Tag: bharat

Cash is still ‘King’ as digital divide between Bharat and India continues

Banking & Finance

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The demand for currency, which has seen a steady surge with the onset of festival season this month, has once again proved that cash is king as the digital divide between Bharat and India still remains startling.

Cash in circulation (CIC) increased by ₹11,115 crore in the week-ended October 15 to ₹29,25,263 crore against ₹29,14,148 crore logged on October 8, as per the latest RBI weekly statistics report.

The CIC is up nine per cent at ₹29,25,263 crore till October 15 this year compared to ₹26,79,937 crore logged in October 16, 2020.

In fact, currency with the public has increased by ₹63,103 crore to ₹28,14,931 crore as of September 24 against ₹27,51,828 crore as of March-end, as per RBI data.

Historically, the cash in circulation to GDP was between 10-12 per cent till FY20. However, post the Covid breakout and increase of cash in the ecosystem, CIC to GDP has inched up to 15 per cent in FY22 and is expected to remain elevated at 14 per cent by FY25.

Rise in cash requirement

The CMS Cash Index shows significant increases of cash requirement in the economy with the onset of festive season as has been happening in the past three years since 2018. CMS Cash Index shows a jump of 9-19 per cent in cash in the last three years. Rajiv Kaul, Chief Executive Officer, CMS Info Systems, one of the largest cash management companies said cash in India continues to be the dominant medium of transactions, across regions and income groups.

He said that in FY21, the CMS network moved over ₹9.15 lakh crore in currency through over 63,000 ATMs that the company replenishes and over 40,000 retail and enterprise chains, whose cash payments the company collects, processes and banks every day.

Demand for cash is expected to intensify in the coming weeks and during Diwali. Historically, during festival season, the cash demand remains high as large number of merchants still depend on cash payments for end-to-end transactions.

Cash remains a major mode of transaction with about 15 crore people yet to have a bank account. Moreover, 90 per cent of e-commerce transactions use cash as a mode of payment in tier four cities compared to 50 per cent in tier one cities.

Sanjay Mehta, CEO, Amol Readymade said though online payments at shops have increased, many customers shopping worth higher amounts still prefer to pay in cash for reasons best known to them.

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Chairman, BFSI News, ET BFSI

Banking & Finance

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HDFC Bank, largest lender by market capital, has created a new business segment of commercial and rural banking to capture the next wave of growth, said Atanu Chakraborty, the bank’s non-executive chairman, in the annual general meeting held on July 17.

“This will not only reinforce your bank’s top position in the MSME segment but also strengthen efforts to serve customers in both India and Bharat,” Chakraborty said, adding that the tech savvy young customers too would be benefited out of this move.

The delivery channels will be complemented with digital marketing, even as your bank leverages the branch channel and virtual relationship channel.

This was Chakraborty’s first AGM after the Reserve Bank of India approved his appointment in April for a period of three years. Chakraborty, a 1985 batch IAS officer of Gujarat cadre, earlier retired as secretary of department of economic affairs in the central government more than a year ago.

The bank continues its focus on corporate and Government business to drive growth.

Chakraborty put emphasis on being “future ready”, a key lubricant for growth in coming days. This, according to him, means that growth engines of corporate banking, MSME, agricultural and rural, government and institutions banking and others will be powered by robust technology and digital platforms.

“These growth engines will account for the bulk of our future investments and can be broadly classified as Business Verticals and Delivery Channels,” said Chakraborty.

During April-June quarter, HDFC Bank reported a 16.1 percent year-on-year growth in standalone profit at Rs 7,730 crore, its slowest pace since December 2016. It was lower than Rs 7,931 crore estimated by analysts in a Bloomberg poll.

In between, the chairman highlighted the lender’s efforts for environment, social and government or ESG, a global cult that qualifies for a cheap international cash pool.

“The bank has taken cognizance of ESG in its business plans and has put in place a broad strategy, which will be fine-tuned as we move ahead,” said Chakraborty.

“Your bank realizes the importance of environment protection and that it is a vital aspect within the ESG framework.”

During the pandemic many bank employees suffered due to the infection. The chairman made a special mention for those as he credited the bank for running bank operations seamlessly braving the odds.

“Many of them lost their lives. They are our unsung heroes. I join all of you in paying my respects to them,” he said.



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