The Challenge Is To Connect 1.4 Billion Indians Through Internet: Axis Bank's Amitabh Chaudhry
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COVID-19 pandemic has been an inflection point to bring about a radical change in not only how bankers think about the banking industry but the nation as a whole. It has affected individual lives and this pandemic has brought changes which are going to stay permanently. And no doubt it has become the new normal.
Building a cashless economy and democratizing the household economy is one of the growing major concerns. Amitabh Chaudhry, managing director & CEO, Axis Bank, discussed all of these major concerns in during Entrepreneur India’s Tech and Innovation Summit 2021.
Chaudhry explained that some Scandinavian countries such as Sweden, Denmark and Norway are adopting cashless payment systems very effortlessly. Sweden for example, has less than one per cent of cash in the GDP. The reason why the cashless payment system works so well in these countries is that even small sellers and retailers have become cashless; and in Sweden these small retailers are not even accepting cash as a mode of payment.
He elaborated the condition of Sweden, that how Sweden is pioneering in bio-hacking and use of microchips. These micro-chips are being implanted in the bodies and this implantation of chips, helps the citizens to go all cashless and keyless. Now, they can enter into their houses, offices or even gym without any hassle all they need to do is show their hands and they are good to go.
Biometric is being democratized in the same way computers were democratized during the 80s and the implants are merely a part of it.
Pointing towards the condition of India, he said that the main problem to address is how you connect 1.4 billion people across the length and breadth of the country, and this led to the birth of Aadhaar, which in turn led to the birth of Jan-Dhan Accounts; now 40 crore people have Jan-Dhan Bank Accounts with INR 1.4 lakh crore deposited in these accounts; and the mobile phone became the third leg of the JAM trinity and all this helped the government to pursue digital and cashless governance.
Talking more about the cashless payment system in India, he said from June 2020 to July 2021, digital transactions have increased by 110 per cent in volume and 109 per cent in value. Moreover, during COVID-19, India had the highest number of real-time transactions which was ahead of China and the US. And, this was all possible because of the infrastructure that was built in the last eight to ten years, said Chaudhry.
Addressing the question on why is India still behind in the process of digital payments even though it has a proper infrastructure for it, he said that paper-based payments in India continue to occupy a considerable share of 61.4 per cent. India's currency in circulation touched 14.6 per cent of its gross domestic product in 2021 which is higher than 12 per cent which was before monetization. Apart from this, around 80 per cent of the working Indians continue to be employed by informal MSMES and this sector produces around 50 per cent of our GDP and most of these Indians are paid in cash.
The other two issues which pose a problem are the digital and the spatial divide. In India, more than 40 crore people still don't have any access to the Internet. If we compare the Internet density of people living in rural and people living in urban areas; we will find that the Internet density is 25 per cent in rural areas compared with urban areas where it is 90 per cent, said Chaudhry.
The digital sector in India accounts for 10 per cent which; is quite low compared to some of the emerging economies. This is why more than 80 per cent of transactions in our country are cash transactions.
Regional languages are another problem as less than 15 per cent of the Indian population knows how to speak English. So the need of the hour is to make the content available in regional language.