The importance of digital money

With NBFCs getting a nod from RBI to operate as a small transaction bank, and digital money leaving the trails; here is some food for thought for the policy makers:

1. With ten NBFCs getting the nod, what would be the qualification criteria for the banks to be fully functional? Or, will they actually be allowed to operate as a full-bank? For the NBFCs like Bandhan, their incentive is a fully-operational bank, after necessary qualifications. My question is, even if they qualify, can we actually allow them to qualify- essentially can we have a three-tiered banking system prelevant in the country- small transactional bank, fully operational bank, and investment banks. In that case, the small transactional bank can park their money in a fully operational banks, who can again park money in investment banks.

2. Where technology matters, and PSU banks are making operational losses, can a directive come to the PSU banks that we need to embrace technology as soon as possible to reduce operational costs?

3. I really do not understand why 3 transactions are only free for an ATM card. It can be 4-6. I am not sure why we are not moving towards a generic ATM, where we can pay utility bills at the ATM and also draw money with our card, from any bank? If we are seeing the clear picture, then we know that ATMs at one place will be redundant given the desire people have expressed in not going to banks or ATMs, but use digital transactions.

4. Some of the lobbyists are fully operational in not allowing digital transactions to happen. This would actually hit their black money coiffures. My question to RBI is: Why cannot we put a better trail on the money, by allowing an amount only till a threshold to be deposited in the bank in the form of cash. Let us say 1-5 crores.

5. Why cannot we follow a trail of the deposits of the money to any political party with proper trails. I guess the GOI is taking a definite step towards allowing the political parties to declare their assets and donations. There is nothing wrong in citing the sources. If a party is accepting money, then let is say “Yes, I have taken so-and-so amount from so-and-so persons!” We have also failed to instill the fear of law in our own back-yard. Exemplary convictions can be the answer to this gap. Everyone talks of IT department’s tax terrorism; but do we really understand that how much is hurting the economy of India through undeclared assets and gross NPAs? I will not be surprised at the developing and developed countries to work together hand-in-hand to promote digital money lest this second income of “black money” goes to fund terrorism or anti-social elements in any form.

So, we can see the benefits of the e-money trail!

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