The Centre has asked state governments to ensure that no additional charges are levied on e-payments to urban local bodies and also consider rolling out incentives like cash back on utility bills paid through digital means.
"I request you to motivate all Urban Local Bodies (ULBs) in your state to switch over to electronic transactions for their payments as well as receipts," Union minister M Venkaiah Naidu said in letters to state urban development ministers.
He said ULBs can play "very important and motivational role" in the drive towards cashless economy by arranging awareness camps and opening accounts, among other steps.
The Urban Development Minister suggested ULBs to consider launching incentives like giving one per cent cash back on utility bills paid through various e-platforms.
"We must incentivise digital transactions and ensure that no additional fees, charges, etc, are levied for such transactions," he said.
He said ULBs on one hand can switch over to 100 percent e-payment of all their incomes-- like collection of taxes, charges, license fee, lease rent-- and can ensure electronic payments for salaries, contractual obligations and other benefits like social security pensions.
Naidu said the Centre has launched a "massive drive" to promote payments through cards and digital means which will help India move towards a "less-cash economy", which will offer benefits like anywhere-anytime availability of services, real-time update of records and ease and transparency in transactions.
Earlier, the Urban Development Ministry had held a video conference with 4,041 cities and states officials to sensitise and motivate them to switch over to e-payments.