Would you please show me the money? I really want to see it.

Take this, a very minor offense if you consider what happens in our country as major.
http://www.addictinginfo.org/2016/04/09/house-republican-busted-for-illegally-using-campaign-funds-for-personal-expenses/

The income tax law in India allows political parties to keep donations below Rs. 20,000 off the books, under the radar in a way.

Imagine that! That's donation below that amount off the radar. This has been debated to death before. A quick google search would suffice.

Then you have the retrospective amendment proposed in the recent budget that makes all indiscretions of our two major political parties legal. Google FCRA amendment in budget or something if interested. (I can't believe using Google as a verb is still in.)

So, we have one of the most opaque election funding system. Most parties are trying to increase their membership, so I as a member of any political party can give donations to both these parties below Rs. 20,000 a million times. (Damn I wish I hadn't quit CA as a career. Might have had that kinda money. NOT.)

That's like say, Rs. 2,000 crores minus a Rs. 1 crores. Where can I get that kind of money? Don't we have a black money problem?

We know the real estate sector has a black money problem. The government has set a limit of Rs. 30 lakhs for all transactions to be intimated to the income tax authorities. A really high amount I must say. But since we have had a property market boom in this country, good luck trying to find any property in major cities and nearby mini cities within Rs. 30 lakhs. If you do, then you are home free. As an aside, do you think people will fail to register their deals sometimes?

Now there are many sources of black money. There is even over invoicing in export transactions that legitimizes any money that is over paid and then routed through offshore accounts. The recent Panama Papers expose is a little close to that eventuality but I am not calling it that because all the information is not out yet.

Now let's go back to the retrospective amendment proposed in the recent budget and the limit of Rs. 20,000. Two major political parties were said to have received foreign funding and the Delhi High Court held that view as well. The parties have appealed in the Supreme Court and we will have to see what happens.

Now let's look at the amendment for a bit. It whitewashes every deed done from 2010 by these parties. The receipt of contribution from foreign sources is currently banned for political parties. This amendment would reverse that situation since it started happening. Now you're thinking what I am thinking, right?

If not, basically it's a clean slate when a legal process had concurred otherwise. In legal terms I guess the government is within its rights to change the law if it passes the scrutiny of parliament. Let's see what happens there.
I was always skeptical of the possibility of anything happening in the case, but this amendment might have changed my conviction. Hence, you are reading this.

The 20,000 limit means that if political parties had a huge membership expansion then, even if I had contributed less than Rs. 20,000, say Rs. 19,999. It's all off the books. No audit trail. Zilch. Only coupon sales. I could have gotten a million of those coupons, but as long as the denomination is below Rs. 20,000. I could print the same coupons and claimed that I contributed money to a political party. That means I could have my own laundering business. I wish I hadn't quit CA.

Now I leave you with a thought. Do you think we should have strict disclosures of the funding of political parties? Do we really need that? I saw this brilliant video of The Last Week Tonight where John Oliver did a satirical piece called Congressional Funding. Although it was funny, it made me realize something. We don't even know what happens below the Rs. 20,000 limit. We just can't find out who is giving what to whom in our political system.

That means we don't know anything. We can sit in our homes and watch TV and think we know how the political system works and find our place in it as it suits us. But we know nothing.

We can't even do a satire piece of that quality. There is litigation on right now to strike down that beautiful piece of law, which keeps the contributions below Rs. 20,000 off the books.

I am hoping for Satire. Let's see if we find out what's going on. I'll do some digging as well.

Check out The Last Week Tonight episode where John Oliver talks about Congressional Funding (American Federal Legislature. A little like their parliament.) here https://www.youtube.com/watch?v=Ylomy1Aw9Hk

Why does one regulate a business?

The recent discussions and debates on net neutrality in the media and among people got me thinking about one thing. What’s a regulator? Why do we need a regulator for any industry? 

Well, any industry that is governed by a body that is formed by a law of parliament to regulate the functioning of an industry would be categorized as a regulator. In the Indian context, the Reserve Bank of India (RBI), Telecom Regulatory Authority of India (TRAI) and the Security Exchange Board of India (SEBI) are examples of regulators. 

RBI regulates banks and non banking financial institutions. TRAI regulates the telecom and broadcast industry. Recently it has taken up the role of even regulating Internet in India. SEBI regulates the stock markets and the forward markets.

But why do we need a regulator for an industry you say? Governments try to figure out how to regulate businesses. By the time they try to figure it out, there are calls to regulate the industry. When the regulation is demanded then the natural corollary is setting up a regulator. This satisfies the industry members because they have to go and whine about their problems to one organization rather than the government.

That was the reason why (new) regulators are setup in India. The real reason that we should setup regulators for industries is simple. Let businesses be given a set of rules to conduct their businesses. These rules are to be implemented by people who understand how the industry functions. So if we have a stock market regulator then obviously there must be people who know a little bit about the stock market working there. It would be silly to have someone, who doesn’t get the stock market like a bureaucrat who didn’t work or study to understand securities laws and stock markets most of his life, wouldn't it?

Well, that’s not what happens in India. Every law that requires a regulator would eventually have a bureaucrat manning the regulator after a while. I am not railing against bureaucrats here. I am just highlighting a simple fact that at some point we need to have a set qualification for regulators. We can’t carve out a bureaucracy from a ministry and recreate it in another white elephant of a regulator. This can’t be happening again and again.

I say this because when you watch Raghuram Rajan’s work with the RBI and his constant regulatory movements, you know the guy knows what he’s doing. Why shouldn’t all regulators be like that? They should be nimble and react to the business environment that prevails. They shouldn’t be caught napping. And neither should they come out with papers that are patently favoring the companies that they are trying to regulate, like TRAI did with Net Neutrality the first time.

TRAI should have foreseen the Net Neutrality debate coming. There was a huge hue and cry about the same subject in the U.S. last year. We are the next big market where people would try to control the future content delivery mechanism – the Internet. You can’t be caught napping.

We should move to a more professional approach to regulating industries. We can’t keep giving posts that require technical qualifications to people who might not have any. We can’t have a regulatory system that only responds to the companies they regulate but not to the consumers.

Why the consumers you say? Well, look at it this way. Laws are passed in parliament for the greater good of people right? Then the law that creates a regulator should also be interpreted and applied for the greater good of the people. That would mean the regulator should work for the greater good of the people too.

Why shouldn’t our regulators not take the consumers views and make it their only reason to exist? Businesses are important for an economy no doubt, but regulators are not meant to promote monopolies and super profits. The businesses are supposed to figure out how to make profits. That’s why when you have the largest telecom operator in India complaining about loss of revenue because of lower revenue from calls and uses that as a reason for justifying differential pricing for data, we should stop and think. Who were these regulators set up for again?

It’s the people stupid.

Net Neutrality: Why should a network be neutral?

Why is everyone debating so passionately about network neutrality in India? Why does it even matter to anyone whether a network is neutral or not? This question has popped into all our heads when the media coverage of this debate reached a crescendo before December 30th 2015 and it will again do so before January 7th 2016.

The debate here is essentially whether the network that is the internet should be controlled by a few or should it be democratic. Democracy would mean that the people who populate the would would control the content that is created on the internet.

Television and Internet

Alright, so let's go back in the past for a bit. The television revolution in this country began in the early 90s. It allowed us to watch new age programming (for those of us who remember Doordarshan) and allowed content creators to experiment with different formats. It popularized sports broadcast and also led to the eventual explosion of the television news business. There was one problem. The broadcaster had to pay our local cable operators(CO)/multi-system operator(MSO) to be available on your television screen. This payment is called the carriage fees. If I couldn't pay the carriage fees, my channel wouldn't feature on the cable network.

Long story short, those who owned the network owned the broadcasting business. This is still the case. The cable digitization drive will move the cable business from an analog signal to a digital signal. This will allow the broadcasters to measure their subscribers accurately. It will also help in sharing of the subscription revenues between . It will help in better tracking of the television rating points (TRP), the lifeblood of the cable /direct-to-home (DTH) TV industry. TRPs allow marketers to measure the audience of a particular TV show or channel. TRPs help the marketers decide where they should place their ads to maximize the reach of a marketing campaign.

So in all every medium of communication should allow monetization for it to be able to sustain itself. Take newspapers, magazines, television news channels, entertainment channels etc. The fact that television media was owned by the messenger (cable TV companies) and not the content creator (broadcast companies) is what led to the broadcasting business being a very expensive business. The listed media companies in India like NDTV, Network 18 (before Reliance acquired it) and India Today group were all in debt. This is because the television business entails huge fixed costs to get the business rolling.

Internet is democratic

The Internet is democratic. It allows the content creator and the content distributor (internet service providers and companies like Facebook, YouTube and Netflix ) an equal footing on the medium. Initially, there were only a few content creators on the Internet.

As the adoption of the Internet grew, we saw companies like YouTube and Netflix come up. These guys put the creators and the consumers on a platform, so that the consumer could choose which content he/she could consume. Hence, there was more content out there to consume and the internet made it one click away.

Facebook the behemoth

Then came Facebook. Facebook's business model is predicated on the idea that as long as people are on Facebook, it will make money. That's the whole point of the medium. It's a good business though.

Imagine having all the knowledge about the likes and dislikes of almost 1 billion users of the Internet. If you actually go through Facebook's terms and conditions, it says that Facebook can do whatever it wants with any and every byte of date you share on Facebook. This data can be used to target ads at Facebook's users. Facebook needs more people on its network to justify its valuation.

The more people it has on Facebook the more data it has to sell to marketers and advertisers to tailor ads at Facebook's users. Every like and dislike that you share on Facebook can be used to target a certain product at you. This is why Facebook is free. It's users are the product to Facebook. The customers are the companies that pay money so that we see ads on Facebook on our news feed.

If Facebook owns the platform through which you access the Internet, then they have more than the data that the need. How? An Internet user accessing any website through Free Basics would be sharing all of his/her browsing information with Facebook. This is because Facebook would be the gateway to the Internet. More information means more money. It's a simple equation.

What's in it for the telco?

In telecom parlance, this is called Average Revenue Per Unit (ARPU). It means the average revenue a telco has earned from a user on its network. This would include the calls that we make and the internet usage that we indulge in on our devices.

Most telcos are obsessed with their ARPUs. A higher ARPU means that the average customer is earning the telco more money. In India, ARPUs have stagnated (put the number here). Data (i.e. Internet) is the next big play that is going to earn the telcos more money. Imagine the possibilities. There are tests that have happened in the U.S. which may provide over 250 GB per second Internet speed. Well, what does that mean Vivek? Why should that matter to me?

We are going to abandon television very soon. The sheer speed and the targeted marketing ability of the Internet is going to cannibalize the broadcasters. The broadcasters are already seeing this trend and want to turn into a multimedia players.

Don't believe me? Google your favorite television show and there might be a pay per view or even a free streaming service available for it. Do you think you're going to spend 600-700 bucks for a television package in ten years? And this is in terms of today's value of money. This amount might be higher in the future considering inflation. Internet pricing will only get cheaper over a period of time as more people would adopt the internet.

Imagine a day when you won't think twice before having 2 GB per second Internet bandwidth at a reasonable price. If the speed increases higher than that, it might just replace your DTH or cable TV. Apple TV and Amazon Fire are examples of this.

The point being telcos have realized that they would remain only a utility provider if they can't have differential pricing for data. They won't earn even a slice of the ad revenue that content providers would be earning through their content. This is because the current model means YouTube owns the platform and hence gets to collect money from the ads. The argument of the telcos is that it's their infrastructure (and since the ARPU from voice calls has gone down) they need to protect their business and be allowed to have differential data pricing.

But why should the network be neutral?

Net neutrality activists say that the Internet was formed with an open architecture. It is supposed to be a connection of several networks across the world. If I enter the web address of a particular webpage in my browser, then I am essentially directed to that webpage as fast as my internet bandwidth would allow me to. Differential data pricing would on the other hand remove this parity. If Google paid my telco more money, then they get a leg up and load faster. And if say a small time media startup couldn't pay that money, then it would have to load slowly.

What's wrong with this you say? Shouldn't anybody who is ready to pay be allowed preferential access? Remember the cable TV industry story in the beginning and the carriage fees? It created a huge entry barrier for new players in the broadcasting space. Only those with deep pockets could feature on a cable or DTH network. There was no level playing field. 

The channels that were available on the network depended more on the abilities of the content distributor and content creator to hash out their business deals. In effect, the content creator (can be you and me) couldn't negotiate from a position of strength. This led to content being created by very few people. The Internet has changed all of that. It gave the power back to the content creator. Content over the Internet could mean any information -audio, visual or text.

Wouldn't' you want a cash cow that will allow you to make money just by having a regulator make a few changes in the regulations for you? The forces of the market are too difficult to handle you see. Profits are too precious not to protect. It would be better if telcos and Facebook own the whole space and make their own deals to share the piece of a huge pie. It's better if they get the deal done before anyone is looking.

P.S. I must admit that a lot here about the media landscape in the early 90s isn't my own thinking.. Most of my understanding is borrowed from the writings of Vanita Kohli-Khandekar. She has been covering the media industry in India since the early 90s. Reading her work would be really helpful.

The illusion of choice

"Everything begins with choice," said Morpheus. The Merovingian looked at him, with his steely eyes and says, "Choice is an illusion created between those with power and those without."

That's a dialogue from The Matrix Reloaded, a seminal film which institutionalized the kind of computer graphics that you see in movies today. This dialogue defines what is wrong with free market capitalism. It's the illusion of choice. The smokescreen of corporate induced propaganda that promotes crony capitalism. This crony capitalism only worries about profit and not the essential element of free markets- choice. It's letting the consumer choose from the available ideas in a market place of ideas. This could be an ideology, a product, service or a political line.

The basic idea of a free market would be, no one idea or person can dominate another. They should get equal space and equal opportunity to make their case. There should be a proliferation of ideas from across the political and economic spectrum. That would mean that I as an individual would have the liberty to choose what I would do with the limited resources that I have at my disposal. The resources could be anything, like my time and my energy. But to make it simpler, let's call it money.

If money is the means of transaction, then I should be able to buy what I want with an unbiased mind and exchange that money for something that I would value. This maybe food, clothing or luxury items like a iPhone 6S or the MacBook Pro. If I am allowed to make this choice taking in only what I need from the discourse, the value of the money that I have in my hand and the incremental value that exchanging the money, say ₹ 50,000, then it would be an unbiased choice.

But what happens when this choice isn't unbiased. What if everything doesn't begin with choice as Morpheus claims it to be. Then you have an illusion of a make believe world where one's choice is only as unbiased as our ignorance. 

Take the Nairobi WTO ministerial meetings for example. India was trying to protect its farmers from excessive agricultural imports from countries which subsidize their farmers' produce and allowing India to procure food grains from farmers to feed its hungry population.

The claim of the WTO (read western developed nations) is that such a system would fly in the face of free trade and would distort world trade. The reasons given are that the food grains that India purchases from its farmers using the minimum support price and then sells them to the needy at lower prices, floods the market with cheap 'distortionist' food grains. This stock of food grains could be sold in the international market and would 'distort' trade. Well, my problem isn't with this whole line of argument.

Look at it this way. What does the subsidy do? It tells the farmer that if you produce crop A, then the government would reward him by buying the harvest from her at a pre-decided price. This is taking away the choice from the farmer to pursue his own economic well being. Well, then how do you feed a country full of hungry people? Shouldn't the government be doing something about it? That's a noble idea, but when you tie in fertilizer benefits along with the kind of crop that is grown, it doesn't allow the farmer grow the crop that he would ideally like. Mihir Sharma explains this concept in detail in his book Restart.

Countries will always pursue distortionist trade practices that would benefit their people. That's a given. But the problem arises when a sovereirgn government is forced into taking decisions based on corporate lobbies. That's distorting the element of choice that one should enjoy in a free market of ideas. This is an ideal situation that we can never achieve, but hey if democracy is a process and is never ending, then why not strive towards another ideal. 

As The Merovingian rightly said, choice is an illusion. This illusion is created by those who want to maximize profits and create perpetual monopolies. They don't want credible regulators who put the consumers' interest first. These corporate giants want to maximize their profits so that they can have good quarter ending call with analysts. They can't see beyond the red and black of the profit and loss account at the end of the quarter. They can't see beyond profit projections that give a hard on to market analysts in predicting the next big bull run. They aren't the ones one should look to for the unattainable goal of a free market of ideas.

Then who must give the people the ability to make an unbiased choice?

"That, detective, is the right question," said Dr. Lanning, to Detective Spooner, in the movie iRobot.

It's the people stupid. It's the people.

Mann ki baat: Mitron, I oversold the 'Acche Din'

Hello Mitron. I am writing this after coming to terms with the reality of the 'Acche Din' project that we had embarked upon. It has come to my attention that we may have gotten ahead of ourselves. The enormity of the task has dawned upon me. The newspapers claim that I don't have talent in my cabinet. This contention might be true. But I will strive to steer us towards the promised land of the 'Acche Din'.

Let me enumerate how bad things are. But before you go through them all do remember, I have performed in the past. And I shall strive to do so even in the face of extreme adversity. This is my promise.

1) Our economy is in bad shape- Duh! If you had to be told that then you are one stupid person. We had performed incredibly well over the past decade beginning from the last few years of Atalji's govt because of export led growth. We didn't create incremental jobs. In fact, as the good doctor (my predecessor) would agree it was jobless growth that took place. This makes my task even more difficult as I have to not just deliver growth, but also deliver jobs. Check out what Ruchir Sharma says about the type of growth emerging market economies have had over the last decade. http://www.ndtv.com/video/player/india-forecasts/india-forecasts-top-10-economic-trends-in-2015/351747?curl=1421123064 I know it's NDTV, but Ruchir makes sense. I am gonna lump it.

2) The world economy is in bad shape- We were riding the global boom a decade ago. And the whole world is in tatters right now. People aren't willing to spend money, but I promised you'll the world. Mitron, do have faith in this humble servant. I shall strive to deliver.

3) Banks are saddled with debt- That's a shocker. I called a meeting of all the bankers in the serene town of Pune. They were promised that we won't meddle in their business decision, 'unless they're against in public interest'. But, Mitron they live in hard times. They've funded so many projects which haven't seen light of the day, that they've lost the appetite for funding any new ventures. Yes, SBI did fund Gautam bhai's mining project. But, it was just a one off. And then there were so many questions on that deal. I really like Raghuram bhai. He's finally delivered the rate cut that was needed. Now I need to speak to Jaitelyji and find out how the rest of the investment cycle has to be pushed forward.

4) Wait for our first full budget - Bhaiyo behno, we must wait for the budget before you write off any hope for a revival. There are many goodies in store for all the hopefuls. We shall strive to deliver a 'India first' budget. But to I hear to kickstart the investment cycle, we might have to take up the Keynesian method of running up a deficit and spending money to signal intent.

5) Mininmum Govt Maximum governance - This is one of my core beliefs. But for that we must sell off a lot of our centrally owned companies. You have all seen the drama created by the Coal India Limited employees. They almost created a power crisis in the country. Someone said that I am following the Thatcher way of taming coal workers. But, I am just following my heart and the manifesto I presented before y'all. Watch this space for more on the slogan.

6) Lack of talent - As you may have heard, I am facing a shortage of talent in my cabinet ministers. I am trying to remedy the situation by changing things around, but I am going to deal with this very soon. Hope Mr. Panagariya gets cracking at his new job and gives us actionable policy views. That can help me deal with the lack of talent.

7) The motor mouths - This is not much of a problem but an embarrassment and a distraction. My whole extended parivar  thinks that we must go back into the past and chase the irredentist goal of being a homogenous country. I know this is something I have to deal with eventually, but I am busy setting things right in the governance structure. Amit bhai has already sent a notice to Maharajji. I hope you'll show some patience. This humble servant shall keep these morons under check very soon.

Consumer Loans are toxic!

So I recently managed to convince my friend not to use his credit card to convert his purchases into EMIs. Yay!

What's the big deal you may ask? Let's check out why he wanted to convert them into EMIs. The normal reason is that he doesn't have enough money to pay for the expenditure that he is about to incur. Well, he's my age and I get that at our age there are certain expenses that we just can't avoid.

So I asked him what are the expenses that he usually converts into EMIs. Here's an illustrative list that we had a heated discussion-

1) Whey protein powder

2) Flight tickets

3) Consumer goods i.e. Cell phones, Television, Washing Machine etc.

4) Gifts

Now what is the one thing in common with these expenses? They're all discretionary. Since, the credit card company allows him to split his current expenditure and transfer it to subsequent months, my friend thinks that he is able to defray his expenditure eventually. This not just wrong, it's foolish. Why is that? Because no credit card company is going to give you a 'interest free' EMI. That's just not how these companies are going to work. To cut the long story short, there's no free lunch. He will be charged some kind of fees and/or a monthly interest rate to cover this up. Sometimes, the credit card company may have a deal with the retailer or the manufacturer to provide a discount to the customer. Here is where you might see messages like 'Interest Free EMIs'. From all the finance education that I have gathered, this just doesn't happen. There's a charge hidden somewhere that he has to pay.

Check out this article in the times of India that I found while doing research for this blog. http://timesofindia.indiatimes.com/business/india-business/RBI-bans-zero-interest-loans-on-EMI-to-credit-card-holders/articleshow/23065529.cms

What would have been the end result if I hadn't managed to convince him that converting purchases into EMIs are wrong? He would have overspent. And he would have gotten into the habit of purchasing more than he could afford to pay for (Credit cards allow you to live over and above your means for a while). Then he would ran up a bill that he couldn't afford to pay anymore. (Read Ramit Sethi's brilliant book I'll Teach You to be Rich to know more)

If my friend hadn't listened to me, he would have reached the conclusion that using a credit card is the worst thing that could have ever happened to him. Let's change that sentence. Using credit cards to fund an extravagant lifestyle when you don't have enough money to sustain it. Well credit cards are not really meant to be used that way. Ramit Sethi uses brilliant examples in his book I mentioned above.

The fault is with consumer loans. They bear exorbitant interest rates. And add to that the interest/charges recovered by the credit card companies. My friend finally understood his folly when i sat him down and explained the above process with a gun to his head (I was just yelling at him). Loans that are not productive or essential to fund a purchase don't make sense. They just end up burning a huge hole in our pockets. And remember, all your credit history gets recorded by the credit bureaus like CIBIL. In the future when you approach a bank or financial institution for a loan, he or she can see exactly credit behaviour. That is they can see that you have a habit of buying consumer goods using high interest bearing loans. This is seriously risky credit behaviour. Your credit card is also a loan, not an ATM.

ATM withdrawal charges and payment banks

It has been a very interesting past few weeks. The RBI has taken two regulatory actions that are very interesting. First, it has allowed banks to charge their customers for use of ATMs over a threshold limit of transactions. It has also capped the amount that can be charged per transaction. We've had few of our biggest banks following this with charging their deposit holders money to withdraw cash from their ATMs from November above 5 transactions in metros. (Non metros your turn will come). Second, we've also had the RBI releasing the final guidelines for payment banks.

These two actions by the banking regulator are quite schizophrenic at first. One initiative allows banks to fleece their customers of more charges in the name of 'third class' service. The second tries to perform the Prime Minister's dream project of financial inclusion. Then why are banks wanting to charge their customers to withdraw money, when we are still struggling with inclusion?

I've been grappling with this question till I had my eureka moment. So we need financial inclusion. What's the solution to that? The Pradhan Mantri Jan Dhan Yojana apparently seems to be taking care of that. This will basically be used to route all the government doles and funding to our less fortunate citizens, who usually have to fend for themselves. It's basically laying the ground work for people to only transact through the official banking channels.

Banks usually collect deposits from their customers to transact their business. This can be done through Term Deposits or CASA. A lot of Current And Saving Accounts (CASA) are cheap funds for banks. They use that to fund their lending business. Someone called it lazy banking. But banks are not gonna have the available balance in the 'Jan Dhan' accounts for them to be profitable. Hence, they need to charge other customers money for hitherto free services like ATM withdrawals. 

This has its origin when the RBI allowed banks to unbundle their services. Remember the first time you found out that you require to pay a charge for an NEFT transaction? (Yes it was free for a while). That was the beginning of this phase of further unbundling of services. Now banks charge you for even breathing the air inside the bank. No, that's not true. But that's how banks function. They need to create different lines of businesses. No business can survive by only having a few lines of businesses. This diversification, within the construct of traditional banking, is what leads us to banks charging you even for a statement of account that one would require from the banks' branch.

Why is this a good thing?

Alright, the title sounds deceptive. Am I advocating that banks fleece their customers? Hell no! But people have to be smarter to realise what's the real game that is being played by the regulator. It wants to streamline the financial system so that all the transactions are captured within the control parameters of the financial system. This can never be done if we have a parallel cash economy that may or may not be funded by fake currency notes. So levying charges on people for cash withdrawals will lead them to use cash sparingly. But never under estimate the Indian mind. We haven't been used to ATMs for that long. So we might as well find people queuing up at cash counters to hoodwink all the well laid out plans.

Anyway, the establishment of payment banks will add to the aforementioned action. Payment banks basically take money as deposits and invest them in approved securities which don't have inherent risks of default. This basically means that if I am ready to invest up to ₹1 lakh in a deposit, I will get interest on it from a savings account with a payment bank and there will be less of a risk on that amount not being repaid to me. 

How does this work together with the charges on ATMs? Well, even companies which provide an online wallet service can become payment banks as per the guidelines of the RBI. This means companies like PayTM, Airtel(m-pesa), Vodafone etc. Basically, everyone who operates an e wallet facility. Better still, they will have to pay you interest on the money you've deposited. So, you'll have money stashed in a wallet that you can call for whenever you need to make a payment and as a result, this will lead to reduced use of cash. This achieves the RBI's objective of getting all financial transactions within the financial system. And tadaa! The apocryphal 'kala dhan' is firmly under the financial system's watch. 

It'll take its time, but these measures in tandem will lead people to sparing use of cash And that will help in controlling the uncontrollable, the generation of unaccounted money in the system.  Regulatory actions sometimes appear to favour a few, but the real picture only appears when the dust settles.