A Study on Factors Leading to Gradual Weakening of Paper Currency Usage in India

Abstract

Globally we are witnessing a rapid proliferation in new electronic forms of payment owing to rapid developments in digitalization and data processing. The movement towards a cashless society that started very slowly through cheques, debit and credit card, followed by numerous steps adopted by banks introducing netbanking facilities with NEFT, IMPS, RTGS today the evolution is accelerated with the advent of robust payment mechanisms such as mobile-based bank apps and other payment applications and mobile wallets. With these newer payment modes becoming more accessible, convenient, and cost-efficient, there is widespread adoption of cashless means in developing and emerging economies. The Indian government’s demonetization initiative made 86% of cash in circulation declared as illegal tender overnight on November 8, 2016.The much recent global pandemic of 2020 filled the public with fear of bacterial, fungal, and parasitic contamination of currency notes. These factors have further lead to the decline in the usages of paper currency. This paper explores some of the issues associated with the waning of paper currency usage in India.