Demoneytisation Dash

Problem statement
Black money is money which is earned through any illegal activity controlled by
country regulations. Black money proceeds are usually received in cash from
underground economic activity and, as such, is not taxed. Recipients of black
money must hide it, spend it only in the underground economy, or attempt to
give it the appearance of legitimacy through money laundering. In India, black
money refers to funds earned on the black market, on which income and other
taxes have not been paid or which is the proceeds of criminal activity such as
bribery, kick backs and corruption.
Possible sources of black money include drug trafficking, weapons trading,
terrorism, prostitution, selling counterfeit or stolen goods and selling pirated
versions of copyrighted items such as software and musical recordings.
Demonetization is a boon for Cashless Economy

On Nov. 8, Prime Minister Narendra Modi declared that 500-and 1,000-rupee
notes (1,000 rupees is about $15) were no longer lawful delicate; individuals
were given 50 days to store them in financial balances or trade them for new
notes at banks and post workplaces when just 50% of Indian grown-ups have
ledgers. ? By pulling back 86 percent of circling money when 70 to 80 percent of
exchanges are money based, has the Indian government has taken a bold step to
root out black money and make India step forward towards a cashless economy.
Push for Digital Payments

The first step to cash less economy in a developing country like India is, each
and every person in the country to have a bank account. Pradhan mantra Jan
Dhan Yojana is the first step taken by the Indian Govt. to encourage people to
open bank accounts and it was a successful drive.
The second major step was demonetisation, which forced people to go cashless .
India is almost entirely a cash economy. Over 92% of its workers belong to the
unorganised sector and earn in cash. Cash powers the rural economy.Also, 97%
of retail transactions are done in cash, with only 6% of retailers accepting digital
payments.
In the process of Demonetisation, firms like PayTm , FreeCharge and Mobiwiki
made their E wallets accessible to people to encourage people to use digital
payments. Number of cashless transactions could rise significantly given the
rapid increase in the number of people owning mobile phones and using the
internet. As an opportunity, few smart phone apps are also being developed to
transfer money from one bank account to other bank account.
Paytm with its latest app update on Wednesday announced a feature for small
and medium businesses to accept payments from consumers using all bank's
debit/credit cards and UPI apps.
This is expected to further accelerate the pace of digital transactions. MobiKwik
claims a five-fold growth in downloads of its smartphone app and a 20-time
growth in usage of its platform this month.
FreeCharge has seen wallet load transactions grow eight times and a nine-fold
growth in consumer transactions. The government, on its part, has asked banks
to install 10 lakh additional point of sale (PoS) terminals within four months to
give a fillip to digital transactions across the country Banks have placed orders
for 6 lakh PoS machines and another 4 lakh are likely to be ordered in the next
few days.
Impact of Demonetization
The immediate impact of demonetisation is visible in the national Capital where
even small traders took to digital modes of payment including e-wallets. Tea
sellers, vegetable vendors and neighbourhood grocery stores started accepting
money through e-wallets after the government banned Rs 500 and Rs 1,000
notes, sweeping away 86 per cent of India's total currency in circulation.
Tea and vegetable sellers in most parts of the city began transaction through
digital wallets while the parking lot operators particularly in malls too accepted
payments through cards of e-wallets. Similarly, patients had the option of paying
doctors' fee through e-wallets at many private clinics and hospitals. Even as the
ruling AAP in Delhi went all guns blazing against the demonetisation move , autorickshaw drivers, a key vote bank of the party, supported the ban. Several auto
rickshaw unions in Delhi took out march in support of demonetisation. They said
with App-based taxi services going cashless, fewer people opted for auto
rickshaws.
India is currently in the middle of an all out movement to modernize the way
things are paid for. New bank accounts are being opened at a heightened rate, epayment services are seeing rapid growth, cash-on-delivery in e-commerce has
crashed, and digitally-focused sectors like the online grocery business have
started booming.
Even the vegetable vendors on the streets have opened up Paytm accounts and
they have a machine outside their shop where someone can scan the bar code
and make the payment.
Things to learn from other cashless Economies

The best examples to follow to make India cashless is Sweden and Kenya. In
Sweden, all major banks in the country came together to launch one digital
payment app: Swish. This app could be used to make payments at places like
petrol pumps, local grocery stores, buses, etc. even to donations in churches,
such that the transaction is done directly between bank accounts on one
platform.
Kenya achieved the same through mobile banking which was started by
dominant telecom operator Safaricom in association with Vodafone group in
2007 through M-Pesa (M Mobile and Pesa Money in Swahili (largest spoken
language in the hinterland)). With only 840 bank branches in the country and
less penetration of Credit/Debit cards in the country, M-Pesa built a strong retail
store chain and 40,000 agents to keep direct contact with the customers of MPesa; they act like portable bank branches to the M-Pesa customers who can give
them with hard-cash instantly and it is debited from their M-Pesa account. The
agents and retail stores are paid commission on the number of customers they
provide services. The customers join the network through a valid KYC which the
government can use to check valid transactions and probably bring them to the
banking ecosystem. The interest generated due to deposits of money from the
customers is used for charity and other philanthropic activities in the country.
Conclusion
India has started a move as demonetisation towards a cashless economy. India
can surely become a cashless economy with the help of private players like Visa
and MasterCard, along with payment wallets like PayTM, Oxigen, MobikWik,
FreeCharge, etc but where is the regulatory authority for the same. India
doesnt have stringent laws to force companies to adhere to their customers
security and privacy.
While through the government start-up UPI (United Payments Interface) the
government can ensure security and safety of the customers data and privacy,
instead of allowing private and foreign players like Visa, PayTM, Mastercard, etc.
the government has to create a robust platform using the security features
developed by NPCI (National Payments Corporation of India), provide better
access of RuPay cards at all POS terminals, etc in order to secure the consumer
data. UPI works both on feature and smartphones.
http://www.forbes.com/sites/wadeshepard/2016/12/14/inside-indias-cashlessrevolution/#5ba636e18c75
http://awordtotheworld.com/demonetization-cashless-india-economy-kenyasweden
https://www.bloomberg.com/news/articles/2016-11-09/modi-s-masterstroke-cashban-seen-boosting-india-digital-push
http://www.thehindubusinessline.com/portfolio/your-money/cashlesseconomy/article9391830.ece

Demoneytisation Dash

Uploaded by

Copyright:

Available Formats

Demoneytisation Dash

Uploaded by

Document Information

Original Description:

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Demoneytisation Dash

Uploaded by

Copyright:

Available Formats

Problem statement

Demonetization is a boon for Cashless Economy

Push for Digital Payments

Things to learn from other cashless Economies

You might also like