Cheque payments conceding turf to digital modes

CTS begins de-growth; declines 2.3pc last year

MUMBAI: Cheque Truncation System (CTS), introduced by the Reserve Bank of India (RBI) in 2010 in order to expedite and streamline cheque payment by eliminating the physical movement of cheques, witnessed a negative growth of 2.6 per cent in volume during 2018-19, though has increased marginally by 2.3 per cent in value terms (2.4 per cent and 7.3 per cent, respectively, a year ago).

Cheque payment system seems to be conceding the turf to digital payment systems that saw exponential growth in the past more than a decade.

CTS eliminated the need to move the physical instruments across branches, except in exceptional circumstances, resulting in an effective reduction in the time required for payment of cheques, the associated cost of transit and delays in processing, etc., thus speeding up the process of collection or realization of cheques.

The volume of digital transactions using the mobile banking channel has witnessed sharp annual increases with a growth of 227.7 per cent in 2018-19 against 91.7 per cent in the previous year, according to an RBI study.

The acceleration in value terms has also been remarkable at 99.5 per cent, which was substantially higher than 12.5 per cent witnessed during 2017-18, the study observed.

Owing to policy initiatives of the Reserve Bank and the Government of India, payment systems in India have taken long strides towards digitisation. The push towards digital infrastructure has been complemented by the greater acceptance of digital modes of transaction among the general public.

Transactions through the PPI, UPI, IMPS, RTGS and NEFT systems are on a rising trend. Some noteworthy features of the Indian digital revolution are –  Paper clearing (CTS) is conceding turf to customer-friendly digital applications; UPI has superseded IMPS in terms of transaction volumes; Debit card usage at PoS is showing healthy signs of growth and PoS infrastructure has seen rapid expansion.

This amply proves that the Indian payment system is poised to fulfil the goals envisaged in the Reserve Bank’s Vision Document 2019-21. According to the Report on Benchmarking India’s Payment Systems, India has a leading/ strong position in terms of several parameters pertaining to digital transaction, technology infrastructure, and payment and settlement laws and regulation.

“At the same time, there exists vast potential for growth of digital transactions in India owing to low per capita quantum currently,” the RBI paper noted.

 

 

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