Unbundling the "WhatsApp Moment" in Indian Banking: Deregulation by Code

Tuesday, 14 March, 2017 - 12:00

On November 08, 2017, the Government of India initiated a demonetisation process. It involved cancellation of Rs. 500 and Rs. 1,000 currency notes as legal tender, establishing of a time bound process for the notes to be returned to the banks, announcement of specific emergency services (such as hospitals and utilities) for which the canceled notes could still be used, and introduction of a new Rs. 2,000 note. While the purpose of the demonetisation move was publicly articulated in terms of removal of unaccounted wealth held in cash form, the state narrative quickly moved to being primarily focused on promotion of various forms of digital payments, especially mobile-based payments. The notion of a "WhatsApp moment" in Indian banking in particular, and in Asian banking in general, has been in circulation since 2015. Nandan Nilekani, a significant technocrat politician of India who has been CEO of Infosys (a major Indian IT company) and the Chairman of the UID/Aadhaar project, was one of the first persons to take note of this upcoming "revolution". In a lecture given by him on August 21, 2015, he described the technological and market forces, enabled by policy decision, that are going to disrupt the Indian banking landscape. This lecture will discuss the linkages between this WhatsApp moment and the demonetisation move, and locate them in the context of institutional and technological changes happening in the Indian banking sector since 2008. It will specifically focus on the development and proliferation of the Unified Payments Interface - an universal, private-owned, government-backed, mobile-to-mobile payment infrastructure - as the key instrument through which the ongoing deregulation of banking in India is being driven.

Sumandro Chattapadhyay is the Research Director at the Centre for Internet & Society in Delhi and Bengaluru