Everyone knew the after effects of the demonetisation on India and the positive impact as well as the negative impact that it had.
But hardly did anyone think about the opportunities that lay unexplored, whether it is for the good intention or the bad. In fact, there were so many instances where merchants accepting digital payments or the customers making cashless payments were taken for a ride.
No doubt people were forced into this digital payment business due to lack of cash during the initial 1-1.5 months of demonetisation, but later the situation improved to such an extent that the ATMs again looked empty despite having the cash.
The biggest irony here is that once things came back to normalcy, there was a sudden dearth of cash in several ATMs and some bank branches. Is this due to the sudden cash flow or due to the uncontrolled printing of notes by RBI or exaggerated demand for cash from certain sections of the society?
It has to be noted that this is how the society behaves. Once the limit on daily withdrawal has been increased significantly, again the people will start to stack up the cash in their homes/offices. This is not unusual since the public's confidence in banks came down during the demonetisation. It is not the note ban itself that caused this distrust, but the fact that the banks were not able to serve the general public with the honesty expected from them. This is due to the few bad apples found in almost all departments and the situation could only get worse until and unless the govt doesnt encourage digital payments even after the availability of cash. How do they do it?
To convince the public that digital payments are better and more beneficial to them, they need to be given incentives: For example doing away with the petrol surcharges, giving cashbacks for digital payments just like how it is being done for fuel stations where a fixed 0.75% cashback is given for every fuel using debit/credit cards. Hope such promotions are given across several merchant locations.
It is here that the BHIM app is really useful and needs to be expanded and enhanced with some attractive features where cashbacks are given on certain categories of transactions.
Anyway, the present situation reminds me of a simple story: The king was given a new security chief since the existing chief has been proved to be corrupt and stealing valuable stuff from the palace. But the new chief is not popular with most of the palace staff since he is too sincere and nothing could go wrong under his supervision. So what did the staff and inmates of the royal palace do? Slowly started the misuse of their rights and brought back the previous chief in disguise. The king could not do much here since the staff are much smarter than him and they wanted to exploit the royal resources as much as they can.
So the moral of the story is that until and unless the people's mindset doesnt change, even a king cannot do anything to root out the malice of corruption and black money which go hand in hand.
The note ban was a temporary measure but the fake notes and money hoarding as well as other ways of black money strive until and unless the govt is not agile enough. Conduct review meets with the RBI and all major banks and track the money that they have in the banks or ATMs and track those dealing in huge amounts of cash. Sadly, this doesnt seem to be happening now since everything has settled and anything related to black money is hardly discussed these days on news channels or in the govt.
So the irony is that despite the hike in usage of digital payments, the usage of cash could actually increase now since the banking network is hardly enough and even if there are enough banks in india they are suffering from the lack of trust in the eyes of public. No one has any idea of what new charges are applied on their own hard earned money in the form of not maintaining AMB(depite the jan dhan yojana being touted as a movement to open crores of "zero-balance" bank accounts, many of those accounts, including those from the govt-owned banks are making it mandatory to maintain a minimum balance). Unless the financial system works in a coherent way and remain constantly in sync with the PM's vision of financial inclusion, any number of demonetisations or remonetisations will yield peanuts.
With love.. Anil
But hardly did anyone think about the opportunities that lay unexplored, whether it is for the good intention or the bad. In fact, there were so many instances where merchants accepting digital payments or the customers making cashless payments were taken for a ride.
No doubt people were forced into this digital payment business due to lack of cash during the initial 1-1.5 months of demonetisation, but later the situation improved to such an extent that the ATMs again looked empty despite having the cash.
The biggest irony here is that once things came back to normalcy, there was a sudden dearth of cash in several ATMs and some bank branches. Is this due to the sudden cash flow or due to the uncontrolled printing of notes by RBI or exaggerated demand for cash from certain sections of the society?
It has to be noted that this is how the society behaves. Once the limit on daily withdrawal has been increased significantly, again the people will start to stack up the cash in their homes/offices. This is not unusual since the public's confidence in banks came down during the demonetisation. It is not the note ban itself that caused this distrust, but the fact that the banks were not able to serve the general public with the honesty expected from them. This is due to the few bad apples found in almost all departments and the situation could only get worse until and unless the govt doesnt encourage digital payments even after the availability of cash. How do they do it?
To convince the public that digital payments are better and more beneficial to them, they need to be given incentives: For example doing away with the petrol surcharges, giving cashbacks for digital payments just like how it is being done for fuel stations where a fixed 0.75% cashback is given for every fuel using debit/credit cards. Hope such promotions are given across several merchant locations.
It is here that the BHIM app is really useful and needs to be expanded and enhanced with some attractive features where cashbacks are given on certain categories of transactions.
Anyway, the present situation reminds me of a simple story: The king was given a new security chief since the existing chief has been proved to be corrupt and stealing valuable stuff from the palace. But the new chief is not popular with most of the palace staff since he is too sincere and nothing could go wrong under his supervision. So what did the staff and inmates of the royal palace do? Slowly started the misuse of their rights and brought back the previous chief in disguise. The king could not do much here since the staff are much smarter than him and they wanted to exploit the royal resources as much as they can.
So the moral of the story is that until and unless the people's mindset doesnt change, even a king cannot do anything to root out the malice of corruption and black money which go hand in hand.
The note ban was a temporary measure but the fake notes and money hoarding as well as other ways of black money strive until and unless the govt is not agile enough. Conduct review meets with the RBI and all major banks and track the money that they have in the banks or ATMs and track those dealing in huge amounts of cash. Sadly, this doesnt seem to be happening now since everything has settled and anything related to black money is hardly discussed these days on news channels or in the govt.
So the irony is that despite the hike in usage of digital payments, the usage of cash could actually increase now since the banking network is hardly enough and even if there are enough banks in india they are suffering from the lack of trust in the eyes of public. No one has any idea of what new charges are applied on their own hard earned money in the form of not maintaining AMB(depite the jan dhan yojana being touted as a movement to open crores of "zero-balance" bank accounts, many of those accounts, including those from the govt-owned banks are making it mandatory to maintain a minimum balance). Unless the financial system works in a coherent way and remain constantly in sync with the PM's vision of financial inclusion, any number of demonetisations or remonetisations will yield peanuts.
With love.. Anil
