Hi Friends,

Even as I launch this today ( my 80th Birthday ), I realize that there is yet so much to say and do.

There is just no time to look back, no time to wonder,"Will anyone read these pages?"

With regards,
Hemen Parekh
27 June 2013

Friday, 25 March 2016

RFID Tagging of Currency / Two Views


For over a year , I have been strongly advocating embedding Rs 500 / 1000 new ( plastic ) currency notes with RFID sensors , to track large accumulations of these high denomination currency notes ( Rs 1 cr worth in 1 Sq Meter area ) , in order to bring an end to BLACK MONEY - and CORRUPTION

Following are comments / views of two experts in respect of my suggestion

Sanjay Sarma , sent following email :

Dear Mr. Parekh,

Yes, placing tags on money has certainly been considered in the past.  I think it is a matter of time before it happens. I do agree with your idea

Having said that, as more and more transactions become digital (credit cards, bitcoin, Adhaar card, etc.) the need for tracking cash goes down — ironically as our ability to track it increases.

 Sanjay Sarma ,  35-206 MIT. 617 253 1925 (T). 617 253 7549 (F).

Guillaume  Lepecq  sent following views :

Dear Hemen,

Thank you do for your kind e-mail. I am delighted you enjoyed the article.

If I understand correctly you are suggesting to incorporate RFID into high-denomination banknotes in order to avoid tax evasion.

This idea is not new; let me point out why I personally believe it would not work.

  • There is a need for an anonymous payment instrument
In a democracy, it is perfectly legitimate to have the freedom to make a transaction, or to store money without the monitoring of the State.  And this anonymity is not synonymous with tax evasion.

One may wish to buy a present for his wife, without her seeing the transaction on a bank receipt. People who are ill have the right to purchase medicine in a confidential way.

I recently spoke to a pharmacist in France, who mentioned that many young people purchase contraceptives in cash.

  • Cash is anonymous but the anonymity is limited.
The anonymity of cash is limited by regulation, technology and bulk. Regulations include for instance imposing a cap for cash transactions; many countries in Europe have implemented this.

Internationally, the transportation of cash across borders is limited to $ 10,000. Technology, includes for instance inks used in banknotes which can be detected by sniffer dogs.

Also, forensic taggants are used in some countries and are sprayed on a banknote in the case of a robbery; when the taggant is detected, the banknote can be traced back to the robbery. Lastly, cash is heavy and bulky to store and transport.

  • Other anonymous payment instruments pose a far bigger threat
During the recent terrorist attacks in Europe, it has appeared that the terrorists have used anonymous pre-paid cards to fund the activities. Virtual currencies also offer a cheap alternative to make perfectly anonymous transactions with a simple click.

  • Using electronic tags in banknotes poses operational challenges
Firstly, it would increase significantly the cost of the banknote. But what happens if the tag is deactivated? There are stories where consumers have deactivated chips in ID documents by ‘frying’ them in a micro-wave.

Would deactivated banknotes still be legal tender? Also, a  real fraudster would simply shift to another payment method and in the example you present, he would use lower denominations that do not carry electronic tags.

I hope this helps.

I invite you to visit www.cashesentials.com. The full report which was mentioned in the Business Line article will be available as of April 12.

With kind regards,


My Take :

As onetime CEO of Sun Microsystems , Scott McNealy pointed out , way back in 1999 ,

"  Privacy is dead , so get over it !  "

Of course , a little bolder - and universally welcome alternative would be :

"  Abolish Personal Income Tax , thereby totally eliminating all incentive to generate Black Money through tax evasion . 

All payments will get made through official channels . 

Within 6 months , all Black Money will become WHITE  and flow into the productive mainstream of the economy

Revenue loss of Rs 2.5 lakh*crore but GDP will go up to 10 %  !


hemenparekh.in / blogs

26  March  2016