India – Cashless village logs out of Modi’s digital dream

It was only 10 months ago that illiterate sexagenarian B Bhumaiah learnt overnight how to use the debit card when he was told that cash transactions were no longer valid in his tiny village Ibrahimpur, which is located 125 km from Hyderabad.The social security pensioner was one among the 1,200-plus adults in the village to have entered the digital era. Ibrahimpur had in fact made Telangana proud by becoming the first village in the south and second in the country to have embraced100 per cent cashless transactions. Chief Minister K Chandrasekhar Rao was so impressed that he directed the officials to encourage other villages to follow in Ibrahimpur’s steps.

Cut to October 2017.

Ibrahimpur, which falls under Siddipet Assembly constituency, is back to the cash system. All the seven shopkeepers and the only auto driver in the village have surrendered their Point of Sale (POS) machines for swiping debitcredit cards to Andhra Bank. Reason: they are unable to pay the hefty charg es levied on the machines.

“Now, I draw cash from the mini bank in my neighbourhood and buy anything with notes. It (digital transaction) won’t work,“ Bhumaiah told Mirror.

Shopkeeper Praveen, who took the lead in encouraging fellow vendors to go in for digital transactions, said, “I am the biggest loser. Not only my customers, I had also encouraged the members of my small chit fund groups to pay using their cards. The bank charged me Rs 1,400 as rent for the machine. Besides, for deposits by about 20 members of my chit fund group to the tune of Rs 50,000, I ended up getting only Rs 45,000. The bank people told me that charges get deducted if there are more than five deposits in an account in a month.“

Though Praveen stopped using the machine after four months, he still had to cough up Rs 1,400 a month till he surrendered the PoS terminal to the bank.

“Our digital village dreams shattered too soon. Bank charged Rs 1,400 for the PoS terminal every month.Even if my total transactions were Rs 18,000, I ended up making profit of less than Rs 2,000,“ fumed Devaiah, another shopkeeper.

“Amounts swiped got credited into our accounts on the third day. That was another headache. I am so relieved that I got rid of the card swipe machine,“ he added.

Now, only the ration dealer and the purified water seller have PoS machines provided by IDFC. “I do not entertain cash transactions. Payments are accepted only through cards,“ said ration dealer Venkata Rajam.

Yellamma, another small shopkeeper, used to refuse to take cash payments till April. Now, she says a blunt `sorry’ if someone offers to pay with his or her card.

“Yes, the vendors have surrendered the machines to us. We actually explained to them while issuing the machines that Rs 1,400 would be collected every month. The PoS machines are taken from a third party on a monthly rent of Rs 1,400. The bank does not pocket the money,“ explained Andhra Bank manager M Shankar.

Bank officials see little scope for the revival of digital transactions in the village with cash becoming available a few months after demonetisation.And they point out that the people had no role in the failure of the digital experiment. They had all learned to transact digitally, but the system let them down.

The digital economy committee, headed by Chandrababu Naidu, had recommended waiver of charges on digital transactions to encourage traders. But no such step was taken.

Devilatha, a young woman who runs a mini-bank as a sub-branch of Andhra Bank, also confirmed that the digitisation process took a reverse turn in the village. “I am doing cash transactions between Rs 8 lakh and Rs 10 lakh every month. Women thrift groups and self-help groups account for transactions (deposits or withdrawals) of Rs 2 lakh each, just like the social security pensioners (Rs 2 lakh),“ said Devilatha, who earns between Rs 3,500 and Rs 4,000 from the bank every month based on the total amount of transactions.