A Research proposal on

Effect of Cashless Policy on Payment System in Rural Areas

15MBA006

Indukaka Ipcowala Institute of Management (I2IM)

Charotar University of Science and Technology (CHARUSAT)

Title
Effect of Cashless Policy on Payment System in Rural Areas

This paper estimates the amount of cashless transactions that is prevalent in India. It uses survey
data conducted in 2017 as well as household, and rural area survey conducted in 20016-17 to
estimate the same. Information captured from the questionnaire survey is also used to identify
the bottlenecks and enablers of cashless payments in India. Demonetization affects the economy
through the liquidity side. Demonetizing is Progressive shift to a cashless economy with a
greater focus on electronic transactions is being envisaged. Rising use of credit/debit cards, net
banking and other online payment mechanisms will be another positive effect of demonetization,

Introduction

India continues to be driven by the use of cashless than 5% of all payments happen electronically
however the finance minister, in 2016 budget speech, talked about the idea of making India a
cashless society, with the aim of curbing the flow of black money.

Even the RBI has also recently unveiled a document Payments and Settlement Systems in
India: Vision 2018 setting out a plan to encourage electronic payments and to enable India
to move towards a cashless society or economy in the medium and long term.

Cash is like water a basic necessity without which survival is a challenge. Nevertheless, cash use
doesn't seem to be waning all that much, with around 85% of global payments still made using
cash. One of the main reasons is that there is nothing to truly compete with the flexibility of
notes and coins.

Of course, the digital era is something to embrace, and new methods of payments will continue
to be introduced. But Indians need to recognize the risks and benefits of different payment
instruments, the risks associated with electronic payment instruments are far more diverse and
severe. Recently lakhs of debit card data were stolen by hackers; the ability of Indian financial
institutions to protect the electronic currency came into question also an important reason why

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people favour cash. The whole isometrics of moving from cash-driven economy to cashless
economy has somehow been assorted with demonetisation that was aimed to extract liquidity
from the system to unearth black money.

Economic activities are legal activities that create and distribute utility from the points of
production to places of final consumption usually with a price exchange. Economic activities
involve incurring cost and making profit. Therefore, economic activities are all activities that are
legal in form that generate revenue at a cost. Economic activities can be classified into
productive activities, commercial activities distributive activities and service activities. Each
activity is concerned with obtaining maximum satisfaction through efficient use of scarce
resources
The new policy on cash-based transactions (withdrawals and deposits) in banks aims at reducing
(NOT ELIMINATING) the amount of physical cash (coins and notes) circulating in the
economy. This policy seeks to turn a money economy to what can be regarded as a cashless
economy. A cashless economy is a shift from cash-based transactions to electronic-based
transactions. The Central Bank of India (CBI) stated the following as key reasons why the cash
policy was introduced.

Cashless on digital payment method

Banking cards
Mobil banking
Micro ATM
Internet Banking

Impact of demonetization on India economy

Effect on money supply
Effect on demand
Effect on price
Effect on GDP
Effect on Online transaction

Literature Review

Ezeamama.M (2014) The Impact of Central Bank of Nigeria Cashless Policy in Nigeria
Economy at Dept of Banking and Finance, OSISATECH Polytechnic, Enugu. The sample size
of this research is 500. The research was carried out, using accidental sampling method, in Lagos
state, Nigeria. statistical technique used was descriptive method. Survey research was adopted
with questionnaire as data collection instrument. The findings of the research is that the
introduction of cashless economy in Nigeria can be seen as a step in the right direction. It is
expected that its impact will be felt in modernization of Nigeria payment system, reduction in the
cost of banking services, reduction in high security and safety risks and also curb banking related
corruptions. The conclusion of the study is reduce handling operation cost incurred on

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conventional money, as well as reduction in cash related crimes. It should also help to provide
easy access to banking services for Nigerians.

AYOOLA.J(2013) The Effect of Cashless Policy of Government on Corruption in Nigeria at

Dept. of Management & Accounting. Obafemi Awolowo University, Ile-Ife, Nigeria. The sample
size of this research is 100. The research was next revolution in public management is e-
governance, which is expected to alter methods of service delivery and may bring about a basic
relationship between and citizens at large and is currently taking place the world over at varying
degrees. The data collected were analysed using descriptive statistics. Primary data were sourced
through the administration of unstructured questionnaire on the selected respondents. The
conclusion of the study is effect of the cashless policy of government on corruption in Nigeria.
Corruption has been identified as a bane of development in the country and the government in its
effort to curb the menace introduced the cashless policy.

Igbara.f, Emerenini.M, Gibson.L(2015)The Impact of Cashless Policy on Small Scale

Businesses in Ogoni Land of Rivers State, Nigeria at Imo State University, Owerri, Imo State,
Nigeria. The sample size of this research is250. The research was dopted the regression analysis
to analyze the data with a view to determining the impact of cashless policy on small scale
businesses.The data collected were coded and analyzed using frequency table and percentage,
while regression analysis was used to test the formulated hypotheses using SPSS (Statistical
Package for Social Sciences). Their owners responded to the research questionnaire. The
implication of the findings from this study is that the introduction of cashless policy has a
negative significant influence on the operation, performance and growth of small scale
businesses in Ogoni land. The results of the study revealed that the characteristic of small scale
businesses is a strong indicator for measuring the level of adoption of cashless policy was
statistically low.

Okoye.C, Ezejiofor.R(2013) An Appraisal of Cashless Economy Policy in Development of

Nigerian Economy. At Department of Accountancy, Nnamdi Azikiwe University, P. M.B. 5025.
Awka. The sample size of this research is 68. The data has been collected through questionnaire.
The data Has been analyzed by using ANOVA, chi square .The finding of the research study is
some recommendations made are: the government should adopt a different strategy to educate
the non-literateNigerians about the cashless economy; and a framework should be worked out to
provide cyber security in Nigeria.

Ajayi.C(2014)Effect of cashless monetary policy on Nigerian banking industry. At

Department Banking and Finance, Faculty of Management Sciences, Ekiti State University,
Ado-Ekiti. The sample size of this research is 370. The data has been collected through
questionnaire. The data Has been analyzed by using were analyzed based on descriptive statistics
(frequency and percentage) and with Chi square. The finding of the research study is study was
to determine the reason(s) and proposed advantages for the implementation of cashless monetary
policy in Nigeria.

Okechukwu.F, Chukwudi.S, Chuks.K(2016)Actualization of a cashless construction industry

in Nigeria. At Department of Building, Nnamdi Azikiwe University, Awka, Nigeria. The sample

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size of this research is 800. The data has been collected through questionnaire used to obtain
primary data. The data Has been analyzed by using ANOVA. The Findings of their search
indicated that most of the construction practitioners are in support of the cashless society.
Because, they believe it will improve traceability and accountability, reduce the rate of
corruption/theft/sharp practices, reform construction practice and improve productivity of the
sector by eliminating idle time.

Chithirai. M.Shanmugapriya M(2015) Rural policyholders preference on health insurance. at

Assistant Professor & Head, PG Department of Commerce. The sample size of this research is
190. The data has been collected through questionnaire used to obtain primary data. The data has
been analyzed by using Statistical tools like Friedman rank test and Factor analysis are applied to
analysis and interpret the collected data. The Findings of their search indicated that most of the
signify that generating awareness among rural masses about the benefits of holding
Health insurance policy especially the benefit of cashless hospitalisation - through well-known
Persons like doctors, agents, existing policyholders.

Muhibudeen.l , Alhassan.h(2015) The impact of cashless policy tools on money circulating

outside nigerian banks. At Department of Accounting & Finance, Faculty of Social and
Management Sciences,Northwest University, Kano. The sample size of this research is 500. The
data has been collected through questionnaire used to obtain primary data and secondary data.
The data Has been analyzed by using ANOVA. The Findings of their search indicated that
Nigerias acceptance of CLP is a new development. Introduced in 2012, the policy has been
hurriedly imposed on both the banks and customers. This has indeed had some impact on
business transactions, the population, as well as currency circulating outside banks. It is the latter
that this study was undertaken to determine.

Ibrahim.o,Maiwada.B,(2014) An Assessment of E-Payment Infrastructures towards an Efficient

Cashless Policy in Nigeria. At Faculty of Management Technology Accounting And Finance
Department Abubukar Tafawa Balewa University, Bauchi. The sample size of this research is
250. The data has been collected through questionnaire used to obtain primary data. The has been
analysed by using chi-square was used to test the hypothesis. The findings of the research
analysis, hypothesis testing and interpretation of result, it was observed that effective e-payment
infrastructure is an essential tool to achieve an efficient cashless policy in Nigeria.

Achugamonu.B, Agwu.M,(2015) Fraud, Unemployment and Cashless System A paradox or

Reality in Nigeria. At British Journal of Economics, Finance and Management Sciences. The
sampal size of this research is 125. The data has been collected through questionnaire used to
obtain primary data. The has been analysed by using t-test through the use of SPSS statistical
package. The findings of the research analysis effective cashless system in Nigeria, there is need
to intensify the public enlightenment programmer more so as the entire nation is envisaged to be
covered in the nearest future. Everybody should be acquainted with the workings of a cashless
economy.

Manpreet K,(2017) Demonetization Impact On Cashless Payment System. At SGTB

Khalsa College, Anandpur Sahib. The data has been collected through based on secondary

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sources of data/ information. Different books, journals, newspapers and relevant websites have
been consulted in order to make the study an effective one. The study attempts to examine the
Cashless Payment System in India. The findings of the research analysis cashless transition are
not only safer than the cash transaction but are less time consuming and not a trouble of carrying
and trouble of wear and tear like paper money.

Sushma patil(2014) Impact of plastic money banking treads in India. At international journal of
management research and business strategy. The sample size of this research is 100. The data has
been collected through questionnaire used to obtain primary data and interview technics. The
findings of the research analysis effective cashless system in India. The use of plastic card is
more and more increasing online payment.

Saini. B,(2015) Demonetization Metamorphosis for Cashless India. At International Journal of

Science and Research.The sample size of this research is 100. The data has been collected
through questionnaire used to obtain primary data. The data has been analyzed by using ANOVA
The findings of the research analysis effective demonetization means growth can accelerate only
in the second quarter of the next financial year.

Objectives

To examine the influence of cashless policy on Payment System of Banks.

To know about the problems faced by rural people for doing cash transactions in
electronic way.

Hypothesis
H0: There is no significance influence of cashless policy on payment system of banks.
H1: There is significance influence of cashless policy on payment system of banks.
Research Methodology
Descriptive methodology if used in the present study.

Sampling Plan
V1-changa uni
V2-Tarapur
V3-Dharmad
V4-Piglag

Population Size

The size of population in this study is 500.

Tools for the Data Collection

The data would be collected using Questionnaire.

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Data Analysis

Following statistical tools would be used for data analysis

a) Regression
b) Factor analysis and various others as needed.

Variable

Dependent Independent variable

Savings Income
Digital awareness Occupation
Life style Plastic money
Corruption Education
Economy Public sector
Small scale business Payment bank
Financial stability
Business transaction
E-banking

References

www.iosrjournals.org
www.ea-journals.org
https://www.researchgate.net/publication/307607052
www.iiste.org
http://dspace.library.iitb.ac.in/jspui/bitstream/10054/1732/2/PaymentCardAugust31.
pdf
research journal of finance and accounting www.iiste.org ISSN 2222-1697(paper)
ISSN 2222-2847-7,2013
Adegbaju, A.A. and olukoye,f.o (2008).-recapitalization and banks performance : A
cash study of negerian bank.

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