India can save up to Rs 70,000 crore in the next five years by reducing cash transactions and increasing the digital payments base in the country, payments gateway Visa said. In a study, the company said the country can save an additional Rs 4 lakh crore by 2024-’25 if it can reduce the cost of maintaining cash to 1.3% of its Gross Domestic Product from the current 1.7%, PTI reported.

The Indian economy has a high cost of cash because of factors such withdrawal charges, infrastructure maintenance and management expenses, the study said. The net cost of cash in the county is borne by households, businesses, banks and the Reserve Bank of India it added. Visa further said that less than 5% of the total Rs 75 lakh crore consumption expenditure in the country was conducted through digital payments.

Policies like tax rebates to consumers and merchants as well as the adoption of new technology and providing incentives to banks will help in increasing the adoption of cashless payments in the country, Visa said, The Hindu Business Line reported. The measures will also “add about 40.9 million households to the financial system”, according to the company. The government “needs to digitise government-to-government, citizen-to-government, government-to-business transactions,” said Visa Group Country Manager for India and South Asia TR Ramachandran.