New Business Models to Curb Black Money

Now that Swiss Central Bank has declared the total liabilities of Swiss banks towards Indians in the tunes of $2.5bn, will anti-black money brigade believe the data?  I don’t consider myself part of anti-black money gang, but is Switzerland only safe destination for money laundering.  I will not question the authenticity of this data but is this data point sufficient?  I learnt from my macro-economics professor that black money is a parallel economy by itself.  If this is the case what can be done at policy level (not just by Finance Ministry but by other ministries too) to fix loopholes to curb the growth of this parallel economy. 

I feel that cash transactions are major culprit of growing black money in the system.  In real estate transactions, more than 50% of amount exchanged is cash transaction, which is not recorded anywhere.  For grocery shopping at local kirana stores, most of the transactions are cash transactions and grocery store owner declares hides most of the income leading to increase in black money in market.

Can the new banking infrastructure be created or existing one be upgraded to include 100% of Indian population and ensure all the transactions are banks transactions rather than cash?  Can the new business models like mobile money, micro payment and virtual money help reduce the cash transactions?