LIRNEasia’s IAB member and close collaborator Professor Ashok Jhunjhunwala has written a thought-provoking op-ed in the Times of India:
Black money thrives in the cash economy. If we introduce traceability in financial transactions, it will be difficult to hide. We can do this using some simple available technologies. It is possible to carry out all transactions in electronic form, where money is transferred from the payer’s bank account to the payee’s. The back-end core banking system of almost all banks allows that. ATM withdrawals, any-branch banking and internet banking thrive on it. The internet, however, is used by a small section. Credit card (and debit card) based payments and transaction could be another way, but have not caught on much (except for use of debit cards for cash withdrawals).
But India has over 750 million mobile phone connections, and growing at 15 million per month. Over 500 million invididuals are believed to have mobiles. In a few years, mobile telephony could touch most of India’s adult population. It is now possible to link one’s mobile phone to a bank account. So, it is possible to carry out most transactions including money transfer, bill payments, balance enquiry and checks on past transactions. A bank’s computer uses the caller line identification (CLI) and a customer’s PIN to authenticate her, following which any transaction can be carried out using an application loaded on her phone. End-to-end encryption makes transactions secure. Transactions are instantaneous: for example, any payment is notified by sending an SMS to the payer as well as payee.