Lok Sabha Question No. 162 (UNSTARRED), answered on 2022-07-18
Subject: Rise in Currency Post Demonetisation
Ministry: FINANCE
Asked by: P. Velusamy

## GOVERNMENT OF INDIA MINISTRY OF FINANCE DEPARTMENT OF ECONOMIC AFFAIRS LOK SABHA UNSTARRED QUESTION NO. 162 TO BE ANSWERED ON 18.07.2022

## Rise in Currency Post Demonetisation

## 162: SHRI VELUSAMY P.:

Will the Minister of Finance be pleased to state:

- (a) whether  the  Government  is  aware  of  the  fact  that  the  currency  with  public  is continuously rising ever after five years of demonetisation which was announced on November 8,2016;
- (b) if  so,  the  total  amount  of  cash  with  the  public  at  present  in  actual  figure  and percentage from the last year;
- (c) whether the Government has allowed cash back for using credit/debit cards and other  modes  of  digital  payment  with  a  view  to  encouraging  digital  payment previously and if so, the details thereof;
- (d) whether the Government is also aware of the fact that digital payment providers are charging service charges for transferring money from credit/debit cards; and
- (e) if  so,  the  steps  taken  to  improve  the  digital  payment  mechanism  without  any hidden service charges levied by the service providers?

## ANSWER

## MINISTER OF STATE IN THE MINISTRY OF FINANCE (SHRI PANKAJ CHAUDHARY)

- (a)  &  (b):  The  demand  for  currency  depends  upon  several  macro-economic  factors including economic growth and level of interest rates.The data on Notes in Circulation (NiC) for the years 2016 to 2022 (as on end March each year) is placed below:

## Data on Notes in Circulation (NiC)

|   Year (till 31 st March) | Volume in million pieces   | % Increase/Decrease in Volume of NiC   | Value - NiC (end- March) (₹ crores)   | % Increase/Decrease in Value   |
|---------------------------|----------------------------|----------------------------------------|---------------------------------------|--------------------------------|
|                      2016 | 90,266                     | -                                      | 16,41,571                             | -                              |
|                      2017 | 1,00,293                   | 11.11                                  | 13,10,193                             | -20.18                         |
|                      2018 | 1,02,395                   | 2.10                                   | 18,03,709                             | 37.67                          |
|                      2019 | 1,08,759                   | 6.22                                   | 21,10,892                             | 17.03                          |

|   Year (till 31 st March) | Volume in million pieces   |   % Increase/Decrease in Volume of NiC | Value - NiC (end- March) (₹ crores)   |   % Increase/Decrease in Value |
|---------------------------|----------------------------|----------------------------------------|---------------------------------------|--------------------------------|
|                      2020 | 1,15,977                   |                                   6.64 | 24,20,975                             |                          14.69 |
|                      2021 | 1,24,367                   |                                   7.23 | 28,26,863                             |                          16.77 |
|                      2022 | 1,30,533                   |                                   4.96 | 31,05,721                             |                           9.86 |

(c):Ministry  of  Electronics  and  Information  Technology,  Government  of  India  had launched a BHIM (Bharat Interface for Money) Cashback Scheme for Merchants to promote usage of BHIM-UPI amongst merchants by incentivising its adoption and also to encourage transactions via BHIM-UPI mode, and the scheme was active from 5th June 2017 and closed on 30th June 2018.

(d) & (e):The mission of the Government is to move towards a less cash economy to reduce  generation  and  circulation  of  black  money  and  to  promote  digital  economy. Through Finance(No.2) Act, 2019, section 269SU was inserted to the Income-tax Act, 1961 (the Act) so as to provide that every person, carrying on business, shall, provide facility for accepting payment through the prescribed electronic modes, in addition to the  facility  for  other  electronic  modes  of  payment,  if  any,  being  provided  by  such person,  if  his  total  sales,  turnover  or  gross  receipts  in  business  exceeds  fifty  crore rupees during the immediately preceding previous year.

In order to ensure compliance, section 27IDB was inserted to provide that the failure to provide facility for electronic modes of payment prescribed under section 269SU shall attract  penalty  of  a  sum  of  five  thousand  rupees,  for  every  day  during  which  such failure continues.

In addition to above, amendment was also made to Payment and Settlement Systems Act, 2007 so as to provide that no bank or system provider shall impose any charge upon anyone, either directly or indirectly, for using the modes of electronic payment prescribed under section 269SU of the Act.

Department of Revenue (DoR) vide notification no. 105/2019 dated 30.12.2019; rule 119AA was inserted to the Income-tax Rules, 1962 to provide for following modes of payment for the purpose of section 269SU:

(i) Debit Card powered by RuPay; (ii) Unified Payments Interface (UPI) (BHIM-UPI);

and (iii)  Unified Payments Interface Quick Response Code (UPI QR Code) (BHIMUPI QR Code).

DoR,  vide  circular  no.  16/2020  dated  30.08.2020,  advised  banks    to  immediately refund charges collected, if any, on or after 1st January, 2020 on transactions carried out using the electronic modes prescribed under section 269SU of the Act and not to impose charges on any future transactions through the prescribed modes.

Further,  RBI  vide  circular  dated  December  6,  2017  on  "Rationalisation  of  Merchant Discount  Rate  (MDR)  for  Debit  Card  Transactions",  advised  banks  to  ensure  that merchants on-boarded by them do not pass on Merchant Discount Rate (MDR) charges to customers while accepting payments through debit cards. In terms of RBI circular dated  March  17,  2020  on  "Guidelines  on  Regulation  of  Payment  Aggregators  and Payment Gateways", Payment Aggregators (PAs) shall ensure that the extant instructions with regard to MDR are followed, and that information on other charges such as convenience fee, handling fee, etc., if any,being levied shall also be displayed upfront by the PA.

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