Coronavirus may possibly achieve what demonetisation couldn’t – Make people go digital. More people seem to have taken to making money transfers through the online and digital channels than they had done previously. In fact, the cash component is going down. These are evident from the figures put out by the Reserve Bank of India.
The amount transferred through RTGS in March was Rs 120.47 lakh crore, 34% higher than Rs 89.9 lakh crore in February, 2020. Real Time Gross Settlement or RTGS is the payment method that has been in force for many years within the banking system that reduces the issue of cheques and then the process of physically reaching it to the payee and then someone going to the bank to deposit it and wait for it to be cleared and credited and so on. It only takes a few hours for the amount transferred through RTGS to be reflected in the account of the beneficiary. It still goes through the settlement process and RBI is involved as the inter-bank mediatory.
Cash withdrawals including from ATMs showed a decline. With most of the shopping options shutdown the use of credit and debit cards also showed a decrease.
It does not require rocket science to connect this directly to the lockdown situation. In terms of the overall digital transactions that got processed in the month of March 2020, the figure stood at Rs 552.26 crore. The figure, when broken week-wise reflects the real picture, Rs 107.78 crore, in the first week; Rs 95.57 crore in the second week, Rs 124.73 crore in the third and Rs 224.16 crore in the fourth week. Lockdown commenced on March 24, after a one-day Janta Curfew on March 22.
Another figure that also does not come as a surprise is the spending on utilities, which is said to have increased by 53% in March. With people staying at home, the lights and fans would be on. Air conditioners may be used more and so on. Many people also resorted to panic-buying which pushed the expenditure on groceries by 18%, according to Razorpay, an online payment facilitator.