Ad Here  
Needed a Banking Atlas Reaching out: is it slowing down? Smart banking in smart cities Small is ‘more’ beautiful Banking on Risk Financial inclusion vs unclaimed deposits Grows Bigger New capitals of Migrant banks Managing NPAs... Reaching the Unreached… United India Insurance - Rs 110 crore losses have been claimed till now due to floods in Tamil Nadu From lazy banking to easy banking Stage set for Indian ‘avatar’ of foreign banks What is the priority – mergers or NPA reduction? Governance in Reverse Gear? All that glitters is not gold... A development bank for BRICS The paradox: clamour for the Goliath and David LVB- A supermarket of financial services Indian customers are tech savvy Emerging crisis Well-lived... How ‘secure’ are the secured loans? A bank for women, by women Bank deposits account for 46.3 per cent of household savings Too big to fail and too small to sail Monetary policy continues to adopt dis-inflationary path Two banks: their jubilees and performances Big bank merger, bigger expectations Cut in repo rate – lower than expected Drastic decline in asset quality Banking in Telangana How okay are new banks? Banking overhauling or reorganisation? Bottomlines shrink, bad loans rise... Nothing much can happen…. Hesitancy in announcing year-end results Growing gainfully Rationalised Cautious and considerate Drop in SLR- sparing lendable resources Ernakulam excels... Good, bad and ugly Payment banks have arrived Insatiable appetite for credit The collaboration suite of cyber criminals Growing volume of stressed assets… Who is the real beneficiary? Why priority status? Why any time money? Capital base of regional rural banks raised New bank licences, at last... One down in private sector A new development bank rising in the east… Lacklustre credit expansion Merger mania haunts banks It’s a war on black money, support it. Anytime banking to anywhere banking Fund healthcare clinics in villages... Ferrying digital banking to Lakshadweep Aadhaar, niraadhaar and banking Small finance payment banks... Mega merger is on Just 660 days! Target over-ambitious... Cradle of banks to a smart city... Another route for achieving financial inclusion Thirty more cities seek to become SMART Small finance banks offer high interest rates Perhaps small is more beautiful than big! Targets continue to be ad hoc Greet Lakshmi the banking robot Holy or unholy?
It’s a war on black money, support it.
When a country declares war, its citizens extend full support to the government setting aside their political differences and mindsets. The same is the need to direct this war on black money. Alas, it hasn’t been so.

India has thousands of economists and hundreds of universities teaching economics.  There has not been a single one objective study analysing the impact of demonetisation. What little analysis has been done is based on western economic models that are irrelevant to India’s cash-driven economy. Also, the analysis is influenced by one’s liking for the prime minister. Even a writer of Arun Shourie’s standing seems to have lost his objectivity. 

Worth the try...

So far no country has succeeded in stopping black money generation through demonetisation.  Perhaps India will also end up that way. This does not mean the government has got it wrong. India may not root out corruption, but it will lay out a solid basis towards it if it implements demonetisation. 

In ten days about Rs. 6 lakh crore of high value notes have been deposited. By closing date, 30 

December, about 60 per cent of demonetised notes may get deposited in the banks. That will result in wiping out a significant amount of black money which will result in reducing the price for assets like real estate and gold. 

Also those who have deposited more than Rs. 2.5 lakh will come under the attention of the tax department. Many such depositors will end up paying a penalty on taxes owed. The government has also declared that they will go after property owners who had monetised their ill-gotten wealth and if they succeed, ill-gotten real estate will also be taken over by the government. This requires tremendous improvement in governance, which is not likely even under the leadership of Modi. 

Even those who are complimenting the government for demonetisation are surprised by the replacement of Rs 1000 note by a higher denomination note of Rs 2000. The latest development now is that there will be Rs 1000 note in addition to Rs 2000 note. Only if the government can limit the circulation of high denomination notes (Rs 500, Rs1000 and Rs 2000) to less than 20 per cent of total circulation (considerably less than the current level of 85 per cent) and promote cashless society will make sense.


An overwhelmingly cash economy...

India is overwhelmingly a cash economy with 90 per cent of all transactions taking place that way. Since smaller denomination notes are used for transactions and bigger denomination notes for storing value, the government could have stopped the printing of Rs 1000 and Rs 2000 notes. 


Moving towards a cashless society...

By restricting circulation of high denomination notes, the government will compel people to use a payment system like Paytm, credit/debit cards, bank cheques... Such a cashless society will result in less generation of black money. Besides demonetisation, government should encourage the process of moving towards a cashless society. 

During wars, one cannot escape a lot of inconveniences and people learn to cope with them. In fact, if people did not rush to the banks soon after the declaration of demonetisation, there would have been no long lines. Already these lines have thinned after the first few days in most parts of the country. Also during wars, media does not frighten people and demoralise them through horror stories. There is need for self-censorship, especially on the part of  television medium.

Author :
Reported On :
Sector :
Shoulder :
IE, the business magazine from south was launched in 1968 and pioneered business journalism in south. Through the 45 years IE has been focusing on well-presented and well-researched articles. When giants in the industry stumbled to keep pace with the digital revolution, IE stayed affixed embracing technology.
Read more
Economist Communications Ltd is committed to ensuring that your privacy is protected.
Read more
You agree that your use of this Website and the purchase of the magazine will be governed by these terms and conditions.
Read more
S-15, Industrial Estate,
Chennai - 600 032.
PHONE: +91 44 22501236