Cash transactions - The bane of all Indian problems

[Former Member]

I feel that abolishing cash can improve the Indian economy. Completely transforming all transactions into electronic ones will help track source of all funds especially in case of troublesome transactions, increase government's revenue and simplify our lives. Imagine if we could just put our finger for finger print verification in an auto rickshaw and the amount is immediately debited to your savings account or credit card (account because you won't need a card anymore). The machine should give you options which account (s) you want debited. I feel if the government adopts it there is a tremendous market and job creation potential too.

To a large extent most economies have long been using plastic cash. But in India we still often use large amounts of cash. Imagine with electronic transactions, no unknown source funds, no black economy and tax evaders. And certainly the cost of an electronic format of money will be less than printing a metallic coin even of the smallest denomination. It's certainly not easy but no "change" is.

Bala

[matt]

Switzerland still uses cash quite extensively, despite having very efficient and widely available electronic payment systems, and we don't have a big problem with tax-evasion, black market etc. So maybe it's something else causing the problems you perceive.

[Former Member]

Hi Matt,

>and we don't have a big problem with tax-evasion,

Of course, all other countries tax-evasion is secured in Swiss banks...

There are so much stories of French tax payers crossing the Swiss border with their brief-case full of cash !

Just kidding h1.

Olivier

[Former Member]

I am not sure if we are talking of the same scales. Will you buy a LCD television with say 1000 EUR cash? It won't be rare to see that happen in India. Though the government today insists on all financial institutions to ask for PAN cards (kind of tax identity cards) when somebody transacts for a value more than Rs. 49000 in cash this is merely useful in case of a check. And a person can easily make thrice a transaction of Rs. 49000.

It would be great if the government begins by saying that all currency notes and coins should be returned in the next 6 months to the banks to be converted into savings account balances. After 6 months the value of the currency will be only 75%. In 1 year the notes/coins will be worth almost nothing. I actually see another problem that people will panic and try to get converted as soon as possible.

Lakshmipathi, you are right that for the large rural population in India they earn only so much that it is spent the same day. But still they can spend the money in a place where their fingerprint is identified. Belgium for example uses the Proton card. It's a fantastic concept. You can load say 50 EUR into your proton card and pay it for a newspaper, a cup of coffee and such small expenses without having to swipe your card and sign.

There is one other important point I missed. Fake currency rackets which are bleeding the nations resources. One of the most important ways for a society to become more civilized and sophisticated is by adopting technology. Also, most solutions for human problems lie in technology or may be it's merely a matter of perspective.

Corporates have made an enormous difference in India. India could take a bite of the global cake thanks to it's emphasis on English skills and university level education. Many governments have indeed begun delivering online services and have embarked on e-governance projects after rubbing shoulders with the corporates. Cashless societies too can be created if the corporates were to take the initiative. And it's not another philanthropic asking from them. There's a potent market. All it needs is initiative from the bigwigs.

Bala

[matt]

> I am not sure if we are talking of the same scales. Will you buy a LCD television with say 1000 EUR cash? It won't be rare to see that happen in India. 

Well, 1000CHFs. But no, it isn't rare. In the UK I rarely carried more than about £10, since debit and credit cards are so widely accepted. But in Switzerland, I regularly carry several hundred. Also, since my debit card only pays up to CHF2000, for larger purchase, I have to use cash - the only alternative is pay by bank transfer then get the goods in a couple of days. And I want them now !

[Former Member]

>Also, since my debit card only pays up to CHF2000, for larger purchase, I have to use cash - the only >alternative is pay by bank transfer then get the goods in a couple of days.

Is'n it possible to use cheques ?

Here in France, I would use cash until 20 u20AC, then a debit card up to 1000 u20AC and then cheques.

If you buy a car or a house, you would use a special "Bank certifed" cheque.

I've heard that German people use cash a lot and that the 500 u20AC bill was created for Germany.

Olivier

[matt]

Cheques are very rare, I don't even have a cheque-book on my swiss accounts! For a car purchase or house(!), I use a bank transfer, but if I was buying consumer iteam, then I'd most likely use cash. It isn't unusual. Many shops will accept a debit card (2000CHF limit) but not credit cards - even supermarkets.

I don't know many shops that will accept anything above the u20AC100. Swiss ATMs dispense u20AC50 as the smallest - that raises eyebrows once we're in France or Germany and some distance from the border.

Some shops and garages won't accept CHF1000 notes. But you can by a coffee or a newspaper with a CHF200, and it's unlikely to cause comment. ( And no, it's not because CH is so expensive that you don't get any change ).

[Former Member]

Hi Oliver,

usually I don't have more than max. 50u20AC with me because I use to pay with my debit card. So I am not sure if that is correct (with the 500u20AC bill).

Siggi

[Former Member]

Perhaps the EUR 500,- note has a secret watermark of a nice juicy T-bone steak in it, for the sniffer dogs along the Liechtenstein border to find as a r e w a r d?

I worked in Egypt for a few years, and almost everything was done in cash. I drove my bike through Mahadi a few times between the bank, the exchange dealer (the currency was pegged at the time...) and our offices with more than 1 million EGP in my bags and pockets.

That might sound crazy, but a lot of people did it the same way and others must have observed folks like me entering the bank like a student living on a boot-lace and exiting looking like the Michelin man.

But I always felt safe, as there was a certain code of ethics about it. Some poor fellow trusted to walk around with loads of money which does not belong to him... must be a good soul

There is also quite a lot of literature on "economics of trust". Perhaps SAP could develop a module for the GRC suite to tie back into this... (e.g. a lie detector built into the SAPGui...

Cheers,

Julius

[Former Member]

Hi Siegfried,

I must have heard a urban myth !

Olivier

[Lakshmipathi]

While in one sense this is a good suggestion, in another way, in a developing country like India, this is not possible. This is due to the fact that still there are illiteracy in villages and they dont have any bank account. Whatever they earn on daily basis, that will be expensed on the same day. Here cash only will help them.

thanks

G. Lakshmipathi