The rupee will become strong with this historic reform
There is absolutely no doubt that India will write a new chapter in the history books about how a country and its people can rise to big challenges. I congratulate the Government’s move to demonetise Rs.500 and Rs.1,000 notes, but at the same time with such an important step taken, there is need to move away from a shadow economy to an even more transparent economy.
Digital transactions will now rise dramatically. In the next several years, India will become the most digitised economy, not just by size but by percentages. A more concerted shift to digital transactions will further enhance transparency and reduce leakage. India has all the pieces in place for a compelling vision for digital financial inclusion.
The increasing convergence of the technological and physical worlds will expand the security challenges globally and organizations will feel the long-term implications of this new digital ecosystem.
It is the biggest reform which no one expected and will have a huge impact on people who have hoarded money and not disclosed money for tax purposes, and this will give a big push to a digital and cashless economy. As people face shortage of notes, they prefer to go online with their transactions and payments. From everyday groceries to taxi fares, digital payments have gone up in every sector. This movement will push the electronics transactions to grow multifold like (10x to 50x, when it comes to digital payments). The rise in digital transactions will lead to a digital exhaust where better credit risk scoring will happen, catapulting in exponential growth. Expert says, we might have taken 20 years to transact digitally, but the next wave of growth and adoption will happen in the next two to three years and the bulk will come from the 500 million mobile users in the country.
Secondly, the growth of e-payment systems is increasing its popularity due to the widespread use of the Internet-based shopping and banking. The number of private and corporate transactions that are done electronically is growing rapidly. Malicious applications targeting online banking transactions have also increased dramatically in the past few years. The massive growth of electronic transactions is likely to witness a growing number of risks in the months to come. There is an immediate need for banks to get proactive about information security and beef up their IT infrastructure against potential cyber attacks. Organizations think they get inherent security just by migrating to the cloud. But moving data off-site does not absolve organizations of their responsibility to secure it and best practices still matter.
Going forward, if Rs.2,000 notes are limited in supply, will they command a premium? Exciting times ahead!