Ministry of Finance junks reports on scrapping of cheque book facility

Junking reports in a section of news media about cheque books being the next casualty in the Prime Minister Narendra Modi-led government's agenda of digital push, the Ministry of Finance on Thursday clarified that there was no such proposal to withdraw the bank cheque book facility. The reports emerged when Secretary General of Confederation of All India Traders (CAIT) said on Wednesday that "in all probability, the Centre may withdraw the cheque book facility in the near future to encourage digital transactions."

Talking to the reporters at the launch of 'Digital Rath', a joint initiative of the CAIT and Mastercard, Khandelwal said the government needed to encourage the use of debit and credit cards. "The government spends Rs 25,000 crore on the printing of currency notes and another Rs 6,000 crore on their security and logistics. Moreover, banks charge 1 per cent on payments through debit and 2 per cent through credit cards. The government needs to incentivise this process by providing subsidy directly to the banks so these charges can be waived," Khandelwal said.

The Finance Ministry, meanwhile, clarified in a tweet that there was no proposal to withdraw cheque book facility. "The Government of India has reaffirmed that there is no proposal under consideration to withdraw the bank Cheque Book facility," Finance Ministry tweeted.

Post-demonetisation, the government has been pushing digital transaction with an aim to move towards less cash society. Following demonetisation, digital wallets, quick response (QR) codes, near field communication (NFC) technology, sound wave systems, virtual cards, unified payment interface (UPI) and Aadhaar Pay have given much needed push to cashless transactions. However, more than 95% transactions happen via cash and cheques.

In fact, most of the business transactions are done through cheques. The cheque is used by businesses against the delivery of goods where the supplier secures payments due in future from its customers. It is also common in dealing with the purchasing and selling of land. Landlords too prefer taking rent from tenants via cheque. But cash usage is still strong.