By Asha Vombatkere, Secretary, Mysore Grahakara Parishat

The Reserve Bank of India (RBI) has published a draft policy at and has called for feedback from the public before 28.2.2013. The policy aims to strongly discourage the use of cheques in favour of electronic cash transfer. It also aims to encourage the use of debit cards in ATM machines for cash withdrawals. In other words, the new policy aims at replacing "paper" banking by e-banking. Mysore Grahakara Parishat has submitted the following feedback:

Experts in cyber-security believe that e-banking in India carries high risk and is unsafe. It is estimated that more than Rs. 8000 crores are lost every year due to e-banking frauds. It is surprising that RBI is promoting these high risk transactions. Several committees have given their reports on how to make e-banking safe, but their recommendations have not been implemented. It would have been better if the RBI had taken steps to make e-banking safe and then published the present policy paper. Another issue is that the laws concerning cheques (such as the Negotiable Instruments Act) are time-tested while laws on e-banking are still nascent.

Experts point out that UK also considered a similar policy and proposed phasing out of cheques by 2018. But strong opposition from the public forced the government to drop the idea. Experts also say that if cheques are discouraged, persons who are using cheques may switch to cash transactions rather than e-transactions and this might aggravate the problem of fake currency.

In a policy paper, one would expect a discussion of both the positive and the negative effects of the proposed policy. This would enable the policy-making body to come to a rational and balanced conclusion. But the RBI policy paper lists only the benefits of replacing paper banking by e-banking. It is no wonder that the proposed policy is skewed in that direction.

Courtesy : Star Of Mysore