INTRODUCTION terms of GDP and third biggest



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Digitalization – History in India

Digitalization is the utilization of advanced innovations to change a plan of action and give new income and esteem delivering openings; it is the way toward moving to a computerized business.

India is the fastest developing economy of the world. The Indian economy is the seventh biggest economy of the world in terms of GDP and third biggest by purchasing power parity (PPP) after US and China. The Indian economy has seen a great deal of changes from acting self-dependent to opening its entryway for worldwide exchanging by introducing LPG (Liberalization, Privatization and Globalization) in 1991 under the Finance Minister Mr Manmohan Singh. And from that point of time, India is growing at a great pace. As indicated by the most recent Economic Survey 2015-16, the Indian economy will keep on growing more than 7% in 2016-17. As indicated by Fitch Ratings Agency, India’s Gross Domestic Product (GDP) will probably develop by 7.7% in FY 2016-17 and gradually increase to 8% by FY 2018-19, driven by the gradual usage of changes in the economy, higher disposable income and change in financial action. The current strides of the Indian government have indicated positive outcomes in the growth of the GDP. As indicated by a Goldman Sachs report in September 2015, India could develop at a potential 8% from financial 2016 to 2020 if provided great implementation of advancement in the banking sector, technology adaptation, urbanization and other changes.

The 1990s likewise observed the passage of innovation in India and individuals started using PCs and computerization overwhelmed each area and now we can see the virtual world that exists and anything can occur in it from joining the world to start a war if not took care of legitimately. But in a developing country like India the process of digital soundness has been moderate and got a tremendous push to go computerized when the demonetization shook everybody. In spite of the fact that there have been different activities taken by our Honorable Prime Minister Mr. Narendra Modi, for example, Make In India, Swatch Bharat Abhiyan, Digital India and so forth. However, it was during cash crunch when individuals began perceiving the advantages of being carefully stable and how valuable it is. Our administration has accentuated continuous cashless as it will make exchanges smoother and transparent and dispenses with the presence of parallel economy which postures risk to the peace in our nation and furthermore helped in their financial inclusion plan and has seen that demonetization has made the accounts opened under Pradhan Mantri Jan Dhan Yojana operational. As appropriately said by Rajat Gandhi on financial inclusion “Regardless of what number of banks may open and what number of boots you have on the ground, if the individual does not know about the financial options that are available to him, policies, plans and budgetary instruments will mean pretty much nothing. It is necessary for a man to comprehend what to search for and know about the advantages that he can get from it. “Thus this makes the financial knowledge related education all the more vital. Financial inclusion is a quantitative term and financial literacy is more about the quality. Financial literacy concentrates on the understanding one ought to need to how to utilize and deal with the money effectively and lessen the risk and save their money from ecological changes, for example, changes in the economy, inflation and so forth. With the demonetization individuals have likewise acknowledged how essential it has progressed for them to think about their money and what influences it the most and how they can secure. At this stage digital mindfulness has likewise picked up significance and individuals are additionally ready to take in the new modes accessible for them to deal with their money in the cashless way. During this time the online payment methods have helped individuals to survive the cash crunch they confronted and have additionally turned into the main impetus for digital literacy and financial literacy.

Objective of the study

To study the steps taken towards digitalization in India and its impact on Indian Financial System.

Research Methodology

The investigation is exploratory and quantitative in nature. The secondary data is utilized for the analysis of the issue. Sources for the secondary information are started from the different sources like investigation report, newspaper, articles and Reserve bank of India (RBI) sites.


Digitalization and GDP Growth

Effect of digitalization on a nation can be surveyed based on its effect on the government, on the economy and the general public. We have seen a noteworthy change in each division with the rise of digitalization. The digitalization has made new openings for work, have prompted development in extremely segment and furthermore prompted the development of the economy i.e. have helped in the GDP growth of the nation. The government has stressed on the digitalization as it brings transparency, better control, better openings for work, it likewise gives an ease of access to the general population and an upward development in the quality of life. The study led by Strategy & (formerly known as Booz and Company) shows that the expansion and compelling use of digitalization can increase their GDP. They indicated that constrained economies face 0.5% expansion in GDP per capita for each 10% increment in digitalization, while advanced digital economies demonstrate a 0.62% increment in GDP per capita for each 10% digitalization increment.

India is known as the powerhouse of the software industry and is in the main position in worldwide sourcing market, however, there is still a lot of work to improve the situation its Digital India battle. Digitalization will be useful in the event that it can contact the most extreme individuals and for that, every single native of the nation ought to have the facility to effectively get to the offices for which they should be associated with the web as well as have digital proficiency to have the capacity to utilize facilities gave to them.

The divide between associated metropolitan centers and remote country zones is one of the principle points of Digital India Program. For this the Central government is confident of accomplishing the entire rollout of broadband network crosswise over 2.5 lakh village panchayats in the nation by 2018 according to Bharat Net programme, which plans to give broadband connectivity to all panchayats in the nation, the panchayats will have an ecological system that will additionally help the availability and scaffold the bridge in the nation. India has additionally begun working together with different nations and business associations (like Google, Cisco and so forth.) to speed up its digitalization procedure by infrastructural improvement, expanding access to web and furthermore began the change of cities to smart cities. This Campaign likewise got some propellant as free/least expensive 4G mobile data and least expensive Wi-Fi broadband for the clients. Organization Reliance Jio Infocomm Limited (RJIL) an auxiliary of Reliance Industries offered push to web use by presenting ground crushing information pack rates, at start of the undertaking by Reliance the SIM was issued free of cost with 4GB 4G information just by presenting the photocopy of Aadhaar card and IMEI no of your 4G or LTE or VOLTE empowered handsets and after the finish of March 2017 at a value most minimal of all other specialist co-ops.

Digitalization and Demonetization

Digitalization and Demonetization: Digitalization progress through Digital India Program expects to give the truly necessary push to the nine pillars of growth areas, to be specific Broadband Highways, Universal Access to Mobile Connectivity, Open Internet Access Program, e-Governance: Reforming Government through Technology, eKranti – Electronic Delivery of Services, Information for All, Electronics Manufacturing, IT for Jobs and Early Harvest Programmes. Each  pillar has its own particular significance, complexities in usage and is a force for the general development of the nation.



1.     Broadband Highways: It covers three parts broadband for all rural, broadband for all urban and National data foundations.

2.     All inclusive Access to Mobile Connectivity: It concentrates on arrange infiltration and filling the holes in availability in the nation.

3.     Open Internet Access Program: To give Common Services Centers (CSCs) and Post Offices as multi-service centres.

4.     e-Governance: Reforming Government through Technology: Government Process Reengineering utilizing IT to rearrange and make the administration processes more productive is basic for change to make the delivery of  government services driven organizations more successful crosswise over different government domains and hence should be executed by all Ministries/Departments.

5.     e-Kranti : Electronic Delivery of Services: The Government endorsed the National eGovernance Plan (NeGP), involving 31 Mission Mode Projects (MMPs) and 8 parts. e-Kranti is a fundamental pillar of the Digital India activity and there are 44 Mission Mode Projects under e-Kranti, which are at different phases of execution.( incorporates Banking, Post office, Income  tax, Land records, Agriculture, Gram Panchayats and so forth.

6.     Information for All: Online facilitating of data and archives to encourage open and simple access to data for subjects.

7.     Electronic Manufacturing: It concentrates on advancing electronic manufacturing in the nation with the objective of NET ZERO Imports by 2020 as a striking exhibition of expectation.

8.     IT for Jobs: It concentrates on giving training to the adolescent in the abilities required for employment opportunities in the IT/ITES segment.

9.     Early Harvest Programs: It comprises of those activities which are to be actualized inside short course of events.

Digitalization is a shelter and should be used legitimately with the current instance of demonetization we can evaluate that it has helped individuals amid the demonetization from Nov. 8 2016 to Dec. 31 2016 when the nation confronted cash crunch, when Rs. 500 and Rs. 1000 notes were scratched and new currency was circled in substitution of old notes. This progression shook the tax evaders as well as pushed India to end up noticeably more carefully stable nation and has additionally featured the advantages and need to go cashless ( or have a less cash based economy). Demonetization has likewise expanded the exchanges from mobile wallet and digital payment channels. Paytm said it hit a record of 5-million transactions per day, preparing Rs.24,000 crore worth of transactions, not as much as seven days into the Indian government’s choice to demonetise Rs.500 and Rs.1,000 notes making it the biggest digital payment organization in the nation It might be viewed as an impermanent stage yet the straightforward entry and accessibility has made to a greater degree a decent option than the paper or plastic cash. With the advancement of technology in the banking division more straightforwardness came in the stream of cash in the economy.

Pradhan Mantri Jan Dhan Yojana offered push to financial inclusion incorporation that everybody whether from urban area or from rural area ought to have a account with the goal that everybody is associated in the economy and demonetization prompted the operationalization of Jan Dhan accounts which were opened under the scheme. It likewise had various advantages like individuals who did not had the identity proofs enlisted themselves for Aadhar card and other identity proofs and will likewise help in direct transfer of advantages to the concerned individual.  Digitalization in this circumstance had a virtual access to the money and with the idea of e-kranti in the banking division it will end up plainly less demanding for the general population to benefit the financial services gave by them. Having a bank account isn’t the main matter of concern yet additionally having the information that how their money gets influenced by monetary circumstance of the nation and different components for having a control over their funds is likewise critical. At the point when individuals are fiscally proficient, they will probably investigate the products and services offered by banks and utilize them for their advantages. This quickens the pace of financial inclusion, where everybody can get to the fundamental managing of banking facilities instead of depending on the conventional frameworks of money market, for example, obtaining cash from money lenders on illogical interest rates. Financial inclusion and financial education are two fundamental elements of an effective economy. In this way financial proficiency is the thing that additionally needs the consideration of the majority and with all the most recent advances occurring around, it is turning into a matter of prime concern. Financial education is “the procedure by which finance related customers/investors enhance their knowing of financial products and ideas and, through data, direction as well as target guidance, build up the abilities and certainty to end up plainly more mindful of financial dangers and opportunities, to settle on informed decisions, to know where to go for help, and to take other compelling actions to enhance their finance related prosperity.”

The finance related proficiency level significantly relies on the education and income of the people; the social factors such like family size, family foundation, age, regions nature of employment lightly affect this. With the digitalization there is a straightforward entry to the money as the banking system framework has developed with the time and furnishes the client with various facilities like online payments of their month to month expenses, for example, electricity charges, payment of premiums and so on. With this development and improvement individuals need to mindful about the issues related with digitalization of finances.

Highlights of the progress in Digital India related to Indian Financial System

·       More than 12,000 rural post office branches have been connected digitally and soon payment banking would likewise turn into a reality for them.

·       Electronic exchanges identified with e-governance projects in the nation have relatively multiplied in 2015, inferable from the Digital India Programme. As indicated by government site electronic transaction aggregation and analysis layer (eTaal), 3.53 billion transaction occurred in 2014, which relatively multiplied in 2015 to 6.95 billion.

Digitalization in Indian Banking Sector

Where everything started…

The requirement for computerization was felt in the Indian banking area in late 1980s, with a specific end goal to enhance the customer service, accounting and MIS reporting In 1988, Reserve Bank of India set up a Committee on computerization in banks headed by Dr. C. Rangarajan.

Banks started utilizing Information Technology at first with the introduction of stand alone PCs and moved to Local Area Network (LAN) availability. With more advancement, banks received the Core Banking platform Therefore branch banking changed to bank banking. Center Banking Solution (CBS) empowered banks to expand the solace highlight to the customers as a promising advance towards upgrading customer comfort through Anywhere and Anytime Banking. Diverse Core Banking platforms, for example, Finacle outlined by Infosys, BaNCS by TCS, FLEXCUBE by I-flex, picked up prevalence. The procedure of Computerization picked up pace with the opening of the economy in 1991-92. A noteworthy driver for this change was impelled by rising competition from private and foreign banks. A few business banks began moving towards computerized customer services to stay focused and relevant in the race.

Banks have profited in a few routes by embracing newer technologies. E-banking an account has brought about decreasing costs radically and has created income through different channels. According to last accessible data, the cost of a bank exchange on Branch Banking is assessed to be in a scope of Rs.70 to Rs.75 while it is around Rs.15 to Rs.16 on ATM, Rs.2 or less on Online Banking and Rs.1 or less on Mobile Banking. The quantity of customer base has additionally expanded as a result of the convenience in ‘Anywhere Banking’. Digitization has diminished human blunder. It is conceivable to get to and dissect the information whenever empowering a solid detailing framework.

RBI has been a directing power for the banks in framing controls and offering proposals to accomplish different targets. Business Banks in India have moved towards technology by method for Bank Mechanization and Automation with the prologue to MICR based check processing, Electronic Funds exchange, Inter-connectivity among bank Branches and usage of ATM (Automated Teller Machine) Channel have brought about the convenience of Anytime banking. Strong initiatives have been taken by the Reserve Bank of India in fortifying the Payment and Settlement frameworks in banks.

Current status in the Digital Space

Indian Government is aggressively advancing digital transactions. The intoduction of United Payments Interface (UPI) and Bharat Interface for Money (BHIM) by National Payments Corporation of India (NPCI) are critical steps for development in the Payment Systems area. UPI is a mobile interface where individuals can make instant funds transfer between accounts in various banks relies upon the premise of virtual address without specifying the bank account.

Today banks expect to give quick, exact and quality banking experience to their customers. Today, the topmost agenda for every one of the banks in India is digitization.

As indicated by the RBI Report in 2016-17 there are 2,22,475 Automated Teller Machines (ATMs) and 25,29,141 Point of Sale devices (POS). Execution of electronic payment system, for example, NEFT (National Electronic Fund Transfer), ECS (Electronic Clearing Service), RTGS (Real Time Gross Settlement), Check Truncation System, Mobile banking framework, Debit cards, Credit Cards, Prepaid cards have all increased wide acknowledgment in Indian banks. These are generally momentous historic points in the banking sector.  Online banking has changed the image of banking and achieved a critical change in the banking operations.

National Electronic Funds Transfer (NEFT) is the most regularly utilized electronic payment technique for transferring money from any bank branch to another bank in India. It works fifty-fifty hourly groups. At present there are 23 settlements. Real Time Settlement (RTGS) is fundamentally utilized for high-esteem transactions which depend on ‘real time’. The base adds up to the RTGS is Rupees Two Lakhs. There is no upper limit. Immediate Payment Service (IMPS) is a moment electronic funds exchange office offered by National Payments Corporation of India (NPCI) which is accessible 24 x 7.

.The utilization of Prepaid installment instruments (PPIs) for buy of products and services and funds transfer has expanded impressively. The estimation of transactions through PPI Cards (which incorporate mobile prepaid instruments, gift vouchers, foreign travel cards and corporate cards) and mobile wallets have bounced definitely from Rs.105 billion and Rs. 82 billion individually in 2014-15 to Rs. 277 billion and Rs. 532 billion individually in 2016-17.




·       Security Risks – External dangers, for example, hacking, sniffing and caricaturing expose banks to security dangers. Banks are likewise presented to interior dangers particularly frauds by employees/workers in agreement with customers.

·       Financial Literacy/Customer Awareness – Lack of learning among individuals to utilize e-banking facilities is the real limitation in India.

·       Fear factor – One of the greatest obstacles in online banking is inclination to ordinary keeping banking technique by more established age and for the most part individuals from the provincial regions. The fear of losing money in the online transaction is an obstruction to use of e-banking.