Opinion: India all set for a good innings in the long run

It will make the sector much more affordable over a period of time. Also, excess inefficiencies in other areas, caused by the same reasons, will get cleansed. The overall cost of delivery in the economy goes down, and so does inflation. These are positive, long-term effects. 

Also, the amount of money which was in the black economy, and is in a sense burnt, comes back through the RBI to the government. This can be spent on various long term developmental programmes, such as infrastructure or even official election funding. It can even replace to some extent the subsidiary programmes that the government is forced to support, merely because there was a consensus existing on it already. The government could move towards a far more transparent, direct-to-bank account subsidy programme, which is devoid of leakage and goes on to boost consumption in the long run. So a lot of good things can happen through this in the long run. Of course, the banking system also gains through these measures. The system needs a boost right now.

We already have one of the finest financial infrastructures available anywhere in the world. Increasing access and lower cost of intermediation through the formal banking channels by expanding the so-called cash points or touch points will lead to an explosion of these services. Today, we have many new variants – we have payment banks, banks, non-banking financial services, mobile wallets and non-bank entities now providing banking services. As we see the landscape, banking services are no longer the domain of the bank in itself. Today we are talking about banking services being provided by even telcos.