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Will India be the first cashless nation?

Will India be the first cashless nation?

Someday, paper money won’t matter and all you’ll need is your mobile phone to eat, take care of your health and manage all your financial needs.

At least that’s what Sahil Kini, principal at the venture capital firm Aspada Investments, predicts for India’s future.

While on a panel at last week’s Milken Institute Global Conference, Kini concentrated mostly on how public digital platforms in India are about to transform society. We had a chance to catch up in New York yesterday to continue the conversation of how financial technology, or fintech, can solve the world’s greatest financial challenge.

Kini focused first on the concept of India Stack, the digital platform that has captured the imagination of innovators and leaders such as Bill Gates and others who see its potential to change the lives of more than 1 billion Indians. The vision is to create a secure, paperless and cashless delivery system in the second most populous nation on the planet.

“The most exciting thing we’re seeing in India is the fact that hundreds of millions of people are getting bank accounts, digital identity and mobile phones at the same time, which is going to set the stage for the next big leap in financial inclusion for India,” he said during an interview in New York.

Developers are partnering with government, companies and startups to realize what is known as the “JAM trinity” — a government initiative which stands for Jan Dhan-Aadhaar-Mobile, a massive effort to link JanDhan (“the people’s wealth”) bank accounts, to what is known as Aadhaar cards (Sankrit for “Foundation”), and connect everything to consumers’ mobile phones. The Aadhaar smart cards, which are akin to a digital Social Security number, are biometrically linked to users via fingerprint ID to create a digital identification program and ultimately a frictionless banking and ID system.

“When you put these three things together — so banking, identity and connectivity — when you put them together, you get this ability to carry out formal transactions for people who were otherwise excluded because it cost too much to serve them,” Kini said.

“And now the cost to serve drops dramatically. You can essentially reach someone for a few rupees or a few cents, and that’s something that will enable a lot of large corporations to expand their reach and serve a lot more people that wasn’t possible before.”

And that is what Kini sees as India’s — and perhaps the world’s — greatest financial hurdle.

“The greatest financial challenge India faces today is the access to capital,” he said.

“In the last 10 years or so, there’s been a lot of talk about the potential of India, and to an extent there’s been a mild frustration about India not realizing its own potential.”

The work and investments that the government and business have made in digital identity platforms, cashless transaction platforms, and mobile phones will lead to “an explosion” in mobile phone usage for transactional purposes, Kini said.

“We are at a massive inflection point in Indian history,” he said.


What do you think about Sahil Kini’s view? Will India be the first truly paperless, cashless society? Do you think India is on the verge of the next great leap forward in financial inclusion, or is there still great work to be done? Share your thoughts using #IndiaDigital.

Courtesy of Linkedin.


Amie Quirarte

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