MP Rajeev Chandrasekhar has written a letter to Arun Jaitley, Finance Minister of India, on December 21. In the letter he has apprised the Finance Minister of certain key issues that will arise as the Government and the RBI move towards digitising the economy and the banking and payments sector.
At the outset, Rajeev welcomed the Government and RBI’s move to transform and digitise the economy. The letter then criticised Government’s inadequacy towards the execution of the new demonetisation policy and said, “It seems that the RBI and/or the banks have not adequately established this definition for banks to follow, which is the only reason why the JDY (Jan Dhan Yojana) accounts all around the country are being used for receiving other deposits and, in turn, used for laundering demonetisation linked deposits. So, RBI must clearly and without ambiguity define JDY accounts in terms of their restrictive functionality in precise terms to Banks that are opening and operating them , so that JDY accounts are ring-fenced from the other banking system.”
In his letter to the Finance Minister, Rajeev sought the minister’s attention on five key issues:
Defining use and operation of JDY accounts – The RBI must clearly and without any ambiguity define JDY accounts in terms of their restrictive functionality in precise terms to banks that are opening and operating them, so that JDY accounts are ring-fenced from the other banking systems.
Defining the use of Aadhaar in the banking and financial system- There are numerous fake Aadhaar entries in the Aadhaar database, including recent Pakistani spies who had Aadhar cards issued in fake names with their biometrics. This shows that the Aadhar database is a poorly verified database in terms of identifying the person whose biometrics are in the database. Therefore, RBI must ensure Aadhaar can and must be used ‘ONLY ALONG WITH’ other proof of ID for people to enter the financial system.
Planning for issues of transaction fraud, data security, and privacy- The data security issue in itself represents a serious challenge to the Indian banking system and the RBI should work with the Government to plan proactively on issues of infrastructure, capacity building, and legislative requirements to deter and prosecute the perpetrators.
Growing the Internet infrastructure and access to digital payment hotspots – The Ministry of Finance and Department of Telecommunication should work closely to create a more focussed investment and rollout strategy of the public networks and private networks using the USO funds and other incentives.
Planning for anticipated surge in Digital Black Economy- There are already reports of a surge in domestic bitcoin trade and move of black economy to the dark Internet. The surveillance and policing requirements are challenging and Rajeev wrote that he suspects the Government and RBI are ill-equipped currently to deal with this.