View of RELEVANCE OF THE PLASTIC MONEY IN THE ECONOMIC GROWTH OF THE COUNTRY

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Vol.04,Special Issue 07, (RAISMR-2019) November 2019, Available Online: www.ajeee.co.in/index.php/AJEEE

RELEVANCE OF THE PLASTIC MONEY IN THE ECONOMIC GROWTH OF THE COUNTRY

Veronika Bhagoria¹,Dr. Sarita Rana²

1Research Scholar, School of Commerce, Davv, Indore

2Assistant Professor, St. Paul Institute of Professional Studies, Indore

Abstract:- It is known that money is the basic need of every person as it is the medium of exchange or can be said as payment tool. In ancient days barter system was used by the people to make transactions. Later money replaced barter system which in turn itself changed into paper money from coins and from paper money to plastic money or in online transactions. Today plastic money has covered the whole market. Also, government is promoting cashless economy because of which the distribution of plastic money has increased. People do feel that plastic money or the money in the electronic form is much easier and more convenient. The present paper makes an attempt to understand the relevance of plastic money in the growth of economy of the country.

Keywords:- plastic money, credit card, debit card, online transaction.

1. INTRODUCTION

As we know that India is a developing country and is growing day by day. This growth of the country also includes the growth of the information technology all over the country. Today information technology is playing a great role in the development of the country as well as in the economic growth of the country. With this increase in the involvement of IT in the country it has become the major part in each and every sector of the country among which banking is the most important one. As IT plays a major role in our banking sector today.

Banks are increasingly using information technology for improving the quality of customer services and also for better marketing of their products. This has lead bank an opportunity to reach out its customers more easily and quickly with the help of internet facilities. In the Indian market, the development of plastic money is probably the most significant phenomenon of the modern banking era. This plastic money comes in various forms where majorly used plastic money is debit card and credit card.

In India, most of the people are dependent upon such type of cards for making different types of expenses and also for making various transactions. Use of such type of cards have become popular within the country as these are the more convenient options for payment. Even today people are still using cash for making payments but for the lower value purchases. Plastic notes are similar to paper however the solely distinction is that they are made of plastic and are extra secured.

But in travelling and buying humans used to elevate big money which was once very unsecured and also increased the crime rate. Hence playing cards were introduced in the world to unravel the issue of carrying huge cash. These cards are known as plastic money.

The utilization of plastic money (card) has multiplied in the mode of charge of big amount and as a result broth there are a lot of exclusive kinds of plastic money that can be used anywhere in the world.

Credit cards, debit cards, kissan credit score playing cards etc., are a new innovation in financial services brought by using the monetary establishments in extending handy availability of money. Since many years, it is anticipated that digital and paperless repayments will grow prominently.

Online payments are time saving & can be completed anywhere at as soon as personal ease this in turn curbs lengthen payments. Now the world is becoming globalized so every card is generic in all places with the electricity of VISA which interconnect one-of- a-kind countries. Thus, plastic cards are actually right here to continue to be and for lengthy as there no better option available.

1.1 Types of Cards

1. ATM cum Debit Card: Debit playing cards are designed for customers who like paying through placard but do not desire credit. A debit card is a plastic card which affords an choice fee technique to money when making purchases. Functionally, it is similar to writing a cheque as the funds are withdrawn at once from either the financial institution account

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or from the final balance on the card. The debit card is consequently perfect for those who have a tight finance and choose to hold within it.

There are two types of debit playing cards systems namely:-

 On-line debit cards

 Off-line debit cards

 On-line Debit Cards: Making a purchase with an online debit card is similar to withdrawing money from an Automated Teller Machine (ATM). The card is passes to a regular magnetic reader, which is linked by a phone to a computer. On getting into the personal identification variety (PIN), pc verifies the PIN and checks to see if one has sufficient cash in the financial institution to cover the transaction, all of which will no longer take extra than a few seconds.

 Off-line Debit Cards: Off-line debit cards work greater like cheques, because there is no direct connection between store and bank. Off-line debit playing cards can be used wherever VISA or MASTER CARD is accepted.

2. Credit Card: A deposit card is a card or mechanism which enables to purchase goods, tour and dine in a lodge without making on the spot payments. The holders can use the playing cards to credit score from banks unto forty-five days. The credit score card relieves the consumer from the botheration cash and ensures safety. It is a convenience of an extended credit without formality.

Different types of Credit Cards:-

• Master Card & Visa: MasterCard is a product of MasterCard International and alongside with VISA are dispensed by financial establishments round the world.

Cardholders borrow money towards a line of savings and pay it returned with interest if the balance is carried over from month to month.

• Dinner Club Card: In 1950s, the dinner membership issued their cards in U.S. The Dinners club card was invented with the aid of Dinner’s club founder Frank McNamara and it was supposed to pay restaurant that would take delivery of Dinner’s club card. Dinner club would pay the restaurant and the card holder would repay Dinners club.

• Global Cards: This card permits the purchaser to get entry to their accounts from anywhere and at any time conveniently. They want now not carry cash; rather they can use the Bank’s global Debit card that combines the gain of traditional ATM card and a deposit card.

• Agricultural Card: Agricultural card is in any other case recognised as Kissan Credit Card. This are made to provide the financial help to farmers. The coverage of the assist extended to all farmers and to enhance the credit float underneath agriculture, the scheme has extended to farmers for term savings as additionally working capital for agriculture and allied things to do and a reasonable thing for consumption needs, thus, paving the way for acceptance of Kissan Credit card as a single window for complete credit. The banking gadget has been routing crop loans through Kissan Credit Cards having recognized it is as a prevalent mechanism transport of credit score to farmers.

• Smart Card: A clever card, chip card, or integrated circuit card (ICC), is any pocket- sized card that has embedded integrated circuits. Smart playing cards can be contact, contactless, or both. It does hold records, statements and acts as a digital purse, storing e-money. It is useable for drawing money and makes payments with automated facility of preserving debts of balances of the party. During a loading operation, the credit account of card holders is debited and credit is given to a centralised card account.

2. ADVANTAGES AND DISADVANTAGES OF PLASTIC MONEY Advantages:-

• Plastic money cannot be easily burnt as it can resist high temperature as compare to paper money.

• You have no concern of theft.

• Paper money also alternatives up dust and stains extra without problems than plastic cash.

• Durability of plastic money is more.

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• It is more safe than plastic money.

• Provide a convenient fee technique for purchases mode on the web and over the telephone.

• Plastic money is easily accepted internationally.

Disadvantages:-

• Plastic money is not also 100% safe.

• It may damage your credit rating in case of late payment.

• Service charges are included to such cards.

• Have complicated terms and conditions.

• Not all the time plastic money can be used like at small shops, newspaper vendors, payment to labours etc.

• Such cards lead to overspending.

• Chances of frauds are high.

3. REVIEW OF LITERATURE

Tabrez Haq and Bushra Malik, (2014) observed about Consumer response towards the usage of plastic money” with emphasis on increase of shift of plastic money in India by consumers from Credit cards to Debit cards -The distribution of plastic money has increased due to the fact that banking sector has become more aggressive. In their study, they make an attempt to understand the after effects of recession on plastic money industry and its impact on consumer preferences. The paper duly investigates the acceptability of the cards among the Indian consumer and the factors influencing the card choice.

P Manivannan (2013) in his research paper “Plastic Money a way for cash Less Payment System” examined that Plastic Money i.e. usage of Credit card was measured a luxury, and has become needed. These plastic money and electronic payments were and used by only higher income group. This facility extended not only to customers in urban areas or cities, but also to customers residing in rural area. However, today, with development of banking and trading activity, the fixed income group or salaried classes are also start using the plastic money and electronic payment systems and particularly Credit cards.

Bansi Patel and Urvi Amin (2012) in their research paper “Plastic Money : Road may Towards Cash Less Society” discussed that now days in any transaction Plastic money becomes inevitable part of the transaction and with it life becomes more easy and development would take better place and along with the plastic money it becomes possible that control the money laundry and effective utilization of financial system would become possible which would also helpful for tax legislation.

Khurana, Sunayna1, Singh, S. P.( 2011 ) explained that ,In today's busy world, nobody has the time to withdraw money from the bank account for shopping. Everybody is interested in carrying the plastic money (credit card and debit card) in their wallet for shopping as it gives convenience, safety, easiness and even style. In this cutthroat competition, banks have to work hard to gain market share and to meet the expectations of customers so that they can delight their customers. This study is carried out to identify customer preferences and expectations from credit/debit card services.

3.1 Objectives of the Study

• To study the use of plastic money in India.

• To study the use of debit card among the people.

• To study the use of credit card among the people.

4. RESEARCH METHODOLOGY

The descriptive research strategy is used in the paper. The secondary records from dependable sources, newspapers, research papers is used to study the use and relevance of the plastic money in India.

5. FINDINGS

As per RBI’s report as on March 31, 2019 the number of debit and credit cards issued were 925 million and 47 million, respectively. An interesting fact is that while the debit cards issued were 861.70 million, as per the socio-economic profile, only 33% of the population

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reported having a debit card in 2017. This could be because of some persons having multiple cards and others none. In credit cards, while the growth is strong and better than all the benchmarked countries, there is still a lot of catching up to do so far as total number of cards is concerned.

The reasons for low credit card usage in India are:-

• demand – where Indian households are traditionally oriented towards savings;

• supply – with a majority of the labour force occupied in the unorganised sector with the card issuers in all probability unwilling to take higher credit risks and,

• the Indian ethos to pay for goods and services on purchase instead of running up credit lines.

Usage of the debit and credit card in India; As per the data available with the Reserve Bank, India’s debit and credit card share was 25% of the payment systems volume in the financial year 2018-19. As per RBI’S report 2019 India is slowly and steadily moving away from cash for making payments at retail outlets. The volume of card payments grew by a CAGR of 40%

from 880 million transactions in 2012 to 4799 million transactions in 2017.

India has one of the lowest ratios of ATM cash withdrawal relative to cash in circulation. This is because of the high level of cash in circulation, low per-capita availability of ATMs and restriction on number of free withdrawals. It is also an indicator of low efficiency in recycling cash, i.e., the cycle withdrawing cash, making payments with it and in turn making deposits through the banking system.

Table 1: Domestic Card Usage India’s Position: 10/19

Sl No Country Domestic Card

Networks* Year Card Network Share (%) 2017 VISA MASTER

CARD DOMESTIC* AMEX DINERS Others

10 India Rupay 2012 48 33 15 4 - -

RBI report 2017 6. CONCLUSION

The results of the study show that according to RBI in India the use of plastic money is less as compared to other countries which means that India has a better scope in the business of plastic money in future. Both debit as well as credit card are used less within the country. Also, it is seen that use of credit card is much less than debit card amongst the people of the country as people are not willing to take higher risk. But slowly people are shifting towards plastic money because of its convenient nature; this can also be said as banks have a good opportunity to penetrate in such market.

The launch of Rupay provides the opportunity for Indian banking system to reduce the dependence on foreign card providers. The flexibility and cost effectiveness of Rupay cards will enhance the penetration of cards in India in rural and semi urban areas. In such a way we can say that in the growth of the economy of the country plastic money plays a relevant role in the development of the country.

REFERENCES

1. Sukhwinder Kaur Relevance of Plastic Money, Study based on Faridkot Dist.(Pb.) © IJEDR 2018 | Volume 6, Issue 3 | ISSN: 2321-9939.

2. Rajesh Tiwari, Priyanka Kumari PLASTIC MONEY: TREND, ISSUES AND CHALLENGES Volume 3, Number 4, October – December’ 2014 ISSN (Print):2319-9016, (Online):2319-9024 SJIF (2012): 3.201, SJIF (2013): 5.058.

3. Tabrez Haq and Bushra Malik, (2014). ” Consumer response towards the usage of plastic money” with emphasis on increase of shift of plastic money in India by consumers from Credit cards to Debit cards.

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4. Vimala V. and Dr. Sarala K.S., (2013).” Usage and perception of plastic money among the customers of BOI” with emphasis of the awareness level, perception and usage of new innovative services in regards to plastic money. Asian Journal of Research in business Economics and Management (Vol. 3, Issue 4, pp 24-37.

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Vol.04,Special Issue 07, (RAISMR-2019) November 2019, Available Online: www.ajeee.co.in/index.php/AJEEE 7. https://www.indiastudychannel.com/resources/172881-Adavantgaes-and-disadvantages-of-Plastic-

Money.aspx.

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