Photographer: Dhiraj Singh/Bloomberg

Cashless Is King as E-Money Stocks Surge From India Currency Ban

  • Government offer rebates, discounts to spur digital payments
  • Digital economy seen growing to $1 trillion in 3 to 4 years

Prime Minister Narendra Modi may offer another gift to India’s electronic cash companies. An index of the stocks has gained 12 percent since November’s surprise currency ban, and may further rally after the government introduced tax rebates on digital transactions from Christmas Day.

The gain in the gauge of 23 companies that make the devices and offer cashless services compares with the S&P BSE Sensex’s 3 percent drop since Nov. 8, when Modi invalidated 86 percent of the nation’s currency in circulation. Modi rolled out a slew of measures including rewards, tax rebates and discounts for digital transactions on Dec. 25.

E-commerce software makers Vedavaag Systems Ltd. and Intense Technologies Ltd. have rallied more than 50 percent in the past month, while Aurionpro Solutions Ltd., R S Software India Ltd. and Tanla Solutions Ltd. have gained 20 percent.

Digital payments have jumped almost 43 percent to 958 million transactions in December from November, according to the central bank’s latest data. As many as 41 percent of small and medium companies said their clients have shifted to bank checks or electronic payments since demonetization, according to a survey of more than 1,100 firms from the local unit of Standard & Poor’s.

India’s digital economy will grow to $1 trillion over the next 3 to 4 years, Information Technology Minister Ravi Shankar Prasad said Wednesday.

“We expect double-digit revenues growth for e-governance firms over the next 3 to 4 years if the government systematically encourages cashless transactions,” A.K. Prabhakar, head of research at IDBI Capital in Mumbai, said by phone. “Growth in digital modes of payments will continue to be strong if the safety is increased and charges are reduced.”

Credit Suisse Singapore Ltd. bought 3.83 million shares in Vakrangee Ltd. on Nov. 10. The company, which provides digital financial services to the government and lenders, counts Janus Capital Management LLCamong its shareholders, data compiled by Bloomberg show.

— With assistance by Anurag Kotoky, and Jeanette Rodrigues

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