'RBI, commercial banks spend Rs 21,000 cr on currency management'

"The major objective is to increase the adoption and use of digital payments in India so that cash usage drops to 5-6 per cent of GDP," Niti Aayog CEO said.

In an interview to Business Today's Dipak Mondal, NITI Aayog CEO Amitabh Kant said that the RBI and other commercial banks spend Rs 21,000 crore every year on currency management operations.

"Visa's report estimates the overall cost of cash upto 1.7 per cent of GDP. As the digital transactions rise in volumes, its costs, mainly in terms of MDR, will come down and will eventually become cheaper than cost of printing, storing, transporting, verifying, distributing and replacing currency," Kant said.

Referring to the objectives of the government in bringing down the cost of digital payments, Niti Aayog CEO said, "The major objective is to increase the adoption and use of digital payments in India so that cash usage drops to 5-6 per cent of GDP."

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"Cost of digital payments have fallen significantly over the years, both due to pro-active initiatives of government and increased volume of transactions. RBI has progressively reduced the caps on MDR charges on debit cards since 2012," Kant added.

Prime Minister Narendra Modi had earlier launched BHIM-Aadhar platform - a biometric-based payment system - in Nagpur. BHIM-Aadhaar Pay app will allow users to make payments through the fingerprint scanner, by authenticating the biometric details of a user with Aadhaar database.

The app, which is available for download to merchants across the country, links your Aadhaar number and biometic fingerprint to complete a transaction. PM Modi had also launched two BHIM Referral Bonus Scheme and BHIM Merchant Cashback Scheme to promote digital transactions.