The Covid-19 pandemic has infected millions of people globally, bringing down economies to a standstill, and is still spreading its fangs far and wide. Despite adequate measures, governments have failed to contain its spread. Both international and local health authorities recommended measures like social distancing and self-quarantines to help provide the spread of this deadly virus.
The Confederation of All India Traders has raised concerns about the possible spread of coronavirus through currency notes. Even the World Health Organisation has advised nations to take measures to maintain proper hygiene during the processing of notes.
RBI records show that there are 10,875 crore banknotes and 12,000 core coins in circulation, as noted on the 31st of March, 2019. Authorities suspect that paper currency can serve as a carrier of different viruses and infections as it is circulated through hand exchange between unknown people. It can even lead to magnified health hazards during the coronavirus pandemic.
India, in the past, had seen instances when Indian banknotes were found to be the carriers of pathogens. While it is unclear how long Covid-19 virus survives on surfaces, it is suspected that it may stay on various surfaces for a few hours or even up to several days.
Various financial institutions across the globe have undertaken practical measures to disinfect cash through the use of ultraviolet light, high temperatures, quarantining, and the destruction of existing cash.
The Way Ahead: A Digital Economy
Tech companies have been paving the way for digital solutions to modify the cash dependence of the financial systems for more than a decade now. However, regulations that worked to check the functioning of traditional banks often hampered the progress of digital technology companies trying to make a mark in financial markets. However, recently, due to a strange twist of fate, governments collectively are discouraging paper money and promoting digital monetary transactions.
On the 16th of March, RBI issued a useful advisory propagating the use of various forms of digital payments among Indian citizens explaining how it is better, given the current scenario. It suggested that the use of alternative forms of payments from the convenience of their homes through online channels like mobile banking, internet banking, cards will also help citizens avoid crowded and public places. In a quest to fill up the void, digital payment avenues present a streamlined and straightforward retort.
This calls for instant financial infusions into the economy to cope up with the downs of the coronavirus crisis. In this regard, digital mediums seem the best suitable recluse. Digital lending allows borrowers to access payments in a streamlined fashion.
This sudden need and preference for digital modes of payment should be viewed as an opportunity for tech firms to steer towards growth. While some experts suspect that this shift is temporary, others believe the convenience of using digital will be the sticking factor. Moving forward, with every transaction that is conducted virtually through digital mediums instead of old-school physical cash fortifies the change that’s under process. Although driven by acute necessities, the adoption of digital payment technologies in the wake of COVID-19 is still getting users comfortable with virtual money.
However, critics also voice the opinions that the unbanked and underbanked sections of the economy would not benefit from such a pandemic-inspired wholesale shift to digital money. The reluctance surfaced during cash usage will affect older and weaker sectors of the population who like to trust cash and lack digital access for formal participation in the digital economy. That is why it is imperative to reinforce the adoption of simple online banking accounts for all citizens that simplifies the distribution of direct payments to them. The Indian government is working relentlessly to improve the financial literacy of the citizens with initiatives like Rupay Cards, Kisan Credit Cards, and Jan Dhan Bank accounts, etc.
Given the numerous advantages that digital payments offer, like speed, ease of business, and touchless transactions, they remain a viable option. The payment technology companies are all set to implement safe and effective solutions with no physical contact, in-person, and online. The advent of coronavirus has accelerated the adoption of digital payments and other alternatives to material options like cash and checks.
Fintech giants and innovators in the digital payment space have been building apps and allied infrastructure to aid mobile and digital banking practices for a while. In some cases, their ambitious plans include turning the economy into an entirely cashless environment. Fintech startups can capitalise on government initiatives like Rupay Cards, Kisan Credit Cards, and Jan Dhan Bank accounts, etc. They can enter into synergies with public institutions in a quest to penetrate the informal economy.
Not only would such collaborations bring long term benefits like less tax evasion, instant transfers, and payments but also help avert the spread of the deadly virus and pathogens through physical money transfer. It would not be entirely wrong to conclude that going digital is the safest route for Indian financial markets.
Finezza is a lending management software tool that digitises the process of lending for NBFCs, MFIs, and banks for maximum efficiency and better returns. The easy to use framework automates the process by digitising the customer onboarding process and allowing instant loan disbursal to borrowers through easy creditworthiness assessment. It uses efficient data extraction and segregation modules to help with customer onboarding.
Backed by AI and ML-based algorithms, the software streamlines the origination process, and even assists loan evaluation officers with reports. It dramatically reduces the chances of NPAs with its smart decision-making reports that access credit data as well as alternative data. Finezza also helps lenders in financial markets, digitise the loan collection process, and optimises the ROI of the business.