DEMONETIZATION.
AUTHOR PANKTI SAVLA.
ROLL NO – 022254.
DEMONETIZATION AND DIGITAL PAYMENTS.
CHAKRABARTY, et al (2023) say that the Demonetization of INR 1000 and INR 500 notes, announced on 8 November 2016, has generated huge attention among public, media and academia alike. This paper probes into the shift to digital payments in India in recent times, using Chen and Liu’s methodology of outlier detection in select indicators of digital payments in India. The sudden announcement of demonetization made some drastic compositional shifts in money supply, with INR 500 and INR 1000 accounted for nearly 85% of total currency. Despite this, nearly 99% of the cash came back to the banking system, in terms of currency (C) – broad money (M3) ratio, demonetization seems like a blip. Moreover, India like other developing countries was already in the falling track of lower currency-M3 ratio. Over the years, various modes of digital payments have emerged as the major vistas of transactions. The Real-time Gross Settlement (RTGS) and National Electronic Fund Transfer (NEFT) systems are two major technology-based digital funds transfer systems in India. Demonetization has had a positive effect on the use of digital payments, but data on digital transactions does not tend to show any major aberrations. This paper seeks to explore the presence and nature of outliers around the time of, or immediately following demonetization, and found no persistent impact of demonetization in changing the behaviour of people in terms of financial transactions. While both for RTGS and NEFT there seem to be no/inconclusive evidence of an innovative outlier, in case of mobile transactions there could have been some fundamental change, but not in an upward direction. The major implication of the demonetization experiment for the digital economy of India is perhaps that a one-shot unannounced change may have little fundamental effect on such transaction habits.
Black money.
CALESS, K. (2023) say that on 8 November 2016, Prime Minister Narendra Modi announced that 500- and 1,000-rupee notes (worth about £6 and £12) were now illegal tender. Citizens were given a small window of time to spend the old currency on approved things, and banks were closed and cash machines were shut for two days. A new 2,000-rupee note was introduced on 10 November, and withdrawal of legal tender was capped at 2,000 rupees a day. Rural India suffered particularly badly, and farmers reportedly suffered bankruptcy in the ensuing liquidity crunch. In 2017, cash is more readily available, but official economic growth predictions have been revised down from 7.5 per cent to between 6.5 and 7 per cent.
The annual Mumbai Derby is the premier horse-racing weekend of the year, and cash is vital to the sport. Gambling is illegal in India, except in horse racing. Sanjay and Rahul tell the author that black money returned to the races immediately after demonetisation, with 70% of the money being black. Tax collection is a major problem, with only 1-2 per cent of Indians paying direct income tax. The government has since moved on from eradicating black money and is now talking of moving to a digital future.
Jokes about the new “cashless India” are abound. The “cashless” system, Paytm and Jio, India’s mass surveillance project, and Mukul Rohatgi’s statement that “violation of privacy doesn’t mean anything” are all part of a conspiracy theory. Demonetisation is yet to be revealed, and attempts to memorialise the Holocaust have failed and may even be counterproductive. Anti-Semitism still exists and sometimes thrives. The Home Secretary, Amber Rudd, posted a picture of herself signing a Holocaust remembrance book on Twitter.
Two weeks later, she announced that the “Dubs amendment” would be discontinued after resettling just 350 children. Adolf Hitler offered German Jews to the world, but the world did not want them. Britain took 10,000 children, sponsored privately, and left their parents to die.Britain took 732 Jewish children after 1945, and Rudd’s signing of a Holocaust remembrance book was a cynical PR gesture. The orthodoxy in these circles is to let people come to bear witness, but this policy led to a young Polish boy describing a fellow visitor as “a rich Jewish bitch”. Theresa May was also caught out. Barbara Winton, the daughter of Nicholas Winton, who organised the Czech Kindertransport and saved 669 Jewish children, pointed out that the Prime Minister had been her father’s MP and had spoken at his memorial service. However, TripAdvisor and its users’ reviews of the death-camp sites in Poland show complaints about the “service” at Auschwitz-Birkenau. The Holocaust symbolises absolute evil, but it comforts us, allowing us to take refuge in distance and in difference.
Court Rules Amid Faint Dissent, Modi’s Cash Ban Was Legal.
MAHAJAN, S. et al (2023) share that India’s Supreme Court upheld Prime Minister Narendra Modi’s 2016 decision to overnight invalidate high-value currency notes, a decision that could provide firepower to the ruling party ahead of a series of elections in coming months. A five-judge panel in a majority verdict Monday said the government’s move satisfied the test of “proportionality” and the court cannot supplant the wisdom of the executive on the matter. Justice B.V. Nagarathna offered faint dissent in calling the decision to withdraw 500 ($6) and 1,000 rupee notes an “exercise of power contrary to the law” that should have been discussed in parliament and conducted through legislation. The shock move to ban 86% of India’s cash caused much hardship, with limited benefits, but there’s been an increase in digital payments, a drop in fake notes, and an improvement in tax collections. Modi’s Bharatiya Janata Party managed to retain power after elections in 2019. He will also face assembly elections in several states, including Karnataka, Madhya Pradesh and Rajasthan, this year.
Examining the Volatility of Systematic Risk in Equity Securities.
SATHYANARAYANA, S. et al (2023) say that Capital asset Pricing Model (CAPM) theory establishes a positive relationship between systematic risk and stock returns, which is modeled as Beta co-efficient. This study computes and estimates beta stability in a company level using historical daily dataset. This study examines Beta stability in the context of demonetization to examine the impact of demonetization on volatility and investors behavior. It also tests unknown breaks in the beta series for the sample period used. Ruler’s review found that stock value progresses could be clarified by market changes, but 20% of the surplus deviation was represented by ventures. Beta stability changes based on industry, indices, time period, size of firm, liquidity factor, and market conditions. Beta stability varies for individual stocks and portfolios due to individual stocks beta features and macro-economic factors.
Beta stability in Indian stock market is time varying, dependent on size and liquidity, and can fluctuate due to macroeconomic factors. This study tested the beta stability changes due to subprime crisis and demonetization implemented in India. The Sharpe’s model is used to compute beta values for stocks, while the Chow Breakpoint test is used to investigate structural breaks in time series data. The study used Ftest, multiple breakpoint tests, and CUSUM tests to estimate the structural breaks in the series. The Chow Breakpoint test showed that the US Subprime crisis had no structural break in the computed beta series, while Currency Demonetization had a structural break in the computed beta series.
The Bai and Perron (2003) test was used to identify multiple structural breaks in the computed beta series, based on the Schwarz criterion and Liu, Wu, and Zidek (1997) proposed criterion. Asian Paints, Bharti Airtel, Cipla, DrReddys Labs, GAIL, HDFC, HDFC Bank, Hero Motocorp, HUL, ICICI Bank, Infosys, L&T, ITC, Lupin, M&M, Maruti Suzuki, NTPC, ONGC, Reliance Industries, SBI, Tata Motors, Tata Steel, TCS and Wipro all have one UDmax determined break and five WDmax determined breaks in the computed beta series. CUSUM and CUSUMSQ tests are used to find structural change in the computed beta series of 30 Sensex listed stocks and three portfolios. CUSUM test finds instability in the distribution if the sum of cumulation goes outside the area between the two critical lines.
The CUSUM test showed that all three constructed portfolios reported a sequential change in the computed beta series. The study was conducted in two phases: computation of CAPM beta on 30 stocks by using OLS Regression and known, unknown and sequential breaks tests by using Chow breakpoint test and Bai and Perron test. The Chow test results showed that the constructed three portfolios were stable for both the Subprime crisis and currency demonetization. Almost all the stocks had both UDmax determined break and WDmax determined breaks in the computed beta series, except for Bharati Airtel. However, Bajaj Auto, Bharti Airtel, Cipla, Coal India, Dr.Reddys Labs, GAIL HDFC, HDFC Bank, Hero Motocorp, HUL, ICICI Bank, Infosys, SBI Tata Steel, TCS and Wipro betas were unstable for the study period. Market participants must take this fact seriously before constructing portfolios and taking positions in the stock market.
Consumer Protection in ATM Transactions: An Investigation into Unauthorised Transactions and Caveats”
BHATT, A. S. et al (2023) said that The ATMs are electronic devices that allow customers to make cash withdrawals and check their account balance without the need for a human teller. They are connected to the authorization of transactions by the card issuer or other authorizing institution via the communication network. Data base security is also important. ATM network system provides authentication, confidentiality, integrity, and non-repudiation features to maintain security. Three mechanisms are used to provide security: time out, invalid card, and stolen card.
E-frauds are a major problem in the electronic payment system. This research discusses measures to minimize fraud in e-payment transactions and revenue loss. Data mining techniques and neural network algorithms can be combined to obtain a high fraud coverage and low false alarm rate. Data mining tools can be used to spot patterns and fraud transactions, while hacking is a serious issue that affects data and network security. Misuses (supervised) and anomaly detection are two main fraud detection approaches.
EMV is a dominant protocol used for smart card payments, but there is a compulsion that can lead to unauthorized disclosure of cardholder data. Attack tree methodology is used to document these compulsions. E-commerce security is a part of information security, with overburdened staff, lack of training, low compliance level, and competition being the main causes of bank fraud. Fraud risk management, risk culture, and bank performance can be measured to protect financial operations from cyber frauds.
The study examines electronic fraud and credit facilitation of banks in Nigeria, using secondary data from NEFF annual reports. Aijaz Ahmed and Syed Mir Muhammad Shah discussed ATM fraud in Pakistan in 2012. This paper recommends strong internal controls and fraud screening strategies for security tools. This research study aimed to identify the reasons behind an unauthorized transaction in India. It used a descriptive research analysis method to sample 400 ATM card holders of banks.
The results showed that there was no significant difference between age, education, profession, or gender in terms of unauthorized transactions. Age had a significant effect on unauthorized transactions, while education had a significant effect on unauthorized transactions. Profession had a significant effect on unauthorized transactions, while gender had a significant effect on unauthorized transactions. The results showed that there was no significant difference between age, education, profession, or gender in terms of unauthorized transactions. This suggests that there is no significant difference between age, education, profession, or gender in terms of unauthorized transactions.
The research found that most customers don’t follow RBI guidelines and are not aware of unauthorized transactions. Good machinery is needed to prevent unauthorized transactions and some customers are not using ATMs due to malfunctioning. Online wallets and net banking are also not used due to errors.
Comparing the Impact of COVID-19 Outbreak, Demonetisation, and GST on the Indian Financial Market: A Comparative Analysis
MISHRA, A. K. et al (2023) say that This paper examines the impact of the COVID-19 pandemic on the Indian financial market, proxied by stock returns, the exchange rate between the Indian rupee and the US dollar, and foreign institutional investor net inflows. It compares the outcomes of the effects of COVID-19 with those of two other major economic policy events in India, namely demonetization and implementation of the Goods and Services Tax. The government’s response to COVID-19 was a lockdown, restricting people’s movement and business activities. Studies have shown that India’s stock market is influenced by mutual funds, gold and crude oil prices, currency risk, exchange rates and foreign equity flows, and long-range dependence. This study examines the effect of COVID-19 on India’s stock market by proposing a dynamic model that relates stock returns, the INR-USD exchange rate, and FII flows.
The empirical approach is motivated by the portfolio balance model, which suggests that an exogenous increase in stock prices will increase the demand for money in anticipation of future expected returns. The study uses daily data spanning from April 8, 2003 to April 20, 2020. This data period was used to compare the impacts of three shocks: demonetization, GST, and COVID-19. Results showed that stock returns were negative during the COVID-19 outbreak, but not during the post-demonetization and GST phases. The benchmark stock price volatility was 2.77, compared to 0.51 and 0.59 in the post-demonetization and GST phases.
The paper presents a Markov-switching VAR (MS-VAR) model with two regimes: Normal market conditions and Abnormal market conditions. The IRF (impulse response function) of the MS-VAR model indicates that shocks in stock returns have asymmetric impacts on stock returns in the COVID-19 phase. The transition matrix shows that the impact of COVID-19 is severe in the context of India’s stock liquidity index (Sensex). The main conclusions and policy implications are presented.
MS-VAR model is flexible in modeling time series subject to nonlinearity and regime shifts, estimated based on Gaussian Maximum Likelihood estimation. Reduced form of model derivatives and transition matrix P control probability of switch from state 1 to 2. The two-state process is used to track the bull–bear cycle of the Indian equity market for the three phases of post-demonetization, GST implementation, and COVID-19 outbreak. Data and measurement of variables is based on daily data from January 3, 2003 to April 20, 2020. The CEIC database provides accurate and in-depth data on the Indian economy and more than 200 other countries. The kurtosis coefficient, Jarque–Bera test, and correlation coefficients between stock returns, exchange rate returns, and net FIIs suggest a negative relation between stock prices and exchange rates.
The COVID-19 pandemic has had a significant impact on stock prices, exchange rates, and FII net flows, with the Sensex showing negative growth and all other stock indices showing negative returns and high volatility. The INR depreciated more during the COVID-19 phase than during the post-demonetization and GST phases. The growth of FII outflows from the Indian financial market is lower in the COVID-19 phase compared to the post-demonetization and GST phases. The MS-VAR results suggest a likely non-linear structure in the stock and exchange rate returns and net FII flows. The MSI(2)-VAR(2)-EVENT(3) model examines the average daily returns of stock indices for three different events, with the COVID-19 dummy being highly statistically significant in regime 1. Autoregressive coefficients are negative, suggesting negative serial correlation.
Exchange rate and stock returns have a negative impact on both regimes and stock indices, with the demonetization phase having a severe impact on the BSE 100. This paper examines the impact of the COVID-19 outbreak on Indian financial markets, emphasizing the dynamic interlinkages between stock returns, net FII flows, and exchange rate volatility. The COVID-19 pandemic has had a severe impact on the Indian stock liquidity index, the BSE Sensex, compared to the demonetization and GST phases. RBI should intervene in forward contract policy and determine trading limits to arrest speculative forces and stabilize the Indian financial market by minimizing outflow of FIIs.
Exploring Customer Behaviour and Preferences in the Usage of Debit Cards: A Study of Ahmedabad City.
DAVE, I. et al (2023) say that Digital banking is an end-to-end platform that enables all functional levels of banking on all service delivery platforms, including debit cards. Debit cards have replaced credit cards as the preferred payment mode in India post demonetization, and are changing with chips and tap options. Banks are exploring contact-less credit and debit cards in India, and debit card usage has grown significantly in recent years in the US. A new survey examines current use, demographics, reasons for using debit cards, and household financial conditions. The paper used a key variable on bank-imposed transaction fees to analyze price sensitivity of card usage and found a 12% decline in overall usage in response to a 1.8% fee charged on certain debit card transactions.
Gene and Sujit (2007) used panel estimation techniques to analyze the change in transactional demand for cash resulting from greater usage of debit cards. Demand for low denomination notes decreases as debit card usage increases, while demand for high denomination notes is less affected. IT-based banking services have increased customer satisfaction, improved operational efficiency, reduced transaction time, and given banks a competitive edge. M-banking adoption literature is fragmented, but compatibility, perceived usefulness, and attitude are the most significant drivers of intentions. The banking industry is adapting to technology innovation, with demand for web-based banking products increasing due to customer-focused service understanding, decreasing attainability cost, competitive market structure, and consumers’ desire to access banking products quickly.
Sanli and Hobikogolu (2015) and Ilyas and Necla (2015) examined the development of web banking tools in the Turkish banking industry and their effects on bank profitability. ROA and ROE performance have had a significant effect on the ratio of branches to ATMs in developed and developing countries, but some variables were found to be in contrast to the expected negative relationship. Logistic regression showed that age, gender, income, marital status, education, profession, comfort level with computers and previous experience of shopping online affect the likelihood of people using Internet banking. This study examined the factors that influence customer satisfaction towards Internet banking, including service quality, web design and content, security and privacy, convenience and speed. Results showed that web design and content, convenience and speed are the top three factors that influence customer satisfaction. Regression analysis showed that R2 (co-efficient of determinant) tends to be near to 0 in all cases, suggesting that the equation may not be perfect for forecasting the value of upgradation of debit card.
Debit card usage has a strong objective of convenience and accessibility, with utility debit cards preferred for convenience and cashback for return. Debit cards have a huge potential of reaching many customers, and banks should develop and upgrade them to make them more accessible.
Parliament, demonetisation, and GST.
RAJARAMAN, I. (2023) say that Demonetization and the introduction of the Goods and Services Tax (GST) were two major economic policies introduced during the first term of the National Democratic Alliance (NDA) government. The BJP headed the NDA coalition, but had a single-party majority in the Lok Sabha. The GST was a fully anticipated event, with the Constitutional Amendment delegated formulation of the rules to a GST Council. Question hour in Parliament offered a channel through which the reactions of ordinary taxpayers could be publicly raised. Demonetization was an unanticipated event that offered no scope for reform or correction.
The most important details in this text are that the Lok Sabha (LS) is the house of directly elected members in the bicameral Parliament, and that questions are also admitted with random selection in the Rajya Sabha (RS). Section 2 covers the process of selection of questions for answering in the Lok Sabha, with descriptive data on the time pattern of questions following demonetization and the introduction of the GST. Section 3 presents the breakdown by party of questions asked, in three groups: the ruling Bharatiya Janata Party (BJP), parties in coalition with the BJP, and parties in opposition. Sections 4 and 5 investigate types of questions asked on demonetization and GST, respectively. Questions are selected from the universe of questions submitted to each cluster by a computerized process, with 250 questions selected for answering during question hour on any given day.
The probability of selection of questions on any one issue also changes from week to week, in accordance with public interest. Questions on a theme can be aggregated into a single multi-part question by the secretariat after selection. There were 61 Parliament weeks covering the full five-year term of LS16, with 34 questions selected after demonetization and 23 after GST. Party-wise propensity to ask questions is calculated as the share of party members in the total number of member-questions asked, normalized by the seat share of the party in Parliament. Other confounding factors such as age, gender, education, attendance record, and region were not taken into account. Figure 3 shows the scatter of these calculated propensity coefficients against absolute seat strength in Parliament.
The propensity of BJP allies to ask questions on demonetization and GST was highest among BJP allies, reflecting differences between coalition partners and the ruling party. Questions on demonetization focused on the difficulties faced by the public and the objectives of demonetization. Questions on cash insufficiency, impact on the real economy, and bank liquidity were answered. After the event, questions continued to be asked about the process leading up to the decision and whether objectives had been met. RBI’s resolution questions justifications of demonetisation, as fake currency and unaccounted wealth are only 0.65% of unreturned currency. The questions on GST were varied and changed in focus over time, reflecting the evolution of the tax, which was open to continued examination and reform.
Execution damage is a major issue for small traders and exporters, and has been addressed through a feedback and review committee and measures taken to ease compliance. A reverse charge mechanism has been introduced to neutralize the bias of buyers towards sellers. The introduction of the GST caused collateral damage among small manufacturing units and unregistered Traders, who suffered in comparison to larger buyers. Parliamentary questions provided the impetus for changes to help small traders, but the revenue collection issue was not explored. The e-way bill was limited to Rs. 11 crore and an equivalent amount in penalty over 6 months, but Parliamentary questions revealed that the party-wise propensity to ask questions normalized by seat share was highest among parties allied to the BJP. Parliamentary questioning was more intense on GST than demonetization, with 25% of the total strength of the Lok Sabha asking one or more questions. Parliamentary questions can elicit information about the functioning of government, flagging public concern, and offer the only indicator of whether concerns are adequately conveyed.
Paytm’s Successful Strategy in Capitalizing on Indian Demonetization.
WRIGHT, C. (2023) say that India’s biggest fintech, Paytm, has doubled its user base in a year and is on track to have 500 million customers by 2020. It is backed by Ant Financial and Softbank and spurred by state policy on financial inclusion. Paytm’s founder, Vijay Shekhar Sharma, was flat broke before demonetization, but the company’s journey from a prepaid mobile webcharge website to an Alibaba and Ant Financial-funded juggernaut was well underway. Demonetization gave the company an almighty lift, forcing people to look for alternatives and the Paytm wallet was the simplest answer. Opposition politician Rahul Gandhi suggested Paytm stood for “Pay to Modi”.
Paytm’s CFO Madhur Deora explains that the company was already on its way before demonetization. Paytm had been doing payment solutions for offline merchants since October 2015 and had signed up five million merchants with QR code acceptance in a year. In 2014, the Reserve Bank of India released draft guidelines for a new kind of institution called a payments bank. Paytm was one of 11 entities to be given in-principle licences, but progress among the 11 has been mixed. Airtel was first out of the blocks, launching a new bank in partnership with Kotak Mahindra in November 2016.
India’s national post office has launched one and the other telcos are expected to do so. Paytm launched its payments bank in May this year with big ambitions. The first step was to transfer in all the wallet accounts, giving the bank an almost 200 million-strong head start at launch. Renu Satti, CEO of the new bank, and Deora, CFO and senior vice-president of Paytm, have responsibility for driving the company’s push into financial services. The restrictions of a payments bank licence relative to bricks-and-mortar banks are fine, as customers choose where they want to keep their money.
Paytm’s first investment offer was a gold product, and Alibaba and Ant Financial have been involved since the early days. Paytm is similar to Ant in terms of scale, vision, entrepreneurial approach and technique, and there is a lot to learn from their experience. Paytm/One97 has a boardroom level of crossover, with Jing Xiandong, Peng Yijie, K Guru Gowrappan, Mark Schwartz, and Goldman Sachs all on the board. Paytm’s wealth management product was inspired by Yu’e bao, which became China’s biggest money-market fund. Paytm and MMTC-Pamp launched Digital Gold, a joint venture to buy, store, sell and resell pure gold online. Indians have an insatiable appetite for gold, and the platform has handled $18.3 million-worth of gold transactions in six months. Ant is also involved in the technology side.
Paytm is well-capitalized and investing in its systems, but is not waiting for a listing. It is part of India’s Digital Stack initiative to bring 500 million Indians into the financial mainstream. Paytm’s approach is to build a solution for the 500 millionth customer, not just the top of the pyramid. Paytm’s principal overseas market is Canada, and international expansion could be on the cards in the years ahead. India has much to do to achieve access to financial services for 500 million people.
Assessing the Impact of Demonetization on Electronic Fund Transfers (EFTs) in India.
HINDOCHA, M.; et al (2023) say that Demonetization is a move to remove counterfeit currency, fight tax evasion, curb inflation, eliminate black money and terror-funding, and promote a cashless economy. It has caused a shift from traditional cash transactions to e-transactions, increasing transparency in the economy. Demonetization has had a major impact on e-transactions, with NEFT, RTGS and mobile banking transactions being the most important parameters. Factors such as ambiance, infrastructure, technology and innovation, services and security, and consumer support and timings are important for banks to modify and offer better services. Demonetization has had a significant impact on electronic fund transactions in Tuticorin district of Tamil Nadu.
The study examined the impact of demonetization on NEFT, RTGS, and mobile banking transactions. Hypotheses were formulated to study the impact of demonetization on NEFT transactions.
RTGS is a payment system used for large value money transfers. It is available in more than one lakh bank branches and the minimum amount to be remitted is 2 lakh. The total volume and value of RTGS transactions increased during the post-demonetization period, with fluctuations in volume and value. Hypotheses have been formulated to study the impact of demonetization on RTGS transactions. Mobile banking is a service by banks that allows customers to carry out financial transactions remotely using a mobile phone.
It is observed that both mobile banking volume and value of transactions increased during the post-demonetization period as compared to pre-demonetization period. Hypotheses have been formulated to study the impact of demonetization on mobile banking transactions. The findings reveal that demonetization had a significant positive impact on e-transactions specifically RTGS and NEFT in terms of volume and value of transactions. To overcome the hurdles, the government has taken several steps in the post-demonetization period such as opening of Jan Dhan account, promotion of Aadhaar payment app in rural areas, increase use of e-wallet transactions, IMPS, and UPI. To ensure security and motivate people to go cashless, more training programs on digitalization can be conducted in rural areas.
An effective and efficient security system is a must, and harsh punishments should be given to those who indulge in cyber frauds. Overall, demonetization has successfully increased the volume of e-transactions in Indian economy, fulfilling one of the major objectives.
CONCLUSION
It appears that the demonetization of INR 1000 and INR 500 notes in India had little fundamental effect on the behaviour of people in terms of financial transactions, and did not significantly alter the shift to digital payments that was already occurring in the country. While demonetization was initially intended to address the issue of black money, it is unclear whether it had a lasting impact on this problem. The move to a digital future in India may provide a solution to the issue of tax evasion and the informal economy, but it also raises concerns about privacy and surveillance. The discussion of the Holocaust and its remembrance, as mentioned in the article, is somewhat tangential to the topic of demonetization and digital payments in India. The Supreme Court of India has upheld Prime Minister Narendra Modi’s decision to invalidate high-value currency notes in 2016, which banned 86% of the country’s cash. The decision was controversial and caused hardship for many people, but the court’s majority verdict said the move satisfied the test of “proportionality” and that the court could not substitute its judgment for that of the executive. Justice B.V. Navaratnam offered a dissenting opinion, saying that the decision should have been discussed in parliament and conducted through legislation. Despite the hardship caused, the decision led to an increase in digital payments, a drop in fake notes, and an improvement in tax collections. This decision could provide a boost to Modi’s ruling Bhartiya Janata Party ahead of upcoming state elections in several states.
The study conducted by Satyanarayana et al. (2023) aimed to examine the stability of beta coefficients in the context of demonetization and subprime crisis. The study found that beta stability varies based on industry, indices, time period, size of firm, liquidity factor, and market conditions. The results of the study showed that almost all the stocks had both UDmax determined break and WDmax determined breaks in the computed beta series, except for Bharati Airtel. However, some stocks such as Bajaj Auto, Cipla, Coal India, Dr. Reddys Labs, GAIL HDFC, HDFC Bank, Hero Motocorp, HUL, ICICI Bank, Infosys, SBI Tata Steel, TCS and Wipro betas were unstable for the study period. The study suggests that market participants must take into account the fact that beta stability varies for individual stocks and portfolios due to individual stocks beta features and macro-economic factors before constructing portfolios and taking positions in the stock market. Based on the article “Consumer Protection in ATM Transactions: An Investigation into Unauthorised Transactions and Caveats” by BHATT, A. S. et al, it can be concluded that ATMs are vulnerable to electronic fraud, and measures need to be taken to minimize fraud in e-payment transactions and revenue loss. The study identified that age, education, profession, or gender did not have a significant effect on unauthorized transactions, and most customers were not following RBI guidelines and were not aware of unauthorized transactions. The research recommends strong internal controls and fraud screening strategies for security tools to prevent unauthorized transactions. Additionally, good machinery is needed to prevent unauthorized transactions, and some customers are not using ATMs due to malfunctioning. Overall, it is crucial to maintain data security and protect financial operations from cyber frauds to ensure consumer protection in ATM transactions.
The paper by Mishra et al. (2023) investigates the impact of the COVID-19 pandemic on the Indian financial market, specifically on stock returns, exchange rate between Indian rupee and US dollar, and foreign institutional investor net inflows. The study compares the effects of COVID-19 with those of demonetization and implementation of the Goods and Services Tax. The authors propose a dynamic model to examine the effect of COVID-19 on India’s stock market. The empirical analysis uses daily data spanning from 2003 to 2020 and presents a Markov-switching VAR model to account for nonlinearity and regime shifts.
The study finds that the COVID-19 outbreak had a severe impact on the Indian stock liquidity index, BSE Sensex, compared to the demonetization and GST phases. Stock returns were negative during the COVID-19 outbreak, with high volatility, while not during the post-demonetization and GST phases. The INR depreciated more during the COVID-19 phase than during the post-demonetization and GST phases, and the growth of FII outflows from the Indian financial market was lower during the COVID-19 phase.
The paper by DAVE et al (2023) highlights the growing usage of debit cards in India and the US, and the impact of bank-imposed transaction fees on card usage. The study also examines current use, demographics, and reasons for using debit cards. Gene and Sujit (2007) analyse the change in transactional demand for cash resulting from greater usage of debit cards, and the effects on the demand for low and high denomination notes. The importance of IT-based banking services and their impact on customer satisfaction, operational efficiency, and transaction time is also highlighted. The studies by Sanli and Hobikogolu (2015) and Ilyas and Necla (2015) examine the development of web banking tools in the Turkish banking industry and their effects on bank profitability, as well as the factors that influence customer satisfaction towards Internet banking. Overall, the studies suggest that debit cards have a strong objective of convenience and accessibility, and banks should develop and upgrade them to make them more accessible. However, it should be noted that the equation used for forecasting the value of upgrading debit cards may not be perfect.
The text discusses the role of parliamentary questioning in relation to the economic policies of demonetization and GST introduced by the National Democratic Alliance (NDA) government in India. The Lok Sabha, the directly elected house of the bicameral Parliament, is shown to be an important forum for raising public concerns and obtaining information about government policies. The text also provides details on the process of selecting questions for answering in the Lok Sabha, as well as the types of questions asked on demonetization and GST. The propensity of different parties to ask questions is also analysed, with the BJP and its allies showing a higher propensity to ask questions on these policies. The text suggests that parliamentary questioning can serve as an important tool for eliciting information about government policies and flagging public concerns, and that it played a role in shaping the implementation of these policies in India.
The article discusses how Paytm, India’s biggest fintech company, capitalized on the demonetization policy of the Indian government and doubled its user base. The company’s journey from a prepaid mobile web charge website to an Alibaba and Ant Financial-funded juggernaut was well underway even before demonetization. Paytm launched its payments bank in May 2017, with the aim of becoming a leading player in the financial services industry. The company’s wealth management product was inspired by Yu’e bao, China’s biggest money-market fund. Paytm is part of India’s Digital Stack initiative to bring 500 million Indians into the financial mainstream, and its approach is to build a solution for the 500 millionth customer, not just the top of the pyramid. Overall, Paytm’s success can be attributed to its early adoption of digital payment solutions, its focus on financial inclusion, and its partnerships with Ant Financial and Alibaba.
The study by Hindocha et al. suggests that demonetization in India had a significant positive impact on electronic fund transactions (EFTs) such as NEFT, RTGS, and mobile banking transactions. The shift from traditional cash transactions to e-transactions increased transparency in the economy, and the government has taken several steps to promote cashless transactions in the post-demonetization period, such as opening of Jan Dhan accounts, promotion of Aadhaar payment app, and increasing the use of e-wallet transactions, IMPS, and UPI. However, the study also highlights the importance of factors such as infrastructure, technology and innovation, services and security, and consumer support and timings for banks to modify and offer better services. To ensure security and motivate people to go cashless, more training programs on digitalization can be conducted in rural areas. Overall, demonetization has successfully increased the volume of e-transactions in the Indian economy and fulfilled one of its major objectives.
REFERENCE
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