Indian financial market is changing rapidly and emerging on the global platform. India is gradually transitioning from a cash-centric to a cashless economy.  The entire country is undergoing the phase of modernization in monetary transactions with e-payment services gaining unparalleled momentum. The boundaries of electronic transactions are no longer confined to the big business houses as the small street vendors, hawkers are now accepting electronic payments for their transactions. It prompts the people of the country to learn transacting through electronic means rather than using cash for every transaction. According to World Bank Report a large section of Indian population is still unbanked. Realizing the need to bring the people residing in far rural areas of the country in the ambit of banking umbrella, the Reserve Bank of India authorized the private players to enter in the banking industry. On Aug19, 2015, the RBI has given approvals for eleven payment banks. Payment Banks activities are concentrated on farmers, migrant labourers, low income households and small businesses which are still not financially inclusive. These banks offer banking facilities such as payments, deposits, remittances, internet banking but cannot undertake lending activities. This paper attempts to study the pros and cons of a cashless economy along with the various initiatives undertaken by the govt of India to promote cashless economy.  The paper also attempts to study the contribution of Payment Banks in move towards a cashless economy as well as their role in banking the unbanked section of Indian population.

KEYWORDS:  Payment Banks, Financial Inclusion, UPI, BHIM, RBI VISION 2021.