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Cashless banking best way to curb black money: Modi

Pitching for greater cashless banking transactions, Prime Minister Narendra Modi on Friday said this can be the best solution to tackle black money problem, even as he asked banks to look for ways to discourage people from investing heavily in gold.

Banks should compete among themselves for encouraging cashless transactions among customers. This will help curb circulation of black money, he said.

Bringing back black money stashed away in foreign tax havens has been one of Modi’s election promises.

To further the cause of his pet Swachh Bharat Abhiyan, Modi asked banks to explore ways to finance 100,00 young entrepreneurs to start cleaning and waste management enterprises a year.

The prime minister was addressing a function to mark 60 years of the ICICI group. He said banks give loans to industry, power and port sectors and they could add one more area for financing – funding young persons to start sustainable businesses.

Modi asked banks to become socially more responsible and provide support to swachhta entrepreneurs or those setting up cleanliness and waste management ventures. Banks could assist in training and building business models. “Can we create swachhta entrepreneurs? There is immense scope in solid waste management and water treatment.”

“Within the financial sector, can we develop a new sector and give it a priority and can banks create one lakh swachhta entrepreneurs with the help of bank finance? Solid waste management and waste-water treatment is big business. We can create such entrepreneurs by training and giving finance to our youth. This can be a sustainable in the long term,” he said.

Modi had launched the Clean India campaign on October 2.

After dedicating ICICI Digital Village at Akodara in Gujarat to the nation, the prime minister said digital banking can bring about major changes in the country’s economy.

Modi also said Indians have a good habit of saving, but the focus has shifted to gold over time and banks have a challenge to look into ways to discourage huge amounts of money being kept in gold.

“He (the common man) thinks he should buy gold which can be monetised easily during crisis. I don’t think out of 100 people, one person would feel the necessity of selling gold during a crisis … but it is a psychology. The the challenge for banks is to assure people that a bank account would ensure easy access to their savings whenever required,” he said, adding this could help banks become the agents of social transformation.

The top executives of ICICI Bank should prepare a 15-year plan with a social charter to contribute for the betterment of society, Modi said.

Addressing the event, Finance Minister Arun Jaitley said India would match China’s growth rate once the unbanked population comes under a structured financial system. Jaitley also said the real challenge today is to bring a further spurt in investment, concentrate on infrastructure and improve manufacturing in a big way.

“I think time has come to enter into the next phase where we give a spurt to these goals that are essential for reviving the Indian economy,” he said.

“The days ahead are going to be extremely exciting… when even these sections (unbanked population) have RuPay cards, and lots of Indian spending goes into the banking sector, probably days are not very far when we could probably match China’s growth.”

The minister said with more and more people using RuPay debit cards, a large part of the economic activity, which has been out of the banking net, would get reflected in gross domestic product.

China has been the world’s fastest growing economy in the recent times, recording double-digit growth rate for almost two decades. India touched a peak of 9.6 per cent in 2006-07 and has since tapered to below five per cent in last two years.

“We have reached a situation which does not excite anyone. I think this challenging and troubled times we are passing through are capable of becoming important turning point in Indian history,” Jaitley said.

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