 1 January 2017

5) Insurance Cover for Rail Travelers:

Railways will provide free accident insurance coverage of Rs.
10 Lakh for passengers who are booking the tickets online.
Currently, 58 percent passengers buy tickets online

6) Discount on Rail Utilities:

Railways will also offer 5 per cent discount on digital payments

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for accommodation, catering and retiring room bookings at
railway stations

7) Service Tax Exemption:

No service tax will be charged on credit and debit card payments
on transactions of up to Rs. 2,000 in a single transaction.

8) Discount on Highway Toll:

For online payment of toll on national highways using RFID
card/fast tags a discount of 10 per cent will be offered.

9) Discount on Insurance Premiums:

Customers paying payments through online gateways of public
sector general insurance companies will be given a 10 percent
discount.

The discount will be 8 percent for premium of new life policies

made through the portal of Life Insurance Corporation (LIC)

10) Rupay Cards to Farmers:

Rural Regional Banks and Co-operative Banks to issue ‘Rupay
Kisan Cards’ to 4.32 Crore Kisan Credit Card Holders. This will

37
benefit farmers of 1 Lakh village covering a total population of
nearly 75 Crore who will have facility to transact ceaselessly in
their villages for their agri needs.

And lastly,

11)​ Public dealings with government departments and PSUs

through digital mode will be free of transaction fee and MDR
charges.

Plastic Money and Cashless Society

The concerned companies also attach a no of facilities with their

services to the costumers. The customers may get cash-back
schemes, life insurances, security covers etc.

Having plastic money has a lot of other benefits. There is no

threat of your pocket being picked. You don’t need to carry
life-threatening cash. There is the transparency in all types of
transactions. No use of black money, no flow of black money

38
and therefore, no corruption.

Easy to use, no inconvenience of standing in long queues for

filling electricity bills, for gas refills, paying school and college
fees. Even the Prime Minister in the same talk show said,”​ Let
your mobile be transformed in to e-wallet.”

There may be some problems in transforming India in to

cashless India. First, there is the majority of people living in
rural areas. They are mostly illiterate. So they are not
technology-savvy. They have phobia of technology. It is ironical
they don’t believe in such things. So for such people awareness
drive must be initiated. Even such people are also in the cities.
Here, the young brigade of India as the PM addresses them must
come forward. They must start this work out of their busy
schedule. Each youngster must teach 4 or 5 people in his
neighborhood the use of Cards. Gradually it can be changed in
to mass movement. As for having the smart phones, the
companies shall certainly come out with cheaper sets.

39
 Everybody shall afford this very useful facility.

And the day will not be far off when the whole of Indians shall
use plastic money for each and every transactions. Then India
shall also become cashless money. Here we must remember one
thing that ​Rome was not built in day​. Things take time. Let the
change happen and hope for the best.

​POSITIVE IMPACTS OF CASHLESS ECONOMY

● A cashless economy will allow less tension of tackling a wallet

full of notes along with us, which is not at all safe in a world full
of anti-socials. We can rather use our mobile as a one-stop
solution for all kinds of transactions such as bill payments, fees
payments, funds transfer, recharge, etc.
● It will ensure a ‘black-money free India’ or rather the so-called
‘parallel economy’ where people bypass the banks to gather
money in their closets at home without coming under the
purview of tax will suffer a setback.
● Crime rates have already started diminishing due to cash ban as

40
 most of the terrorist activities are funded with black money that
has bore the brunt of this. In addition to this, other crimes such
as burglary, extortion, bank robbery, etc. are also declining.
● One of the biggest advantages is the increase in the span of the
income tax. Due to least involvement of cash, transactions have
to be done through banks where proper KYC verifications will
be done prior to banking transactions and hence, it will be easier
for the Government to monitor and mend the income tax evasion
by the unscrupulous persons. This will, in turn, enhance the
revenue received by the Government.
● Banks are likely to be in favor of a cashless society as it saves
them the cost of printing, inspecting, storing and guarding
‘paper’ money. Costs also include the security and labour
involved in processing and transporting cash, maintaining
automated teller machines, and regulating the amount of cash in
circulation.

. • Prohibition on the use of cash could restrict criminals such as

drug dealers and people involved in possible unregistered

41
activities like prostitution and betting from doing business.

• Eliminating cash could also mark an end to bribery and

other such corrupt motives as authorities would be able to track
virtually all transactions. Tax crimes would also stop.
• Restriction on the possession of currency would remove the
‘zero nominal bound’ as a constraint on countercyclical
monetary policy.
• According to a study by Wolman, countries could save
about 1 % of their GDP annually by switching over to
‘electronic’ currencies.
• Every reform has some pros as well as cons. There are more
than a few challenges to our proposed cashless system, which
are as follows-
• People still rely on the idea of money being ‘physically’
realizable. For some psychological reason, ‘paper’ money is
revered more than ‘plastic’ money or ‘digital’ money. Cash
keeps a check on people’s spending habits. • Anything that’s
technological comes with a baggage of risks and security threats.
A very high and unbreakable degree of security would be

42
needed as a deterrent to hackers and cyber criminals.
• The idea of a cashless society won’t be readily popular
among a certain section of our demographics. While a
user-friendly model might not necessarily require consumers to
be tech-savvy, there would still be some sort of digital
awareness required to understand the working of a society with
no cash. People who have grown up and lived through times
when a substitute for cash wasn’t even thought of might face
some difficulty in adjusting to a world without currency notes.
• All the existing cash in the world cannot be removed or
deemed ‘abandoned’ at one go. Also, when it comes to money,
reassurance is the thing that matters most. For a complete
switch-over to the new monetary model, the voluminous amount
of cash presently circulating in the market would have to be
converted into an equivalent number of ‘digital’ points.
• Developing economies have an added challenge in the form
of high levels of illiteracy among the masses. For example, in
India itself, there are large sections of rural population who
haven’t seen a bank in their lifetimes, let alone owning a bank

43
account. The only way they recognize money is through
currency notes and coins. An ideal cashless economy should
look to incorporate all the benefits of a digital monetary system
and to find solutions to the aforementioned challenges, in order
to achieve wide acceptance among the people who earn, spend
and consume.

There are many possible ways of going about this but an

outright prohibition on the use of cash is certainly not going to
work. Rather, the central bank or authority could ‘tax’ the use of
cash, leading to the value of the paper currency depreciate
relative to the reserves, say by 10% annually. By managing the
exchange rate between currency and reserves and pushing it
further, the central bank could remove the ‘zero lower bound’
and tax the use of currency, which would thus tax the criminal
and anti-social enterprises that largely rely on currency. So a full
restriction on the use of cash could be seen as a limiting version
of mildly extreme policies that tax currency by allowing its
value to depreciate relative to bank reserves. When the exchange
rate between currency and reserves becomes large enough, cash

44
in the economy would cease to exist.

CHAPTER IV

DATA ANALYSIS AND INTERPRETATION

In this chapter the data collected from primary sources have been
analyzed and interpreted. An attempt was made to identify the
impact of cashless economy towards Indian people. It deals with
the people money transaction and the socio-economic factors in
the study area.

The analysis of data requires a number of closely related

operations such as establishment of categories, tabulation and
then drawing statistical inferences. Analysis work after
tabulation is generally based on the computation of various
percentages, coefficients, etc.., by applying various well defined
statistical formulae. Interpretation refers to the task of drawing

45
inferences from the collected facts after an analytical or
experimental study. In fact, it is a search for broader meaning of
research findings.

46
​ ​ TABLE4.1

GENDER WISE DISTRIBUTION OF

RESPONDENTS

GENDER FREQUENCY PERCENTAG

E

Female 60 40.0

Male 90 60.0

150 100
TOTAL

47
INTERPRETATION

The above table reveals that out of total number of

respondents 60.0 percentages of the respondents are male and
remaining 40.0 percentages of the respondents are female in the
gender wise distribution.

It is inferred that majority (60.0%) of the respondents are

male in their gender wise distribution.

48
 CHART 4.1

GENDER WISE DISTRIBUTION OF

RESPONDENTS

49
 TABLE 4.2
​

AGE-WISE DISTRIBUTION OF RESPONDENTS

AGE FREQUENCY PERCENTAGE

Below 20years 20 13.3

21-30years 66 44.0

31-40years 35 23.3

29 19.3

Above 41 years

150 100.0

Total

50
INTERPRETATION

The above table reveals that out of total number of

respondents 44.0 percentage of the respondents are in the age
group of 21-30 years, and 23.3 percentage of the respondents are
in the age group of 31-40, 19.3 percentage of the respondents are
in the age group of above 40 years and remaining 13.3
percentage of the respondents are in the age group of below 20
years.

It is inferred that most (44.0%) of the respondents are in the

age group 21-30 years.

51
 ​CHART 4.2

AGE-WISE DISTRIBUTION OF RESPONDENTS

52
 TABLE 4.3

EDUCATION WISE DISTRIBUTION

RESPONDENTS

EDUCATIONAL
QUALIFICATIO FREQUENCY PERCENTAG
N E

Illiterate ​0 ​0

School level ​29 ​19.3

Collegiate level ​96 ​64.0

Professional ​25 ​16.7

TOTAL ​ 150 ​100

INTERPRETATION

The above table reveals that out of total number of

respondents 64.0 percentage of the respondents are acquiring

53
collegiate level education, 19.3 percentage of the respondents are
acquiring school level education and remaining 16.7 percentage
of the respondents are professional.

It is inferred that majority (64.0%) of the respondents are

acquiring collegiate level education.

​CHART 4.3
EDUCATION WISE DISTRIBUTION
RESPONDENTS

54
 TABLE 4.4

OCCUPATION WISE DISTRIBUTION OF THE

RESPONDENTS

​OCCUPATION
FREQUENC PERCENTAGE
Y

55
 Private employee 24 16.0

Government employee 15 10.0

Business 18 12.0

Agriculture 21 14.0

Others(student/housewife) 72 48.0

​Total 150 100.0

INTERPRETATION

The above table reveals that out of total number of

respondents 48.0 percentage of the respondents are
students/housewife, 16.0 percentage of the respondents are
private employees, 14.0 percentage of the respondents are
farmers, 12.0 percentage of the respondents are businessman’s
and remaining 10.0 percentage of the respondents are
government employees. It is inferred that most (48.0%) of the
respondents are student/housewife.

56
 ​CHART 4.4

OCCUPATION WISE DISTRIBUTION OF THE

RESPONDENTS

57
 ​TABLE 4.5

MONTHLY FAMILY INCOME WISE

DISTRIBUTION OF THE RESPONDENTS

MONTHLY PERCENTAGE
FAMILY INCOME FREQUENCY

Below 20000 33 22.0

20001-30000 42 28.0

30001-40000 25 16.7

40001-50000 28 18.7

Above 50000 22 14.7

TOTAL 150 100.0

58
INTERPRETATION

The above table reveals that out of total number of

respondents 28.0 percentage of the respondents are earning
income between Rs.20001-30000, 22.0 percentage of the
respondents are getting below Rs.20000, 18.7 percentage of the
respondents are earning income between Rs.40001-50000, 16.7
percentage of the respondents are earning income between
Rs.30001-40000 and remaining 14.7 percentage of the
respondents are earning above Rs.50000.

It is inferred that most (28.0%) of the respondents are

earning monthly family income between Rs.20001-30000.

59
 CHART 4.5

MONTHLY FAMILY INCOME WISE

DISTRIBUTION OF THE RESPONDENTS

60
 TABLE 4.6

DISTRIBUTION OF RESPONDENTS BASED ON

MEDIA OF AWARENESS

MEDIA FREQUENCY PERCENTAGE

Television 106 70.7

Newspaper & 15 10.0

Magazines

Friends & Relatives 20 13.3

Internet 9 6.0

TOTAL 150 100.0

61
INTERPRETATION

The above table reveals that out of total number of

respondents 70.7 percentage of the respondents aware about
cashless transaction through television, 10.0 percentage of the
respondents are aware through newspaper & magazines, 9.3
percentage of the respondents through friends & relatives, 6.0
percentage of the respondents through internet.

It is inferred that majority (70.7%) of the respondents are

aware about dove products through television.

CHART 4.6

DISTRIBUTION OF RESPONDENTS BASED ON

MEDIA OF AWARENESS

62
63
 TABLE 4.7
KNOW ABOUT CASHLESS TRANSACTION
Knowledge about People Percentage
cashless transaction

Yes 100 66.66

No 50 33.34

Total 150 100

INTERPRETATION

​The above table reveals that out of total number

of respondents 66.64 percentage of people who know about the
cashless transaction. And the 33.33 percentage of people don’t
know how to make cashless transaction.
It is inferred that majority (66.66%) of the
respondents are know about cashless transaction.

64
 ​CHART 4.7

KNOW ABOUT THE CASHLESS TRANSACTION

65
 TABLE 4.8
USE OF THE CASHLESS TRANSACTION

USE OF PEOPLE PERCENTAGE

CASHLESS
TRANSACTION

REGULARLY 75 50

NOT SO OFTEN 50 33.34

NOT AT ALL 25 16.66

TOTAL 150 100

INTERPRETATION
​The above table reveals that out of total number of
respondents 75 people know about the cashless transaction and
they use the cashless transaction. 50% of people use cashless
transaction regularly and out of 150 number of people 50 people
they know who to use the cashless transaction but the people
don’t use regularly their percentage 33.34%.and the balance 25
66
number of people they don’t use cashless transaction
ever.(16.66).

It is inferred that majority (50%) of the

respondents are know about cashless transaction and they use
cashless transaction regularly.

67
 CHART 4.8

USE OF THE CASHLESS TRANSACTION

68
 TABLE 4.9
TIME PERIOD OF CASHLESS TRANSACTION

TIME PERIOD PEOPLE PERCENTAGE

1-2​ YEARS 48 32

3-4​ YEARS 72 48

MORE THAN ​5 30 20
YEARS

150 100
TOTAL

INTERPRETATION
​The above table reveals that out of total number of
respondents 32 percentage of people used cashless transaction
3-4 years. And 48 number of people used cashless transaction

69
1-2 years. More than 5 years, 20 percentage of people used
cashless transaction
It is inferred that majority (48%) of the respondents are
used cashless transaction and they use cashless transaction 3-4
years regularly.

CHART 4.9
TIME PERIOD OF CASHLESS TRANSACTION

70
 TABLE 4.10
METHOD PREFER CASHLESS TRANSACTION

METHOD FREQUENCY PERCENTAGE

CARD PAYMENT 44 29.33

E- PAYMENT 30 20

ONLINE 48 32
PAYMENT

POS 10 6.67

WALLET 18 12

TOTAL 150 100

71
INTERPRETATION
​ he above table reveals that out of total number of
T
respondents 29.33 percentage of people using card payment
method of cashless transaction. And the 20 percentage of people
using e- payment wise cashless transaction. And then 32 of
people using online payment method of cashless transaction 6.67
percentage of people using POS method. At last 12% of people
they are using still cash payment that is called wallet.
It is inferred that majority (32%) of the respondents are used
cashless transaction for online payment and 29.3% 0f people use
cashless transaction for card payment.

72
 CHAT 4.10
METHOD PREFERE CASHLESS TRANSACTION

73
 TABLE 4.11
DIFFICULTY IN CASHLESS TRANSACTION

DIFFICULT FREQUENCY PERCENTAGE

SLOW 11 7.36
CONNECTION

COMPLEX 42 28
PROCEDURE

LACK OF 82 54.64
KNOWLEDGE

TAX 15 10

TOTAL
150 100

74
INTERPRETATION
​ he above table reveals that out of total number of
T
respondents 7.36 percentage of people are facing difficulty
through slow connection network. And 28% of people suffering
complex procedure, 54.64% of people’s difficult is lack of
knowledge, 10% of people facing difficult in taxation method.
The majority (54.64%) of the respondents are facing difficult
through lack of knowledge. The people don’t know how to make
cashless transaction and they don’t know many information
about it.

75
 CHART4.11

DIFFICULTY IN CASHLESS TRANSACTION

76
 TABLE 4.12
REASON TO CHOOSE CASHLESS TRANSACTION

‘
Reasons FREQUENCY PERCENTAG
E

safety 30 20

Easy to transfer 45 30

No carriage of cash 20 13.33

Fastest way 30 20

benefits 25 16.67

77
INTERPRETATION
​ he above table reveals that out of total number of
T
respondents 20% of people using the cashless transaction for
safety purpose, and 30% of people using cashless transaction for
Easy to transfer the amount, 13.33 % of people using for less
carriage of cash and 20% of people using cashless transaction for
fastest way of transaction, some of the people ( 16.67%) using
cashless transaction for benefits.

78
 CHART 4.12
REASON TO CHOOSE CASHLESS TRANSACTION

79
 TABLE 4.13
CASHLESS INDIA POSSIBLE PERCENTAGE

POSSIBLE FREQUENCY PERCENTAGE

YES 120 80
NO 30 20
TOTAL 150 100

INTERPRETATION
​ he above table reveals that out of total number of
T
respondents 80%of people that is 120 people give their opinion
on cashless India is possible, and balance 20% of people that is
30 people said impossible to the cashless transaction.
Majority of the people 120 that is (80%) of people’s
suggestion is cashless India is possible.

80
 CHART 4.13
CASHLESS INDAI POSSIBLE PERCENTAGE

81
 CHAPTER V

FINDINGS, SUGGESTIONS AND CONCLUSION

FINDINGS
● Majority (60.0%) of the respondents are female in their
gender wise distribution.
● Majority (64.0%) of the respondents are acquiring
collegiate level education​.
● It is inferred that most (44.0%) of the respondents are
in the age group 21-30 years.
● It is inferred that majority (64.0%) of the respondents
are acquiring collegiate level education.
● It is inferred that most (28.0%) of the respondents are
earning monthly family income between
Rs.20001-30000.
● It is inferred that majority (70.7%) of the respondents
are aware about dove products through television.

82
● It is inferred that majority (66.66%) of the respondents
are know about cashless transaction.
● It is inferred that majority (50%) of the respondents are
know about cashless transaction and they use cashless
transaction regularly.
● It is inferred that majority (48%) of the respondents
are used cashless transaction and they use cashless
transaction 3-4 years regularly.
● It is inferred that majority (32%) of the respondents are
used cashless transaction for online payment and
29.3% 0f people use cashless transaction for card
payment.
● Majority of the people 120 that is (80%) of people’s
suggestion is cashless India is possible.

83
SUGGESTIONS
● Governments and their agencies like electronic transactions.
Without cash, it’s much harder to hide money from the tax
man.
● For poorer people, cashless transactions just aren’t practical.
Prepaid credit cards are one alternative, as are vouchers that
can be bought in grocery stores for cash and used to pay for
iTunes, Amazon, Spottily, and other online services​.
● Cash is an important safeguard against economic volatility.
At times of distress, when the confidence in the banking
system erodes, citizens are likely to withdraw cash in large
numbers and hold it in its physical form. This is known as a
bank run and has occurred periodically in modern financial
history.
● The oblique pricing structure that treats and prices the credit
and debit card in a similar manner has several drawbacks
that hinder its growth / popularity and some features of the
product even cause potential risk to the users. We list few of
the drawbacks.

84
CONCLUSION
Even as ordinary citizens queue up for cash and economists
are busy estimating the extent to which economic growth will be
hit because of the ongoing drive to replace high-value banknotes,
there has been a lot of discussion on whether the government can
use the current situation to push India towards a cashless future.
In his radio address on Sunday, Prime Minister Narendra Modi
once again pitched for creating a cashless society. To be sure, the
government on its part is working at various levels to reduce the
dependence on cash. Opening bank accounts for the unbanked
under the and adoption of direct benefit transfer is part of the
overall idea to reduce usage of cash and increase
transparency​.​The government will have to create conditions not
necessarily by creating cash shortages to push cashless
transactions to a threshold level after which the network effect
will take over. India may not become a cashless economy in the
foreseeable future, but it needs to reduce its unusually high
dependence on cash to bring in much needed transparency and
efficiency in the system.

85
 A STUDY TOWARDS CASHLESS ECONOMY

With reference to Coimbatore city

1. Name : …………………………………….

2. Address : ……………………………………………

……………………………………………………………
3. Gender :
[ ] Male [ ] Female

4. Age :
[ ] Below 20 [ ] 20-30
[ ] 30-40 [ ] Above 40

5. Qualification :
[ ] Below SSLC [ ] Diploma
[ ] Graduation [ ] post graduation
[ ] professional

6. Occupation :
[ ] Student [ ] House wife
[ ] Salaried [ ] Self Employed

7. Annual Income:
[ ] Not earning [ ] Below 30000
86
 [ ] 30000-60000 [ ] 60000 and Above

8. Do you have knowledge on cashless transaction?

[ ] Yes [ ] Partially Yes
[ ] No
9. Through which Source do you came to know about cashless
transaction?
[ ] Advertisement [ ] Friends & Relatives
[ ] Magazines & Newspaper
10. How often you use cashless transaction. ?
[ ] Regularly [ ] Not very Often
[ ] Not at all

11. Since how long you were using cashless transactions?

[ ] 1to2 years [ ] 3 to 4 years
[ ] more than 5 years

12. What method do you prefer on cashless transaction?

[ ] card payment [ ] E-Payment
[ ] Online Payment [ ] POS
[ ] Wallet

87
13. What difficulty do you face in cashless transaction?
[ ] Slow connection [ ] Complex procedures
[ ] Tax [ ] Lack of Knowledge

14. What are the benefits do you receive in cashless

transaction?
[ ] Return back money [ ] Fast transfer
[ ] No need to carry cash

15. Through which Source do you came to know about

cashless transaction?
[ ] Advertisement [ ] Friends & Relatives
[ ] Magazines & Newspaper

16. Do you think cashless India is possible?

[ ] Yes [ ] NO

17. Where do you use cashless method often?

[ ] Petrol bunks [ ] Stationary

88
 [ ] Payment of bills

18. Why do you choose cashless transaction?

( multiple choice)
Reasons Tick
safety
Easy to transfer
No carriage of cash
Fastest way
benefits

19. After Demonetization your usage of Cashless Transaction

is increased?
[ ] Yes [ ] No

20. Suggestions
________________________________________
________________________________________

89
________________________________________
________________________________________
______________________

90