India saw a huge economic upheaval in December 2016 when the Central Modi government imposed demonetisation in the country. The decision affected the entire nation with everyone running for money including the banks.
During that time, one village in Telangana stood out as the second cashless city in the country after Akodara in Gujarat. The adopted village of Telangana Irrigation Minister Harish Rao’s Ibrahimpur village in Siddipet district earned recognition as the second cashless village in the country and the first in South India.
Every business saw swiping machines replacing money tins and hotels rooted for mobile banking services. Below Rs 500 was allowed for money transactions and everyone were educated on cashless transactions. Bank accounts were opened and debit cards issued to all who didn’t possess one.
Telangana Chief Minister K Chandrasekhar Rao urged all the villages to emulate Ibrahimpur to become digital villages. Journalists poured into the village to record the 1200 and odd locals and their cashless transactions.
The euphoria seems to have died now as the villagers are forced to return to cash transactions because of the high rates charged by the banks for transactions.
A chit fund businessman Praveen encouraged everyone to pay the money through swiping machines but then he surrendered the machine to the Bank.
“All of us returned our swiping machines to the bank as the authorities are collecting a rental charge of Rs 1,400 per month, irrespective of the volume of business we did. Even if we did not use the machine, we were forced to pay the amount,” he said.
He also said that he incurred a loss of Rs 10,000 in a span of six months for using the machine. “What is the use of cashless transaction then?” he asked.
From a village that taught even its senior citizens to use a debit card, Ibrahimpur has gone back to ‘cash only’. The villagers now say that it was a mistake to shift to a digital mode of payments.
The manager of the local bank confirmed the news that businessmen were returning the swiping machines.
Mulla Shankar, the manager of the local branch of Andhra Bank admitted the cashless transaction concept was a failure. “Before giving the swiping machines, we told them about the rental charge of Rs 1,400 per month. But in their enthusiasm, they did not bother. Since they are all petty merchants, they found it a big burden and hence, they returned the machines,” Shankar said as reported in Hindustan Times.
On the other hand, the Telangana government does not want to lose out its cashless village and has urged the banks to waive charges.