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

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