The Overseas Investors Chamber of Commerce and Industry (OICCI) has put forth a recommendation to the government, urging the demonetization of the Rs5,000 banknote as a measure to curb cash dealings in the country.
This proposal was included in the OICCI’s recommendations for the upcoming budget of 2023-2024, which aims to foster economic documentation and promote a digital payment system.
READ MORE: FPCCI proposes simplification of taxation system in Budget 2023-2024
Recognizing the need for a comprehensive approach to achieve the vision of digitalization, the OICCI emphasized the requirement for both public and private sectors to intervene. The current IT infrastructure is limited in its capacity to support widespread banking penetration in rural areas, posing a significant obstacle to the successful implementation of digital payment systems nationwide. To overcome this challenge, the OICCI suggests engaging international e-commerce companies and fintech firms to aid in the adoption of digital payment platforms.
READ MORE: Pakistan’s apex trade body calls for significant reduction in petroleum prices
Outlined within their recommendations are several key points that aim to document the economy and facilitate the transition to a cash-less society:
i. Eliminating or discouraging the circulation of cash in the economy to enhance documentation.
ii. Promoting the development of platforms and infrastructure that facilitate digitization of payments, including fintech solutions, POS invoices, e-invoices, and mobile wallets. This approach would help bring retailers and service providers into the tax net.
READ MORE: Business leaders urge unity to address political instability and economic crisis
iii. Providing tax incentives and concessions to fintech companies and merchants to promote financial inclusion and advance towards a cash-less economy.
iv. Rationalizing the cost of transactions conducted through point-of-sale (POS) systems to encourage their utilization.
v. Launching attractive schemes for retailers and consumers, in collaboration with banks, the State Bank of Pakistan (SBP), and other relevant stakeholders. These initiatives would promote the adoption of digital banking products such as debit/credit cards, POS machines, and mobile wallets, thus reducing the circulation of cash in the economy.
vi. Recommending the demonetization of the Rs5,000 banknote as a measure to discourage cash dealings.
READ MORE: FPCCI urges government consultation for Pakistan’s economic challenges
The OICCI believes that implementing these measures will contribute to the digitization of payments and the overall growth of the economy. By reducing reliance on cash transactions and promoting digital alternatives, the country can improve transparency, increase tax revenue, and foster financial inclusion.
It remains to be seen how the government will respond to the OICCI’s recommendation regarding the demonetization of the Rs5,000 banknote, but it is clear that efforts to curb cash dealings and accelerate the shift towards a digital payment ecosystem are gaining momentum.
Disclaimer: This news report is based on the recommendations put forth by the Overseas Investors Chamber of Commerce and Industry (OICCI) and does not necessarily reflect the government’s stance or decisions on the matter.
