New Delhi: Demonetisation is a major change for India that will result in a significant increase in bank deposits and digital transactions with non-cash retail payments likely to see a 10-fold jump by 2025, says a report.
According to global financial services major Deutsche Bank, demonetisation is an immediate catalyst for the digital payments revolution.
"We forecast a 10 times jump in non-cash retail payments by 2025, with mobile becoming the dominant mode of executing transactions," Deutsche Bank said in a research note.
The report further noted that "though not perfect, India does have the necessary ecosystem in place for adoption to take off".
Factors like Aadhaar penetration of 93 percent of the population, improving data speeds and connectivity and supportive regulations will help meet the above objectives.
"A 70-80 percent reduction in cost of operation and user -friendly transaction options should drive both a push and pull effect for digital payments," it added.
According to RBI's estimates, the cash floating in the system is about 13 percent of the country's gross domestic product, making India one of the most currency dependent countries in the world. Moreover, 90 percent of retail payments are done through cash.
"Given the concerted push towards a digital economy, we expect cash in circulation to reduce from current 13 percent," the report said, adding that "we expect non cash transactions to go up to 40 percent of payment transactions by FY25E".
Moreover, mobile is likely to become the dominant channel due to wider acceptability and lower costs. Currently, debit cards are the preferred mode of payment after cash.