Cashless transactions can solve black money problem, says PM Modi

  • HT Correspondent, Hindustan Times, Mumbai
  • Updated: Jan 02, 2015 23:58 IST

Prime Minister Narendra Modi on Friday made a strong pitch for cashless banking transactions to clamp down on India's infamous parallel economy, even as he asked banks to create products to wean people away from parking surplus funds in gold.

"Of many solutions to tame black money, cashless transaction is one of the very important solutions," Modi said at an event to mark 60 years of banking major ICICI in Mumbai.

"This is a very big opportunity and we should promote this. People should inculcate the habit of cashless transaction," he said.

Viewed as going hand in hand with corruption, "black money" has been at the top of the agenda of widespread public protests over the last couple of years.

In a report last month, the Supreme Court-monitored Special Investigation Team has recommended far-reaching changes to combat black money including a radical proposal to limit cash holding by individuals.

Modi also asked banks to come out with products to encourage savings in financial assets away from gold.

"The challenge for banks was to assure people that a bank account would ensure easy access to their savings whenever required," he said, while adding this could help banks become the agents of social transformation.

According to the World Gold Council, over the past five years, the annual demand for the yellow metal has averaged 895 tonnes, equivalent to 26% of total physical demand worldwide.

According to experts, India's savings rate could reach 40% of GDP in the next few years if households started investing largely in financial assets.

Taking forward his 'Swachh Bharat' campaign, Modi asked banks to help create 100,000 'Swachhta Entrepreneurs' in a year by financing cleanliness and waste management ventures.

Finance minister Arun Jaitley said the target of adding 75 million bank accounts under the Pradhan Mantri Jan Dhan Yojana had been achieved much before schedule. Indicating the government's resolve to counter delaying tactics of the Opposition in passing key Bills in Parliament, Jaitley said the government will continue doggedly on the roadmap that has been set out and there will be no relaxation on this.

"The biggest challenge is to attract domestic and international investments. Time has come to enter the next phase. I hope banks, both public sector and private, will be the catalysts," he added.

Earlier, ICICI Bank managing director and CEO Chanda Kochhar, announced the bank's adoption of Akodara village in Gujarat to develop it into a "digital village" by providing facilities such as cashless banking, e-health, as well as digitised schools and mandis.

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