Demonetization currency. In 2016, the Indian government decided

Demonetization is the act of stripping a currency unit of its status as legal tender. It occurs whenever there is a change of national currency: The current form or forms of money is pulled from circulation
and retired, often to be replaced with new notes or coins. Sometimes, a country
completely replaces the old currency with new currency.

In 2016, the Indian
government decided to demonetize the 500- and 1000- rupee notes, the two
biggest denominations in its currency system; these notes accounted for 86% of
the country’s circulating cash. With little warning, India’s Prime Minister
Narendra Modi announced to the citizenry on Nov. 8 that those notes were
worthless, effective immediately – and they had until the end of the year to
deposit or exchange them for newly introduced 2000 rupee and 500 rupee bills.

Chaos ensued in the
cash-dependent economy (some 78% of all Indian customer transactions are in
cash), as long, snaking lines formed outside ATMs and banks, which had to shut down
for a day. The new rupee notes have different specifications, including size
and thickness, requiring re-calibration of ATMs: only 60% of the country’s
200,000 ATMs were operational. Even those dispensing bills of lower
denominations faced shortages. The government’s restriction on daily withdrawal
amounts added to the misery, though a waiver on transaction fees did help a bit.

refers to an economic policy where a certain currency unit ceases to be
recognized or used as a form of legal tender. In other words, a currency
unit still loses its legal tender status as a new one comes into circulation.
Demonetization can also be referred to as the process of moving people from a
cash-based system to a cashless system (digital system).

Payment is a means of making payments over an
electronic network such as the Internet. E-commerce sites use electronic
payment, where digital payment refers to paperless monetary transactions.
Digital payment has revolutionized the business processing by reducing the
paperwork, transaction costs, and labor cost. Being user friendly and less
time-consuming than manual processing, it helps business organization to expand
its market reach/expansion. Listed below are some of the modes
of electronic payments ?

Credit Card- Payment using credit
card is one of most common mode of digital payment. Credit card is small
plastic card with a unique number attached with an account. It has also a
magnetic strip embedded in it which is used to read credit card via card

Debit card, like credit card, is a small plastic
card with a unique number mapped with the bank account number. It is required
to have a bank account before getting a debit card from the bank.
Smart Card

Smart card is again similar to a credit card or
a debit card in appearance, but it has a small microprocessor chip embedded in
it. It has the capacity to store a customer’s work-related and/or personal
information. Smart cards are also used to store money and the amount gets
deducted after every transaction.

E-Money transactions refer to
situation where payment is done over the network and the amount gets
transferred from one financial body to another financial body without any
involvement of a middleman. E-money transactions are faster, convenient, and
save a lot of time.

Electronic Fund Transfer is a very popular
electronic payment method to transfer money from one bank account to another
bank account. Accounts can be in the same bank or different banks. Fund
transfer can be done using ATM (Automated Teller Machine) or using a computer.

Statement of problem:

            The Government of India aimed that
the India wants to become cashless economy to achieve the economic growth
rapidly. For this the government used demonetization of
currency as an instrument, in this circumstance, overnight the policy of demonization
was implemented in India. This makes an attack among the common people to
setback them financially immediately. Due to end line, the people are rush to
bank counter and ATM to use their money. They stay in queue to exchange their
old notes (500 and 1000 rupees). Though the urban people are able to come over
this problem at some extent, but the rural people are struggled extensively.
Digital Payment a technique to streamline the effect of demonetarization in a
right direction, as it is easy to implement in urban area but it is too
difficult in rural areas as its influenced by various factors such as social,
cultural, economical, technological etc.. In this dimension, it is the need of
hour how far this demonetarization rooted in the rural areas and what factors
that influence them adversely.


v  To study the Impact of Demonetization on Digital Payment

v   Analyzing the factors
influencing the Digital Payment in rural area.


There is no significant
difference between Age of the Respondent and Opinion about Digital Payment.



 Sources of data: The Study is based on both Primary and Secondary Data.
Primary data is collected through questionnaire, The Secondary Data from
different journals, newspapers and relevant websites
have been consulted in order to make the study an effective one.

design: A
Survey was conducted in Panruti Taluk, in order to measure the Impact of
Digital Payment System. Using Random
Sampling, the samples were selected for the study.

size: The sample size of
this analysis is selected from sampling unit. The sample size is 150 respondents
in Panruti Taluk.

  Statistical tools: Percentage analysis, Chi-Square test.

 Limitation of the study:

The study was confined
only in Panruti Taluk, so the respondents are limited for this study and the
time period for this study is limited.

Review of the study:

Dhume Dec. 15, 2016, nearly six weeks after India abruptly scrapped
high-denomination banknotes accounting for about 85% of its currency by value,
the economy continue to slow. Poor and middle-class Indians are still suffering
from the shortage of new bills. But the most significant casualty may well be
Prime Minister Narendra Modi’s reputation as a sound economic manager.

Alvares, Cliford (2009) in their reports “The problem regarding
fake currency in India.” It is said that the country’s battle against fake
currency is not getting easier and many fakes go undetected. It is also stated
that counterfeiters hitherto had restricted printing facilities which made it
easier to discover fakes.

Ashish Das, and Rakhi Agarwal, (2010) in their article “Cashless Payment System
in India- A Roadmap” Cash as a mode of payment is an expensive proposition for
the Government. The country needs to move away from cash-based towards a
cashless (electronic) payment system. This will help reduce currency management
cost, track transactions, check tax avoidance / fraud etc., enhance financial
inclusion and integrate the parallel economy with main stream.

Jain, P.M (2006) in the article “E-payments and e-banking”
that e- payments will be able to check black” An Analysis of Growth Pattern of
Cashless Transaction System. Taking fullest advantage of technology, quick
payments and remittances will ensure optimal use of available funds for banks,
financial institutions, business houses and common citizen of India. He also
pointed out the need for e-payments and modes of e-payments and communication


analysis & interpretation:

       Ho: There is no significant difference between Age of the
Respondent and Opinion about E-Payment system


Highly Satisfied




Highly Dissatisfied


below 19 years







19-26 years







26-33 years







33-40 years







above 40 years















Degree of Freedom = (r-1)
(c-1) = (5-1) (5-1) = (4) (4) = 16

Level of Significant: 5%

Table value = 26.2962

Calculated value =



the Chi Square test, the calculated value is 18.9699 and the table value is 26.2962. Then The Calculated value is less than the
Table value, so the Null Hypothesis is accepted. Therefore the Result is there is no significant
difference between Age of the Respondent and Opinion about Digital Payment.



of respondents are male, 37% of respondent are female, using Digital Payment
while in Demonetization.

of respondent are below 19 years of age, 32% of respondents are between 19-26
years of age, 25% of respondents are between 26-33 years of age, 26% of
respondents are between 33-40 years of age, 7% of respondent are between above
40 years of respondent are using E-Payment for payment in Demonetization.

of respondents (72%) are satisfied with the Digital Payment in Demonetization.

of Respondents are satisfied with the Banking system for making payment in

of Respondents are highly satisfied, 42% of respondents are satisfied, and 57%
of respondents are neutral with the factors to make payment through Digital
Payment in demonetization.

in Demonetization, 37% of respondents are prefer IPS (Immediate Payment
System), 29% of respondents are prefer E-Wallet, 13% of respondents are prefer
NEFT (National Electronic Fund Transfer), 11% o respondents are prefer Plastic
money (Debit & Credit Card), 9% of respondents are prefer Net Banking, and
1% of respondents are prefer Cheque for make payment easy and their convenient
with these instrument.

of respondents (54%) are satisfied with the instrument for making transaction
in Digital Payment in Demonetization.

of respondent are says yes that the entrepreneurs are provide E-Instrument for

 In Demonetization, 100% of respondent are
benefit with Digital Payment to make their transaction.

of respondents (89%) are using their smart phones to make transaction in
Digital Payment with their convenient.


In the Demonetization the consumers are
adopted new method for make their payment. Traditionally the consumers are
prefer cash on delivery for  making
payment, but in recent the consumer and common peoples are move to instrument
of Digital Payment for make payments. Hence, The Demonetization gives more
opportunities to payment and the technologies should be developed. The
digitalized system is benefit to the consumer for payment. It’s should develop
the rural areas.



analysis refers that the impact which are faced by the rural area people in
demonetization. The respondents in rural area are struggled to face their daily
needs and their emergencies to pay in demonetization. The educated respondent’s
preferred digital payment in demonetization. The digital payment devices are
increased in demonetization to make their payment transaction. But there is no
awareness of the payment device in rural area.