Government should be watchful about the origination of black money: SBI

According to a SBI Research note there is excess currency floating in the economy and therefore the government needs to be attentive about the whereabouts of the source of illicit money.

The report in principal supported the demonetisation move by the government but with a rider that all the money which is present in the system, its origination should be tracked.

According to SBI Research, there is excess currency floating in the economy and the number could be as much as Rs 5 lakh crore. The report noted that such excess cash is neither required nor desirable for overall equilibrium of the economy. Over time, large part of such excess cash becomes unaccounted and adds to the stock of black economy.

As per SBI Research, the government should come up with a detailed list of incentives to popularise digital transactions, like completely banning all cash transactions for government services, mandatory installation of PoS machines at merchant outlets and making PAN details mandatory for any cash transaction above a specified limit.

Report also highlighted the use of mobile wallets as a platform which has the potential to be a disruptive force in the years to come and hence banks should focus on providing mobile based banking services to customers and merchants.