Digital Solutions – Cutting Across Domains
– Venkatesh N. Mulabagilu
The word Digital is sweeping the Globe. We can see digital footprints in all walks of life. How can we leverage this Digital revolution to transform our societies in ways that would make the world a better place to live?
It is high time for the leadership in the Government and Industry to work on cross-domain Digital solutions to kick start innovations and attract investments to solve complex problems in a country as diverse as India. Any such solution which passes the test in India is likely to be adopted in other countries as well as it would have passed the tests of scale, complexity, diversity and divergent, distracting politics.
In this article, I would like to highlight one use case as an example for a cross- domain Digital solution.
How can we solve the Problem of Cheque Bounce cases plaguing the viability of Banking industry? This issue takes trillions of Rupees out of circulation from the economy, impacting adversely the lives of millions of Indians cheated of their hard-earned money. Also, the issue gets clogged in the judiciary for decades despite Cheque Bounce cases deemed as criminal offence.
How can digital technologies restore the credibility of Cheques as a reliable instrument of banking business?
Let us use the STAR (Situation, Task, Action and Result) technique to define the problem, identify key tasks and actions to be taken, followed by understanding the expected result.
Situation: The negative impact of Cheque bounce cases to individuals, Banks and nation, as Cheques are the only post-dated instrument for business transactions
a) Individuals: People accept cheque as a reliable instrument for any transaction, with the belief that bouncing of a cheque is a punishable criminal offence. However, they continue to end up as victims.
All that the person whose cheque has bounced is to deny that he has issued the cheque when challenged by the victim in a court of law. The case then drags on for decades in a decadent judicial system which thrives on corruption and which is concerned more about its status, perks and privileges than delivering speedy justice Add to that the lethargic police that hardly bothers about enforcement of law. The accused with the active connivance of lawyers will exploit every loophole in the law to deny justice by using all excuses to delay the case.
b) Banks and Nation: The Banks normally take Post-Dated cheques towards payment of loans by the Business or Individuals towards repayment of loans in instalments.
However, the unscrupulous Bankers with blessings of politicians issue large loans to business people who are well connected and take cheques from the borrower of loan towards repayment. Then the loanee will default on payment of loans wilfully and bounces the cheques.
What are the Important Tasks to be looked into?
Ensure non-refutability of cheques with Digital technologies. Ensure that the cheque issued is as per the law and in line with the judicial process.
What are the Actions that could be taken with Digital technologies to solve the Cheque Bounce problem?
a) Introduce Digitally compliant cheques with Block-chain Technology which the issuer of the cheque cannot disown, instead of paper cheques
b) The Government must make Digital Compliant cheques mandatory and invalidate other cheques as Banking instrument for transaction.
c) Judiciary should set up a judicial committee to validate the issue of Digital Compliant Cheques and announce that any person who bounces the Digitally Compliant cheque is a defaulter under criminal non-bailable offence under the law and must serve jail term of 7 years as per law or repay the amount within stipulated time
What is the expected Result?
At the time the Digital cheque is issued, the issuer of the cheque and the Bank as the issuing authority will vouch for the authenticity of the cheque in a non- repudiatory manner with the help of technologies such as Block Chain and secure Digital Identity & Access Management systems.
Digitally signed cheques can be linked to Citizen Unique Identifiers such as Aadhar number in India with Biometric based authentication to ensure that the issuer of the cheque is held accountable and digital forensics is used to validate the physical signature of the cheque issuing party. Digital cheques once issued should be treated as non-refutable evidence of the issuance of the cheque.
In case of legal transactions with Digital cheques, the issuer of the cheque will issue the cheque in the presence of the approved Legal or Judicial officer.
The cheque should be digitally signed by the issuer as well as the judicial officer to confirm that the cheque is a valid legal instrument issued as per law with explicit approval of the issuer who agrees to the legal validity of the cheque with approved legal authority as a signed witness.
What is the expected outcome? Reduced litigation
and improved governance & compliance
Digital Technologies can improve the health of the
Banking system, expedite the judicial process in a transparent and evidence-based manner, improve the economy of the country, ensure better compliance to
rule of law at low cost and bring relief to the common man.
Implementation of Digital Technologies should cover the process
End to End from the cheque issuer to the Banks up to the level of Banking regulators such as RBI and integrate that with the judicial process, as even one siloed operation done in isolation manually can cost the exchequer trillions of Rupees in the form of NPAs as seen in the context of PNB scam which rocked the nation.
Secure end to end digital banking could potentially minimize money laundering or terror funding as it is possible to track the beneficiary as well as the issuer of the cheque or transfer of money anywhere in the world.
What is in it for Technology Companies?
Technology companies with expertise in Blockchain technology, Cognitive technologies, Domain expertise in Banking, Document management systems, end to end Infrastructure solutions, Applications integrating Banking and Judicial processes to ensure data integrity and protection with top-notch security can come up with the complete solution set to tackle the menace of Cheque Bounce cases in India.
This solution has the potential to create a huge demand for hardware and software, resulting in the creation of job opportunities in India, while also attracting investors to this key cross-domain innovation initiative.
The Technology company which develops and delivers this solution in India can potentially sell this solution across all the 150+ countries.