MAJOR RESEARCH PROJECT

On

“A STUDY OF IMPACT OF DEMONETIZATION ON DIGITAL PAYMENTS”

Submitted to

Devi Ahilya University, Indore

For partial fulfillment of the requirement for the Degree of

Master of Business Administration 4th Sem (finance and marketing full time)
Batch 2017 - 2019

Guided by: Submitted by:

Mrs.RuchiMehraAkshitPhatak put your guide name
MBA 4th SEM

IBMR, IPS ACADEMY

Rajendra Nagar, A.B. Road, Indore – 452012 (MP)

1
 PREFACE

The bookish knowledge of any program, which we get from educational institutions, is not enough to
be used in our day-to-day life. The more practical knowledge we have, the more beneficial it is for
our learning.

To make the students aware of the working of the business world every student of MASTER OF
BUSINESS ADMINISTRATION (4th Sem full-time ) has to undergo a major research project where
he/she experiences many aspects of business under the supervision of Professional Managers.

I strongly believe that the knowledge gained from this experience is more than the knowledge gained
from the theories in the book.

PLACE: INDORE
DATE : AkshitPhatak

2
 CERTIFICATE

This is to certify that I AKSHIT PHATAK of Institute of Business Management and

Research, IPS Academy, Indore of MBA ( FINANCE AND MANAGEMENT )
program has prepared Major research Project report on topic “A STUDY OF IMPACT
OF DEMONETIZATION ON DIGITAL PAYMENTS” under my guidance.

Internal Examiner (Guide) External Examiner

Director
IBMR, IPS Academy

3
 STUDENT DECLARATION

I AkshitPhatak Student of Institute of Business Management and Research, IPS

Academy, Indore of MBA FINANCE AND MANAGEMENT ) program has prepared
Major research Project report on topic “A STUDY OF IMPACT OF
DEMONETIZATION ON DIGITAL PAYMENTS”.

The Research as per my knowledge is original and genuine and not published in any
research Journal previously.

AkshitPhatak

MBA (4th sem)

2017-19

4
 ACKNOWLEDGEMENT

I often wondered why the project reports always began with acknowledgement. Now, when I have
undertaken project myself, did I realize that project report involves not just the researcher but so
many people that help in making the research possible. Therefore, I take pleasure in beginning the
most beautiful part of the report.

I fall short of words to express my gratitude to my guideMrsRuchiMehrawho despite their busy

schedule were able to find some time to guide me through trouble and solve my problems to the best
of abilities. Without their unfailing guidance, encouragement and patience this project would not
have been possible. It has been a learning experience under him/her.
I am thankful to my faculty guideMrs.RuchiMehrawho gave me detailed instructions during my
MRP.

5
 INDEX
S. No. Contents Page No.

1 Abstract 7-8

2 Introduction 9-12

3 Review of Literature 13-14

4 Objectives 15
5 Advantage of Using Digital Payments 16

6 Future of Digital Payments 17

7 History of Demonetization in India 18-19

8 Demonetization On Indian Economy 20-23

9 Cashless Payment System 24-25

10 Benefits of Cashless Economy: 26

11 Factor Affecting /Influence The Digital Payments: 27-29

12 Boost In Digital Payments 30-31

13 32-35
20 Best Digital Wallets in India
14 Demonetization & Paytm 36-38

15 Research Methodology: 39-40

16 Analysis of Data 41-47

17 Conclusion 48-49

18 Suggestion 50

19 Webliography 51

Abstract no need

Demonetization is the hottest new topic in the country. Financial analysts everywhere are talking
about what the long-term impacts could be while several businesses and people are caught up in the
unprecedented cash crunch that has been caused. With the retail businesses taking an all new
dimension thanks to the growth of the internet, the business models and the payment methods have

6
all changed. And this complex model is now further complicated by the introduction of
demonetization. Though it is true that this can lead to a more positive effect in the long term, talking
about the short term effects, it has been predominantly adverse for the customers and businesses.

Online money transactions and digital payments are not as difficult as they were before. This makes
it easy for you to smartly tackle the sudden ban on old currencies. And online transactions do come
with a lot of benefits. This is the right time to unleash the full potential of your debit cards. Make
online payments, apply for easy loans, pay all your bills and do a lot more with just a debit card.

This paper looks at the impact that Demonetization has had on the various payment methods in India.
Specifically, it aims to see how the various digital platforms have evolved with the advent of
demonetization Method: Various digital platforms of payment like payment apps, net banking, etc
were studied extensively. Their evolution before and after demonetization is looked at, and compared
against one another. Findings: De-monetization has given a big boost to the digital payment
platforms in India. They are fast, reliable, easy to learn and navigate. It is able to fulfill the
requirement specifications. Which platform an individual decides to choose is dependent on many
factors. While an extremely handy and useful software component, it is not without its share of faults
and glitches that needs to be resolved soon. Security is still a major concern regarding these
platforms. Applications: These payment portals help to make payments more convenient and easy to
use. One does not have to go to the bank to do monetary transactions.
Flipkart, Amazon, Snapdeal and many other online shopping sites are ruling the retail segment. These e-
commerce sites, however, took an unplanned spike in their revenue soon after the implementation of the ban
on the higher denomination currency notes.

Most of the orders that were placed with the cash on delivery option could not be delivered because the online
retailers could not accept old notes. All the overheads and the costs incurred in shipping the orders go a waste
in case of undelivered orders. This is indeed a significant loss for the e-commerce players.

If there is one thing that has been growing at a good pace after demonetization, it is online payments. Rather
than being tied up in the cash crunch and standing in the never ending ATM queues, more people switched to
online payments. There has been a rise in the number of debit and credit card transactions. Even smaller
vendors have introduced cashless payment methods.

Online retailers also have introduced impressive discounts for all the cashless payments. This encourages
more customers to choose a payment method other than COD and claim their discounts and in turn helping the
e-commerce businesses retain a reasonable cash flow.

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 There has been a significant growth in the mobile wallet sector. Transferring money as well as
making payments for online orders is easy with mobile wallets. More people have begun to fill up
their mobile wallets resulting in the growth of the mobile wallet providers like Paytm, Mobikwik and
more.
Unified Payments Interface (UPI) will see a steady growth. The support of the government has also
been in favor of promoting UPI for online payments.

Online payments are quick, hassle free and time saving. And EMIs are the best part about online
payments. This avoids causing a financial strain when you make a large value purchase. Know how
easy it is to get instant loans for all your appliance, furniture and gadget purchases. So do not let the
ban on currency notes of higher denominations stop you from buying all that you wanted.

Introduction

On 8 November 2016, the Government of India announced the demonetization of all ₹500 and
₹1000 banknotes of the Mahatma Gandhi Series.[2] The government claimed that the action would
curtail the shadow economy and crack down on the use of illicit and counterfeit cash to fund illegal

8
activity and terrorism.[3][4] The sudden nature of the announcement and the prolonged cash shortages
in the weeks that followed created significant disruption throughout the economy, threatening
economic output.[5][6][7]

Indian Prime MinisterNarendra Modi announced the demonetization in an unscheduled live televised
address at 20:00 Indian Standard Time (IST) on 8 November.[8][9] In the announcement, Modi
declared that use of all ₹500 and ₹1000 banknotes of the Mahatma Gandhi Series would be invalid
past midnight, and announced the issuance of new ₹500 and ₹2000 banknotes of the Mahatma
Gandhi New Series in exchange for the old banknotes.

The BSE SENSEX and NIFTY 50 stock indices fell over 6 percent on the day after the
announcement.[10] In the days following the demonetization, the country faced severe cash shortages
with severe detrimental effects across the economy. [11][12][13] People seeking to exchange their bank
notes had to stand in lengthy queues, and several deaths were linked to the rush to exchange cash. [14]
[15]

Initially, the move received support from several bankers as well as from some international
commentators. The move has also been criticised as poorly planned and unfair, and was met with
protests, litigation, and strikes against the government in several places across India. Debates also
took place concerning the move in both houses of parliament.[16][17][18][19] The move reduced the
country's industrial production and its GDP growth rate.

By the end of August 2017, 99% of the banned currency had been deposited in banks: only
approximately ₹14,000 crore of the total demonetised currency had been discarded, leading analysts
to state that the effort had failed to remove black money from the economy.

The plan to demonetise the ₹500 and ₹1000 banknotes was initiated between six and ten months
before it was announced, and was kept confidential, with only ten people being completely aware of
it. The preparations for printing new ₹500 and ₹2000 bank notes began in early May 2016. The
Union cabinet was informed about the plan on 8 November 2016 in a meeting called by the Indian
Prime Minister Narendra Modi.

Public announcement

On 8 November 2016, Modi announced the demonetization in an unscheduled live national televised
address at 20:15 Indian Standard Time.[8][9] In the announcement, Modi declared circulation of all

9
₹500 and ₹1,000 banknotes of the Mahatma Gandhi Series as invalid effective from the midnight of
the same day, and announced the issuance of new ₹500 and ₹2,000 banknotes of the Mahatma
Gandhi New Series in exchange for the old notes.[33]

After Modi's announcement, the Governor of the Reserve Bank of India, Urjit Patel, and Economic
Affairs Secretary, Shaktikanta Das, stated that while the supply of notes of all denominations had
increased by 40 percent between 2011 and 2016, the ₹500 and ₹1,000 banknotes increased by 76
percent and 109 percent, respectively, owing to forgery. They said that forged cash was used to fund
terrorist activities, and that the demonetization was meant to counter this.[34] After demonetization,
only 0.0035% of the ₹1,000 banknotes were found to be fake.[35]

Patel also stated that the decision had been made about six months ago, and the printing of new
banknotes of denomination ₹500 and ₹2,000 had already started. However, only the top members of
the government, security agencies and the central bank were aware of the move. But media had
reported in October 2016 about the introduction of ₹2,000 denomination well before the official
announcement by RBI. This statement has led to much debate, because the Reserve Bank governor
six months before the announcement was RaghuramRajan, while the new banknotes have the
signature of the newly appointed governor, Urjit Patel.

The Reserve Bank of India stipulated that the demonetised notes could be deposited with banks over
a period of fifty days until 30 December 2016. The banknotes could also be exchanged for legal
tender over the counter at all banks. The limit for such exchange was ₹4,000 per person from 8 to 13
November, was increased to ₹4,500 per person from 14 to 17 November, reduced to ₹2,000 per
person from 18 November.[2][38][39][40] International airports also facilitated an exchange of notes for
foreign tourists and out-bound travelers, amounting to a total value of ₹5,000 per person. [41] The
exchange of banknotes was stopped completely on 25 November: Modi had previously stated that
the volume of exchange would be increased after 24 November

Cash withdrawals from bank accounts were restricted to ₹10,000 per day and ₹20,000 per week per
account from 10 to 13 November.[2] This limit was increased to ₹24,000 per week from 14
November 2016.[38][39]

A daily limit on withdrawals from ATMs was also imposed varying from ₹2,000 per day till 14
November,[43] and ₹2,500 per day till 31 December.[38][39] This limit was increased to ₹4,500 per day
from 1 January,[44] and again to ₹10,000 from 16 January 2017. Limits placed vide the circulars cited

10
above on cash withdrawals from Current accounts/ Cash credit accounts/ Overdraft accounts stand
withdrawn with immediate effect. RBI increased the withdrawal limit from Savings Bank account to
Rs 50,000 from the earlier Rs 24,000 on 20 February 2017 and then on 13 March 2017, it removed
all withdrawal limits from Savings Bank Accounts.[45]

Under the revised guidelines issued on 17 November 2016, families were allowed to withdraw
₹250,000 (₹2.5 lakh) for wedding expenses from one account provided it was KYC compliant. The
rules were also changed for farmers who are permitted to withdraw ₹25,000 per week from their
accounts against crop loans

The Specified Bank Notes (Cessation of Liabilities) Ordinance, 2016 was issued by on 28 December
2016 ceasing the liability of the government for the banned bank notes, and also imposing fines on
people found carrying out transactions with them after 8 November 2016; or holding more than ten
of them after 30 December 2016. The ordinance also provided for the exchange of the bank notes
after 30 December for non-resident citizens and others on a case by case basis. [47][48] Fuel pumps,
government hospitals, railway and airline booking counters, state-government recognised dairies and
ration stores, and crematoriums were allowed to accept the banned ₹500 and ₹1,000 bank notes
auntil 2 December 2016

A fortnight before the official announcement, a news report in the Hindi daily DainikJagran quoting
RBI sources speaking of the planned release of new 2000 rupee notes alongside withdrawal of 500
and 1000 rupee notes.[50][51] Similar news was reported in The Hindu Business Line on 21 October
2016, also describing a forthcoming 2000 rupee note and the possible withdrawal of 500 and 1000
rupee notes.[52] The chairman of the State Bank of India had also openly spoken in April 2016 about
the possibility of demonetization of ₹500 and ₹1000 notes.[53]

Prominent businessmen stated after the announcement of demonetization that they had received prior
warning of the move, allowing them to convert their money into smaller denominations. [54] A BJP
MLA from Rajasthan, Bhawani Singh Rajawat, claimed in a video that wealthy businessmen were
informed about the demonetization before it occurred. He later denied the comments. [55][56] More than
30 politicians belonging to the BJP were arrested and investigated for having unaccounted money in
the new 2000 rupee denomination

In the year after demonetization, digital transactions have grown considerably. Indeed, disruptions in
the digital space have not only revolutionised the way we manage our finances, they have also made

11
contactless and cashless transactions the preferred choice of many among us. And, with digital
wallets, quick response (QR) codes, near field communication (NFC) technology, sound wave
systems, virtual cards, unified payment interface (UPI) and Aadhaar Pay offering top-notch secure
payments options, the smartphone has become the most sought after all-in-one device.

"We have registered 3.5X surge in digital payments this year and we will continue adding new online
and offline use-cases, enabling more consumers and merchants to experience the power of digital
payments," says Kiran Vasireddy, COO, Paytm. Along with the growing usage of digital wallet in the
past one year, the number of ATM transactions have also risen, showing the co-existence of cash and
digital in the Indian economy. As per RBI reports, digital transactions have grown 13.5 per cent from
Rs 109.82 trillion in August to Rs 124.69 trillion in September; the highest was in March at Rs
149.59 trillion. Mobikwik currently has 65 million app users, which has more than doubled after
demonetization. "Over the past one year, the industry has only grown over 55 per cent and has added
150 million users in the e-wallet platforms, along with 10 million merchants" says UpasanaTaku, Co
Founder, Mobikwik

Digital wallets and credit/debit cards have been the alternative to cash after demonetization to cope
with the cash crunch. "There was a surge right after demonetization. After cash circulation was back
in the market the peak has come down but the numbers are almost 35 per cent higher than what it
was pre-demonetization" says Praveen Dhabhai, COO of Payworld. A lot of people use wallets on a
daily basis for a wide range of services including online recharges, utility payments, travel bookings
and movie ticket among others.

Literature Review
Chronological order
Deepika Kumari (2016) in her studies of Cashless Transaction: Methods, Applications and
Challenges concluded that the as the demonetization applied by government of India, Government
trying to aware its people for cashless transaction by various kinds of advertisement method but still
a large number of people are awaiting for the introduction of cashless transaction. This paper is a

12
study of cashless transaction its different methods, advantages and challenges. This paper will help to
understand the basic of the cashless transaction.

Piyush Kumar (2015) conducted a study an analysis of growth pattern of cashless transaction
system concluded that the cashless transaction system is reaching its growth day by day , as soon as
the market become globalized and the growth of banking sector more and more the people moves
from cash to cashless system. The cashless system is not only requirement but also a need of today
society. All the online market basically depends on cashless transaction system. The cashless
transition is not only safer than the cash transaction but is less time consuming and not a trouble of
carrying and trouble of wear and tear like paper money. It also helps in record of
the all the transaction done. So, it is without doubt said that future transaction system is cashless
transaction system.

Saini, B.M(2015) in his studies of ̳ Demonetization –Metamorphosis for Cashless India, conclude
that cashless transaction will lead to e - transactions. There has been a drastic improvement in
electronic transactions which may boost cyber crime, so we make people aware of ways to keep
credit, debit cards safe and to train them to teach the measures to keep our transactions hassle free.
We need a specially trained cyber police, forensic labs with state of the art evidence gathering tools,
public prosecutors who understand technology and cyber courts to punish cyber criminals. Hope
India will be in line of developed countries in the days to come

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
discover fakes.

Ashish Das, and Rakhi Agarwal, (2010) in their article “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.

13
Jain, P.M (2006) in the article “E - payments and e - banking” opined that e - payments will be able
to check black ”An Analysis of Growth Pattern of Cashless Transaction System. 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

Nuthan K, Rashmi P.C, in their article An E-payment System: Literature Review, “E-payment
becoming a daily part of our life. This paper gives the brief description of e-payment system. It also
explains the types of e-payment gateway system and e-payment protocols. The security requirements
of the e-payments are discussed. The problem of misusing the data related to the customer in e-
payment is addressed.

OBJECTIVE

Any activity done without an objective in a mind cannot turn fruitful. An objective provides a
specific direction to an activity. Objective may range from very general to very specific, but they
should be clear enough to point out with reasonable accuracy what researcher wants to achieve
through the study and how it will be helpful to the decision maker in solving the problem. This study
is an attempt to analyze the consumer perception towards the digital transactions and also to know
about the impact of Demonetization of digital payments. So the scope of this study is to cover the

14
full view of the customers and their preference pattern.

No need

1.To know the importance of digital payment after Demonetization as perceived by the people of

India.

2.To assess the people trust and confidence in digital payment system after Demonetization.

3.To assess the uses pattern and nature of transaction done by the people after Demonetization.

4.To identify the factors of digital payment after Demonetization.

Advantage of using digital payments

Low cost: The government and companies have been promoting digital payments by offering lower
cost. For example, HDFC Bank has recently waived of charges on online transactions through RTGS
and NEFT. Similarly, you do not need to pay service tax on card transactions up to Rs 2,000.

15
Saves time: Transfer of money between virtual accounts usually takes lesser time than wire transfer
or a postal one, which may take may take several days. It is also better than standing in queues or in
lines at a bank or post office.

Convenience: The biggest motivator for digital transactions is the ease of doing these transactions.
With proper access to internet, financial transactions can be performed anytime and anywhere which
attracts people to this segment. These transactions can be performed from anywhere without the need
to be physically present there.

Low risk: Using digital wallet reduces the risk of losing your physical wallet or it getting stolen.
Online fraud in cyberspace also exists but with proper measures e-currency is secure.

User-friendly: The government and the wallet companies have been working on their services and
they have come up with much better and user friendly apps. There is also 24/7 support team to help
and deal with any queries.

Controlling expenses: It is also said to be controlling your expenses as you can automatically keep
track of expenses. These accounts contain the history of all transactions representing the money that
has been spent which can be checked anytime. Controlled expenses result into higher investing,
suggest experts.

Discounts: In the initial days of demonetization, the wallet companies lured customers with
attractive offers and discounts which have visibly come down in the current times. Online websites
and portals linked themselves with the mobile wallets and heavy offers and discounts were given by
them. Still, getting those offers and discounts is one of the reasons of the growing popularity of
online and digital transactions.

The future of digital payments

Demonetization has given the much required push to digital transactions. But there is still a long way
to go for the digital payment system to become mainstream. With the government pushing for it and
increased adoption by consumers, companies and experts are hopeful that it will continue to rise in

16
the future. "We (Indian economy) are in a transition phase, digital mode of payments and cash will
continue to co-exist, and presumably, even flourish simultaneously moving India towards becoming
a 'less-cash' economy" says, Ravi B Goyal, Chairman & MD, AGS Transact Technologies.

"The push to get the unbanked on a banking platform is the key first step. On top of that, the
penetration of cheaper data services provides the right conditions for digital payments to explode
soon" says, BrijrajVaghani, Founder and CEO, Ridlr, an app for cashless transportation. After
demonetization a lot of new wallets were launched and the existing ones in the market have been
performing exceptionally well. "Going forward, we will play a key role in bringing millions of small
merchants to the formal financial ecosystem, and make wealth management and financial services
accessible to them. We believe this is a great opportunity for us to offer financial services and
contribute to the growth of our country" adds Paytm'sVasireddy.

History of Demonetization in India

The whole country was taken aback when Prime Minister Narendra Modi on November 8 announced
that the currencies in the denominations of Rs 500 and Rs 1,000 will be invalid post midnight.
However, the lower denomination –Rs 10, Rs 20, Rs 50, Rs 100 and coins –will be valid. He further

17
announced that new notes of Rs 500 and Rs 2,000 would introduce shortly. Thus, giving millions of
Indians a panic attack.

But what do you think was this the first time an Indian currency was banned of a sudden?

Well, the answer is NO. A look into the past will make you realise that India is no new to
demonetization. Demonetization has been implemented twice -1946 and 1978 – in the past.

Image Source

The first currency ban:

In 1946, the currency note of Rs 1,000 and Rs 10,000 were removed from circulation. The ban really
did not have much impact, as the currency of such higher denomination was not accessible to the
common people. However, both the notes were reintroduced in 1954 with an additional introduction
of Rs 5,000 currency.

Rs 500 and Rs 1000 notes were introduce in 1934 and after four years in 1938, Rs 10,000 notes were
introduce.

18
The second:

That came in 1978; the then Prime Minister of India Morarji Desai announced the currency ban
taking Rs 1000, Rs 5000 and Rs 10,000 out of circulation. The sole aim of the ban was to curb black
money generation in the country.

Similarities in 1978 and 2016 ban:

 The note ban by Morarji Desai also aimed to drive away black money out of circulation in the
economy. Hence, The High Denomination Bank Notes (Demonestisation) Act was
implemented.
 Narendra Modi announced the currency ban is an address that was broadcasted across all
news channels. Similarly, Desai announced the ban over the radio after which the banks were
closed the following day.
 Both the affairs were kept confidential.

Differences in the ban:

 Unlike Modi, Desai didn’t have the backing of the RBI Governor. The Governor I.G. Patel
believed that the ban was implemented simply to immobilize the funds of the opposition
party. Patel also believed that people never store black money in the form of currency for too
long.
 It didn’t have much effect on the people and affected only the privilege few. While the recent
ban had shaken the whole country.

Coming back to 2016, there is also a buzz that smaller denomination currency notes like Rs 50 and
Rs 100 will also be replaced by incorporating new features and design. And that reminds us of an
incident dating back to early 70s, when there were rumours of withdrawing Rs 100 note from
circulation, and immediately hoards of people were seen rushing to banks to exchange their Rs 10
and Rs 20 currencies.

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 Demonetization On Indian Economy

Demonetization refers to an economic policy where a certain currency unit ceases to be recognized
or used as a form of legal tender. In other words, a currency unit loses its legal tender status and a
new currency comes into circulation. From time to time the Government formulates fiscal policies
that are meant to encourage economic growth. A lot of black money circulates in the economy and
most of them are unaccounted because the sources of income are not known to the government. To
wipe this money out of circulation, the government can demonetize currency notes, so that the
money holders are forced to deposit their money in banks or lose their wealth. It is a strategy that
worked quite well for many countries. Demonetization is also referred as the
process of moving people from a cash - based system to a cashless system (digital system). Keeping
hard cash is a practice that is not encouraged by the government and other financial institutions.
Therefore, moving people to a cashless system is a favorable economic policy for the development of
the country. On November 8th 2016, the Prime Minister of India Mr.Narendra Modi announced one
of the boldest moves in the history of India by banning Rs.500 and Rs.1000 currency notes. The
impact of banning the
currency notes was felt by every Indian Citizen. Now Let‘s analyze the political, economic and
social impact of the demonetization in detail.

1 POLITICAL IMPACT
The political impact of demonetization was felt by the whole country with majority of the educated
people offering support to the demonetization. The speeches against black money made by Prime
Minister Mr. Narendra Modi are attracting huge crowds turning into vote banks for BJP. There is a
growing support for BJP from the educated people and especially the youth for the bold step taken to
curb black money. The opposition parties however oppose the demonetization drive. The continuous
adjournment of both
the houses indicates this scenario. Dr. Manmohan Singh, ex-prime minister of India has said this
move as unlawful against democracy. His statement came out in the Rajya Sabha in the presence of
Mr. Narendra Modi. Opposition parties strongly oppose the demonetization implementation process.

2 SOCIAL IMPACT

20
The banning of Rs.500 and Rs. 1000 notes was released suddenly and the worst affected was the
common man. The social impact was drastic with marriages facing severe issues with cash
transactions. People conducting marriages must produce
the marriage invitation to withdraw 2, 50,000 and above. This has caused great difficulty among the
public. The impact on the health care sector was huge with hospitals refusing to accept the old
currency. The common man faced severe issues transacting in the hospitals with old currencies and
several cases of death had been registered for not attending the patients due to demonetization
Salaried employees faced the issue on the opening day of the month with their salaries credited in the
bank account but they
were able to withdraw only 2,000 rupees from the ATM machines. Many salaried people
have gone to the bank branch to withdraw their full salary amount with loss of pay.
Social problems in the form of road blockades and quarrels arouse with people waiting in long
queues before the banks and ATM machines. People become restless spending an entire day to
withdraw money. Several deaths have been registered as a result of waiting in long queue.
Pensioners are worst affected with no special provisions made for senior citizens in banks.

3 ECONOMIC IMPACT
Demonetization is viewed as a measure of sterilizing the money. RBI plays the pivotal role in this
demonetization drive. All the banking experts welcome this demonetization measure. Considering
the banking sector, both public and private sector banks are facing the severe issue of Non -
Performing Assets (NPA) or Bad loans to the tune of 10 lakhs crore including the stressed assets
according to RBI sources. This demonetization
measure will help banks to recover some bad loans and improve their financial position.
Considering the entire economy of India as a whole, demonetization will make most of the
transactions to be done through the formal banking sector. This will increase the transparency with
people and corporate paying tax properly. Income Tax department has reported that only 4 percent of
the individuals pay income tax while this figure has t
o be increased to 28 percent. The demonetization will help achieve this target of the
Income tax department. When black money within India gets curbed, it will result in the overall
economic development of the nation

21
CASHLESS ECONOMY IN INDIA
The Digital India is a flagship program by the Government of India with a vision to transform India
into a digital society and knowledge economy. ―Faceless, Paperless, Cashless‖ is one of professed
role of Digital India. India continues to be driven by the use of cash; less than 5% of payments
happen electronically, however the finance minister, in the budget speech, spoke about the idea of
making India a cashless society, with the aim of mopping black money. Even the RBI has also
recently announced a document — “Payments and Settlement Systems in India: Vision 2018”—
with a plan to encourage electronic payments and to make India to move towards a cashless economy
in the medium and long term.

Speed and satisfaction of operations for customers, no delays and queues, no interactions with bank

staff required.

 Reduction of tax avoidance because it is financial institutions based economy where transaction

trails are left.

 It will curb generation of black money

 Will reduce real estate prices because of curbs on black money as most of black money is invested

in Real estate prices which inflates the prices of Real estate markets

22
CASHLESS PAYMENT SYSTEM

As the banking system evolved, it became easier, safe and even remunerative to keep one's money in
a bank account and it became still more easier and safe to use „transfer of money in bank accounts‟
for making payments for the economic transactions. This was more so for large value transactions.
Actually, it is now used equally for effecting low value transactions also. For effecting this transfer of
money in bank accounts, a
payment instrument was needed to instruct the bank to effect that transfer. This instrument was the
cheque for a very long period. Thus a system consisting of the cheque as the payment instruments
and an infrastructure around the cheques consisting of the drawee bank, the drawer bank and the
cheque clearing houses came on the scene and were known as the payment systems.
With the developments in the information and communication technology, world over, different
kinds of payment instruments and innovations in the instruments and the payment systems evolved.
It happened in India too and that's the story I will be narrating now. Today we can boast of a strong
retail payments framework in the country comparable to that of any advanced country, and perhaps
even better than some of them in terms of the variety and efficiency. Various types of payment
instruments exist to meet the requirements of different users in different circumstances – bank
accounts, cheques, debit and credit cards, prepaid payment instruments, etc. There are various
systems to meet the remittance requirements of users depending upon their time criticality and cost
sensitivity – National Electronic Funds Transfer (NEFT), Immediate Payment Service (IMPS),
Aadhaar Enabled Payment System (AEPS) and recently Unified Payments Interface. The need for
making bulk and repetitive payments is met by systems such as Electronic Clearing Service (ECS),
National Automated Clearing House (NACH) and Aadhaar Payment Bridge System (APBS).

AIM FOR LESS - CASH & NOT CASH - LESS

 Cash greatly facilitates transactions and there are legitimate high value transactions in every
economy.
The fundamental idea behind this exogenous shock is to raise the cost of illegal transactions and
not going cash less.
 Going less - cash is a fine balance between maintaining ease of financial transactions and curbing
malpractices.
 As cash facilitates crime because it is anonymous and big bills are easy

23
DEMONIZATION EFFECT ON ELECTRONIC PAYMENT SYSTEM

The government wants India to go cashless, but doing so is not easy. Cashless transactions have their
downsides for consumers. But, for those with access to digital payments, rejecting cashless options
or hesitating to embrace technology is also not the answer, especially in the wake of the cash crunch
brought on by the government's
demonetization move. Questions of access aside, a cashless world has its benefits. Embracing
cashless options and being an informed consumer who is aware of the available systems and their
designs increases the chances of a convenient and consumer-friendly experience. Traditionally,
online transactions were do ne either by
providing debit and credit card details or through net banking interfaces. While there were issues of
security, which kept improving, the payment experience was not very user - friendly. These options
were also largely restricted to computers with access to internet.
But after the smart phone revolution, things have changed entirely. India has seen an explosion in
digital payment options, from e - Wallets to the Unified Payment
Interface to a combination of the two.
There are many cashless payment options available in India. 5 Best cashless payment options in
India.

1)E Wallets –E Wallets have become very famous nowadays. After demonetization, use of e wallets
has been implemented at a very large - scale. These e wallets allow users to make payments using
your mobile number or by scanning a QR code which takes place in a jiffy. All you need to do is
simply download a wallet like paytm.

2)UPI – UPI also known as Unified Payments Interface is another great way to go cashless. Unified
payments interface also called UPI is system of payments. Using unified payments interface, people
can transact using their smart phones. To pay using this system called unified payments interface,
you need 2 important things: Smartphone and a Bank Account.

3)Plastic Money – Plastic Money means debit cards and credit cards that are used at ATM‟s for cash
withdrawal and POS machines while shopping. Having a debit or credit cards make you burden free
from carrying cash.

24
4)Net Banking – Net Banking is another handy way to get cashless transactions done. All you need
is a bank account with e banking facility enabled on it. You can transfer funds to others account from
the comfort of your home. There is no need of going to your bank to get transfers done. You can
make all payments and transfers yourself. This is a very convenient way to go cashless in India as
well.

5) Aadhaar Card – Aadhaar Card enabled payment system allows a person to pay using his aadhaar
card if it is linked to his bank account. Once you link your aadhaar card to your bank, you can make
payments using your finger prints

25
Benefits of Cashless economy:

 In Financial year 2015, RBI spent Rs. 27 billion on just the activity of currency issuance and

management.

This could be avoided if we become cashless society.

 It will pave way for universal availability of banking services to all as no physical infrastructure is

needed other than digital.

 There will be greater efficiency in welfare programes as money is wired directly into the accounts

of recipients. Thus once money is transferred directly into a beneficiary‘s bank account, the entire

process becomes transparent. Payments can be easily traced and collected, and corruption will

automatically drop, so people will no longer have to pay to collect what is rightfully theirs.

 There will be efficiency gains as transaction costs across the economy should also come down.

 1 in 7 notes is supposed to be fake, which has a huge negative impact on economy, by going

cashless, that can be avoided.

 Hygiene – Soiled, tobacco stained notes full of germs are a norm in India. There are many such

incidents in our life where we knowingly or unknowingly give and take germs in the form of rupee

notes. This could be avoided if we move towards Cashless economy.

 Reduced costs of operating ATMs.

26
 FACTORS AFFECTING /INFLUENCING THE USAGE OF THE Digitalpayments:

People thought that country near to corruption less:- the objective behind the decision of
demonetization is the reduction of corruption from the economy and people are supporting this move
even when the are facing so much of problems in their daily lives. E-payment will help in the
reduction of the corruption because it is a transparent payment system.. itPeople are trying to get
used of online transactions to make economy a cashless economy.

Mismanagement of ATM – Calibration of Rs.500 and Rs. 2000 (Work of Third Party) : - ATMs are
not receiving the proper cash during the cash crunch period, has not been calibrated properly, only Rs
100 notes are being fed. Earlier guards use to visit once in a day to check cash and other facilities but
now nobody comes for even it
he week.

Mismanagement in Circulation of Money in rural and Urban area as per requirement:-the

initiative of demonetization has caused a chaos across the country. People want bank notes, but the
current supply of currency is not meeting the demands of rural as well as urban areas as per their
requirement. Needs are huge but the circulation of money is scarce. It has created headache as ATMs
and banks regularly run out of cash.

Long Q in front of Bank and ATM :- banks and ATMs are hit by the shortage of currency but the
needs of the people are abundant which results in the long queues in front of banks and ATMs which
isa wasting their precious time standing in queues.. Many of the ATMs are shut for the long time
from the period of demonetization came into effect. This has led to the increase in the demand of
online transactions.

Special Discount offer on online payment/ Money saving:- economic policy in the country can
impact the growth of online transactions. E-commerce companies are boosting their sales by
attracting and provoking the population by providing special discount offers on the usage of online
payment system, making them understand that it will save their time as well as money also. Due to
these offers, people have started using modes of online payment.

27
Threat of Income Tax Department:- the threatening statement that the cash deposits will be taken
up for the income tax enquiry was a serious and true statement. Income tax department has made
mandatory rules to furnish PAN and reporting to them by bank has made people alert and alarming.

Non Availability/ short availability of Cash at Bank:- when cash is not available at the banks and
ATMs, people who are well equipped with the plastic money and other modes are not wasting their
time lined up outside the banks and ATMs. They have increased the usage of online transactions and
trying to get habitual of the online trans
actions.

Non availability of Cash in Market as near about 86% of cash has been wiped out from the
market:- India is a country dealing with 90% of transactions in cash and when suddenly 86% of
cash has been wiped out from the market, it brings people with shock. Non availability of cash in the
market forcing the people to meet their daily demands through the online transaction systems or
modes.

Transparency:- online tools brings transparency to the dealings. It make things easy for others to
see what actions are being performed. All the information is being disclosed to everybody making
use of it.

Threat of robbery, pick-picketer:- plastic money like debit card and credit card can be carried with,
mobile apps, e-wallets can be used without the fear of theft and cash robbery from home. Online
transactions lessens this fear of people using online tools as compared to people using cash for their
transactions.

Audit trial/ Track all transaction anytime anywhere:- dealing online helps in tracing all the
details of the transactions in a one click. It gives convenience to track all the details of the day to day
dealings anywhere and anytime. It is simple, secure and free and ensure the entire payment process
traceable.

Recording for Future as evidence –For Bank, People, Government and Tax Department:- the
transactions dealt in the electronic modes can be recorded as evidences for future. It can be preserved
by banks, people, income tax departments as well as for the government. It maintains authenticity
and reliability of the records maintained electronically.
28
Easy and Fast:- dealing online is easy and cost effective for both seller as well as the purchaser. It is
a dealing that saves your time and money simultaneously.

Advertisement / campaign / Motivation to use people- Television Newspaper:-people are

influenced by the advertisements and campaigns which are undertaken to motivate them to try and
go cashless. These adds and campaigns are shown in the television and newspapers again and again
to encourage people towards online transactions.

Threat to the people that Money do not become paper due next move of Government:-one of
the important factor influencing the usage of online transactions is the fear of another move to be
taken by the government. Demonetization was the move that brings people in the big shock and now
people are trying to be transparent as possible as they can in terms of money because of the fear and
threat of the next unexpected move by the govt.

Time constraint (Leaving Job and standing in a Q) Costing and easy of doing payment for
people:- wasting time in the long queues in front of the banks and ATMs is making people angry all
the time. It is making their life very difficult. For the small amount only they have to take leave from
their jobs and standing in the Q and then too people need to be lucky for the cash because it don’t
take time to ATMs running out of cash.

Easy to carry debit and Credit Card:- it is very easy to carry plastic money in the pockets without
the fea will ensure a good governance system and it will be an important tool in the reduction ofthe
corruption.

It will get rid of terrorist activities:-when everything becomes transparent, it will help in tracking
the terrorist activities as well. One of the Motive of demonetization was the end of terrorism and
digitization will be helpful in getting rid of the terrorist activities.

29
BOOST IN DIGITAL PAYMENTS

It has been exactly one year since Prime Minister Narendra Modi launched what has been decreed India’s
greatest offensive against black money – the demonetization of INR 500 (old) and INR 1000 notes. Delivered
a bolt from the blue, the PM addressed the nation on Friday (8 November, 2016) at about 8 pm and said that
the aforementioned currency notes would be withdrawn with immediate effect. The government also
announced the introduction of new INR 500 and INR 2000. A number of regulations and restrictions were
placed on the people of India in reference to cash withdrawal from bank accounts and exchange of
demonetized notes causing widespread anguish. Now, a year hence, with adequate cash having been infused
into the economy, let us take an objective look at the demonetization drive and the developments that
followed.

The demonetization caused much discomfort and misery to the common man – that much is
undeniable. Through most of November (after the demonetization was announced) a maximum cash
withdrawal limit of INR 4000 was announced. Exchange of demonetized currency before 31
December resulted in endless queues outside banks and post offices. All 2,05,509 ATMs in the
country were initially shut down and even after recalibration a maximum of INR 2000 could be
withdrawn on a single day. Numerous tales of people falling ill and even dying in the queues were
reported but the worst hit were daily laborer and people from the lower rungs of the economy who
depend largely on cash payments. Handloom, consumer goods, jewellery, auto, and paints were some
of the severely affected sectors that suffered from lack of liquidity. Small companies which
traditionally record an earning between INR 250 million and INR 500 million on an annual basis
were severely impacted. Year-on-year sales in these companies went from -19.3 percent in FY 2015-
16 to -53.6 percent in FY 2016-17. The common man silently suffered through the demonetization
drive in the hope that black money would be flushed out through this exercise and this will bring
long term benefits to the country.

Government Promotes Digital Payments

The greatest positive outcome of the demonetization exercise undertaken by the GoI was the boost it
imparted to digital payments, taking the nation closer towards becoming a cashless economy. In
December 2016, PM Modi launched the BHIM (Bharat Interface for Money) app – an indigenous
mobile payment application based on UPI (Universal Payments Interface). The application allows
smartphone users to link their bank accounts and make payments through UPI. Over 30 leading
public sector banks and private banks can be connected with BHIM. The government also

30
incentivized the use of BHIM by announcing the Digi-DhanVyaparYojna and the Lucky
GrahakYojna. By February this year, BHIM was downloaded 17 million times setting a record.

Spike in Cashless Transactions

UPI based BHIM certainly made its mark with the masses, more so because it allowed payments to
non UPI based recipients and also because it did not require an active internet connection for the
payments to be made. In urban regions, however, the use of mobile wallets such as PayTM, Google
Tez, Airtel Money, Citrus Pay and Freecharge began to rule the roost. From the local vegetable
vendor to cabs on hire, everyone seemed more than willing to accept digital payments. This is a
temporary phenomenon, said critics of the government but statistics reveal a different story. About a
year after the announcement of demonetization, the people remained keen on conducting digital
transactions. Some 68 million UPI transactions were conducted across India in October 2017 – a
massive increase from the 0.3 million in November 2016. 82 million MPS transactions were
conducted in October 2017, up from 36 million in November last year. Integration is now king and a
number of private digital wallets such as PayTM have linked with BHIM and its UPI based interface.
Not wanting to be left behind, public sector banks in India too have been actively promoting their
mobile banking apps and e-wallets over the past year. SBI Pay by SBI, Axis Pay by Axis Bank,
eMpower by Canara Bank and PayZapp by HDFC are among the most used mobile wallets (by
Indian banks). The launch of India Post Payments Bank (IPPB) is another major development aimed
at capitalizing the vast outreach of India Post and promoting digital payments. There remains much
debate about the quantity of black money flushed out by the demonetization drive. There are
numerous lessons in policy implementation that our government may wish to take but one thing
remains clear. The exercise has ushered in a new era of digital payments and cashless transactions.

31
20 Best Digital Wallets in India

The demonetization of Rs 500 and Rs 1000 currency notes has been working largely in the favor of
digital wallet startups. India has seen a phenomenal increase in the number of digital wallets and is
slowly moving towards being a cashless country. And with the transaction limit on digital wallets
being increased to Rs 20,000, it just keeps getting better.

1) Airtel Money:

With the Airtel Money app, users can easily recharge prepaid accounts or pay postpaid bills. You can
also shop online if your digital wallet has cash loaded in it. It’s also extremely safe as every
transaction or payment you make requires a secret 4-digit mPin.

2) Citi MasterPass:

Citi MasterPass, a free digital wallet, helps make checking out while online shopping a speedier
process. Once you’ve stored all your payment and shipping details in your Citi Wallet, simply click
on the MasterPass button and it will take care of the rest.

3) Citrus Pay:

Citrus Pay, one of the top e-wallets in India, it offers a Citrus wallet for customers as well as payment
solutions to businesses. With a strong base of 800 million customers, it has definitely earned its spot
as one of the best mobile wallets in India.

4) Ezetap:

Ezetap, a Bangalore based digital payment solution founded in 2011, offers business owners
solutions to accept card payments via electronic devices. It also send customers e-receipts through an
SMS or email.

5) Freecharge:

Freecharge, one of the most famous names right now when it comes to digital payment in India, has
been known to target the youth in all their promotions. With equivalent amount of coupons given for
every recharge you make, it’s a great option to save while paying your bills online.

32
6) HDFC PayZapp:

HDFC PayZapp, making digital payment in India simplified with one click payments, is one of the
top online wallets in India. Users can easily compare flight and hotel tickets and even buy music or
pay bills with the app. Simple connect your debit/credit card once and forget to worry about making
payments.

7) ICICI Pockets:

While you might find a Pocket card redundant, considering you’re opting for an e-wallet app to
avoid using a card, they do have a pretty neat wallet app. It’s VISA powered and can be used on any
Indian website, or to transfer money to email ids, WhatsApp contacts, and also just tap and pay your
friends easily.

8) JioMoney:

JioMoney, launched recently in 2016 by Jio, is a digital payment app. With JioMoney, one can
receive great discounts and offers. Users can also bookmark their frequently visited retailers so
shopping can be made quicker than usual.

9) Juspay:

JusPay Safe is a payment browser with over 650+ transactions in a day. They offer a browser with
which users can make payments quickly via cards with 2 clicks.

10) LIME:

LIME, launched by AXIS in 2015, was the first mobile app in India to integrate wallets, shopping,
payments, and banking. Apart from the usual features like making payments, they also let you
analyze what you spend. With a cool feature that rounds up all your change and invest in a
deposit and a shared wallet tool, they’ve definitely earned their spot in the top list of mobile wallets
in India.

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11) Mobikwik:

Mobikwik is a Gurgaon based e-wallet payment system in India that helps its users store their money.
Founded in 2009 by Bipin Singh and UpasanaTaku, this digital wallet enables users to recharge, pay
bills, and make third-party purchases with one tap.

12) MomoeXpress:

MomoeXpress, a Bangalore based digital wallet in India, claims to have the fastest checkout system.
Though they’re only available in Bangalore, they have a wide range of solutions they offer to
residents on the city. From paying for your rickshaw ride to salons & spas, there are over 3000
outlets available at your disposal.

13) MoneyonMobile:

MoneyOnMobile, authorized by the Reserve Bank of India, enables users to buy goods, products,
and services from registered merchants. It’s a multilingual app that reaches remote areas of the
country to millions of users making online payments available to a wide population.

14) Mswipe:

Mswipe, the first mobile point-of-sales solution in India was founded in 2012. They don’t exactly
offer an app, but they do provide a machine that can be attached to your mobile device to accept card
payments. This may not be a digital wallet app but it does support going cashless.

15) Ola Money:

Ola Money, launched in 2015, is a digital wallet in India offered by Ola. While it’s majorly being
used to make payments for Ola cab rides, making cashless traveling a dream come true, it can also be
used to buy groceries or flight tickets and much more.

16) Oxigen:

Oxigen, a FinTech company founded in July 2004, is one of the major providers of digital payment
in India. Along with making online purchases and paying bills, you can also send gift cards to your
dear ones.

34
17) PayMate:

PayMate, founded in 2006 by Ajay Adiseshann, launched PayPOS in 2012, an app for small business
owners to receive payments conveniently via debit cards and credit cards and also process electronic
transactions.

18) Paytm:

Paytm, launched in 2010, is currently the largest mobile wallet app in India. With payments via
Paytm being accepted almost everywhere, it’s hard not to simply switch to it completely. From
paying mobile bills to buying movie tickets, there’s almost nothing you can’t do with Paytm.

19) PayUmoney:

PayUmoney, a part of PayU India, is a free payment gateway solution for merchants to collect
payments from customers via debit/credit cards or net banking, and more. They also offer SMS and
email invoicing for merchants that do not have a website.

20) State Bank Buddy:

State Bank Buddy, a product of State Bank of India, is an online wallet in India that’s available in 13
languages. Users (non SBI account holders too) can send money via Facebook, or to other bank
accounts, book hotels or movie tickets and much more!

35
Demonetization & Paytm
India’s biggest fintech has doubled its user base in a year and is on track to have 500 million
customers by 2020. It is backed by Ant Financial and Softbank and spurred by state policy on
financial inclusion

It is a year since Indian prime minister Narendra Modi turned his country’s transactional finances
upside down with his demonetization programme. The dust has now settled. People will argue for
years about the pros and cons of what he did, but there is near universal agreement on the company
that did best out of the whole thing. Paytm was already big news before Modi’s demonetization
shock last November 8, when he withdrew all the Rp500 and Rp1,000 banknotes from circulation to
curb corruption and the black economy, he said, apparently without warning anyone in the banking
sector that he was about to do so.

The rags-to-riches story of Paytm’s founder, Vijay Shekhar Sharma, who not so long ago would walk
20 kilometres across Delhi because if he paid for an auto-rickshaw he would not have enough money
for dinner, and who was flat broke as recently as 2003, was by then already well-rehearsed in Indian
media. The journey of his company from a prepaid mobile webcharge website in 2010 to an Alibaba
and Ant Financial-funded juggernaut that is the largest mobile payment service platform in India was
well underway. But demonetization gave the company an almighty lift. Modi’s move completely
pole axed India’s cash transaction economy and forced people, and in particular the small merchants
who are legion in the country, to look at alternatives. The Paytm wallet was the simplest answer and
people flocked to it. It went from 125 million wallet customers before demonetization to 185 million
three months later, and it has continued to grow, hitting 280 million users by November 2017.
Sharma and his staff saw an opportunity and put everything they had into it; Sharma has said that he
and his staff did 600 days’ worth of work in 60. They ran full-page ads the following day praising
Modi for “taking the boldest decision in the financial history of independent India,” a stunt that was
not without its critics. Opposition politician Rahul Gandhi suggested Paytm stood for “Pay to Modi”
(it is actually Payment through mobile).

It is important for any company like ours that has such big ambitions to have partners and
shareholders who share our conviction on the journey - MadhurDeora, Paytm

36
Sharma’s catch-phrase is ‘Go big or go home’ – it is on his office wall, on his coffee mugs, all over
his interviews – and he certainly ran big on demonetization. Looking back on it now in New Delhi,
Paytm’s CFO MadhurDeora, who joined from Citi a month before demonetization, is keen to point
out that the company was already very much on its way before Modi’s unexpected bounty came
along. “We were doing payment solutions for offline merchants since October 2015,” he explains,
making it the only company outside the card networks that was doing so in India at the time. “So
when demonetization happened, we had the product and the sales infrastructure already. It took a lot
of effort to scale up, but the foundations were already there. “Clearly, it made the adoption for a lot
of users a lot faster,” he says. “It went from being one of the options to be being a necessity of the
hour, and our brand become a lot bigger.” Signing up merchants at a cracking pace (in October COO
Kiran Vasireddy said Paytm had gained five million merchants with QR code acceptance in a year
and that the company processed $1.6 billion of transactions during the recent Diwali month, up
three-and-a-half times year on year), the company learned a great deal about merchant and consumer
behaviour and the power of the offline merchant network.

Banking

One thing that was on its way with or without demonetization was Paytm’s engagement head-on
with the world of banking. Back in 2014, the Reserve Bank of India released draft guidelines for a
new kind of institution called a payments bank. These would be able to accept restricted deposits (no
more than one lakh rupees, or Rp100,000, per customer, equivalent to about $1,530) and could not
issue loans or credit cards, but could run current and savings accounts, issue ATM and debit cards
and operate net and mobile banking. Forty-one institutions applied, Paytm among them, and in
August 2015 Paytm was one of 11 entities to be given in-principle licences. Progress among the 11
has been mixed. Three ended up giving their licences back, concluding it was not worth going ahead.
The telco Airtel was first out of the blocks, launching a new bank in partnership with Kotak
Mahindra in November 2016. India’s national post office has launched one and the other telcos are
expected to do so. Paytm launched its payments bank in May this year with big ambitions. The
mobile wallet business had been a curtain raiser, Sharma said at the time: the payments bank would
be the main show. The first step was to transfer in all of those wallet accounts, giving the bank an
almost 200 million-strong head start at launch; the target, stated brazenly and frequently, is to hit 500
million current and saving accounts by 2020. Madhur-Deora-300 Paytm’s CFO
MadhurDeoraRenuSatti, who formerly ran Paytm’s movie ticketing business, CEO of the new bank.

37
More broadly, Deora, as well as being CFO and senior vice-president of Paytm, also has
responsibility for driving the company’s push into financial services. To him the payments bank
licence is “a huge responsibility. From day one, we have wanted to get this right.”

It is also an opportunity. “At a fundamental level, what a payment bank offers us is the opportunity to
be the primary deposit relationship for our customers,” says Deora. “Take a step back. All these
things we are building are what you can do with your money: spend it, save it, borrow it. In having
the deposit relationship, then we can have all those things you can do with your money in one place.
That’s a huge differentiator for us. “Now you have the largest merchant network in the country, by
far the largest spending network whether online or offline, combined with the ability to save, borrow
and deposit the salary, all in one place.” To Deora, the restrictions of a payments bank licence
relative to the bricks-and-mortar banks “are fine. The customer chooses where they want to keep
their money.”

38
Research Methodology:

The research methodology consists of two stages: The initial phase was to undertake detailed
secondary data search about the Impact of Chinese products on Indian economy. Questionnaire
method will be used to understand the consumer perception to toward the digital payments in indore.
The data would be collected with the help of Survey And e-mails. We have received 50 responses.
Survey Administration: The questionnaire Comprised of 17 questions which measured responses for
different perceptions of respondents for the digital payments users. The methods used for survey was
questionnaire administration with respondents filling out the responses themselves and online survey
through mail posting. Sampling: The survey was conducted on 50 respondents; sample was based on
affordability criteria especially on time constraints. Email invitations were sent to invite respondents
on the Internet, and employee, students were contacted for responses

Research Design:

The study is exploratory in nature. it provides s description of contemporary satisfaction parameter in

consumer satisfaction towards the digital payments. Exploratory research provides insight into and
comprehension of an issue or situation. Exploratory research helps to determine the best research
design, data collection methods and selection of subjects.

Sample size

Sample size is the size of sample drawn from the population which is the
true representative of the research. The number of respondents included in the study was 50
customers on consumer perception towards the digital payments evaluating and analyzing the
data and because of time constraint

Tools for data collection:

Primary Data:

There are various ways to undertake the gathering of primary data, including conducting surveys
through the questionnaires on consumer perception towards digital payments users and collect
the data from the respondents . Sample size - 50, sampling technique-convenience sampling,
area- not restricted .

39
 Secondary Data:

This involves information that already exists somewhere, such as in studies already undertaken
on this area as well as published books, articles in journals, articles on internet and other sources.

Tools for Data collection:

Primary Data have been analyzed through percentage analysis and graphical representation (Pie
chart) method. Secondary data have been analyzed through interpretations and applied logical
method.

40
 Analysis of Data

1) Q. Age of respondents?

2)Q. Occupation of respondents?

41
3)Q. do you know anything about demonetization ?

4)Q. did you face problems to make payment after demonetization ?

42
5)Q. do you make payments through the digital payment system?

Interpretation 1 to 5 : 56 % of sample age is between 23 to 30 age . 95% of sample was aware to

demonetization . 55% of people face problem often while payment.85 % of people is know that
digital payment system.

6)Q. did you start using digital payment after the demonetization period ?

43
7)Q. do you think demonetization plays very important role to encourage the digital payments?

8)Q. why do you prefer digital payment over other modes of payments?

44
9)Q. which E-wallet you prefer to use most of the time?

45
10)Q. how many times you use the digital payment system in a month?

Interpenetration : 6 to 10: 75% of people using digital payment after demonetization

period.50% of people believes digital payment is safe and time saving.78%of people using E-
wallet use most of time.60% of people of people using digital payment system in a month. 85%
of people say yes digital transaction are important for the economic.

11)Q. do you think that digital transactions are important for the economy?

46
12)Q. do you think that e-wallet service should be widely available in india?

13)Q. would you like to refer your friend to use digital payments?

47
Interpretation : 10 to 13: 90% of total sample uses E-wallet services.80% of people who they
give my serve response .

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Conclusion
The Government has implemented various reforms for sustainable and transparent economic
development. The Demonetization and Digital payments are most important among the reforms.
The impact of demonetization was felt more in the social sector and the worst affected was also
the poor and the common people. The cash less transaction is not only requirements but also
emerging need of today for transparent economic development.

In Hyderabad City cashless can be achieved easily because most of them already adopting
cashless payment, there is only need of Government should ensure first availability and quality
of telecom network in all parts of country. Financial institutes or intermedia ries like banks and
related service providers will have to constantly invest in technology in order to improve security
and ease of transaction. People as a customer will only shift when it‘s easier, certain and safe to
make cashless transactions. Government and banks should adopt strategy of incentivize cashless
transactions and discourage cash payments by the way of proper implementation and supervision
of restrictions for using cash based transaction then the cashless India will come to true in future.

The demonetization undertaken by the Indian government in a large concern. Due to that the public
turns to cashless transaction that is Internet banking. It reaches High success rates through co-
ordination. It’s like two faces of coin become of one side it will be benefit to Nation and other side
its going towards digital economy may bring the transparency in the system. Internet banking brings
easy and convenient service people develop the ability to use E-banking but the same time at the
earlier time the people affected in this changes people are facing problems because the limit of
withdrawal has not been kept at the high level it difficult to adapt illiterate people but even all these
difficulties overcome and make the banking transactions effectively due to this implementation
increase Internet users and also initiative taken by government Agencies to make the India developed
in future. It is pretty clear that demonetization has impacted the e-commerce industry. Due to
demonetization consumers are buying more products through online mode instead of retail shops
due to cash crunch. The consumers have adopted new method of making payment where prior to
demonetization, consumers were making payment by choosing the cash on delivery option but
now majority of them are shifted to debit card and Paytm wallet to make payments. Hence, it can

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be concluded that demonetization has opened up more opportunities for the ecommerce industry
and it will prove huge boon for digital payment market
It is observed in the study that in terms of various factors promoting towards online banking majority
of the customers gave highest ranking to the option “Less time for transaction”. They prefer online
banking because of faster services, and next priority was convenience and ease of use. Least
preferred is technology savvy. The people living in Urban area feel Online banking is essential, and
metro city people desire to adapt online banking as it is vital. And the suburban area customers are
not so clear about the services due to lack of awareness, where as customers living in rural areas feel
need for online banking is negligible, they are not much in to digital transactions.

The findings while analyzing the satisfaction levels of the consumers towards various digital channel
services, it is observed using factor analysis that 35 variables are reduced to 8 factors and these 8
factors extracted together accounted for 79.735 % of total variance. The result of PCA is shown as
online banking services were loaded as a very significant factor in terms of highest satisfaction level,
followed by Telephone Banking Services factor and Mobile banking services fallowed by ATM
Services and Convenience. Various challenges faced by consumers in the process of digitalization are
that there is No privacy of customer's information, Security concerns, Not aware of all services E-
banking. If the banks improve on these key issues probably the dream of transformation to digital
India may materialize in forth coming period.

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Suggestion

The cashless transaction activity had a great step to enhance the transparent economic development,
empower the financial inclusion and integrates the parallel economy with main stream. In present
scenario the country needs to move away from traditional cash based transaction towards a cashless
or digital payment system. Therefore the following suggestions will help to improve cashless
transaction among the consumers.

 The Government of Telangana along with banks should be organize intensive awareness program
about the benefits and need of cashless transaction or digital payments to students of colleges, higher
educational intuitions.

 The banks should organize camp at village to educate the people about digital payment system.

 The Government of India and Telecom ministry should make necessary step to enhance broadband
speed and wide coverage of internet to all areas.

 The government should continue and give some incentive benefits to those who are using regular
digital payments because it will motivate not only the regular user but also new user

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