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Old 10th November 2016, 07:38   #226
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Default re: Government scraps Rs 500 and Rs 1000 notes!

Looks like the plan is working.

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Originally Posted by BI
A day after the government discontinued Rs.500 and 1000 notes in a shock announcement to curb black money, sacks full of burnt notes were found in Bareilly in Uttar Pradesh.

The burnt Rs. 500 and Rs. 1,000 notes were reportedly brought in sacks and then dumped by workers of a company on Parsa Kheda road at CB Ganj in Bareilly, sources said.
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Old 10th November 2016, 07:40   #227
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Default re: Government scraps Rs 500 and Rs 1000 notes!

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Originally Posted by prasadee View Post
Its a small sum - like $200 for expenses that may come up at the airport/taxi and such. INR is not accepted at my US Bank/foreign exchange counter in my city. The only ones accepted at my bank are Mexican Peso, Euro, British Pound , and a couple others. I already tried SBI California. My time is worth more than my small stash of INR, so I give up.
I had the exact same feeling when i saw the gung-ho brigade praise this decision. I refer to it as a case of changing goal posts mid-play and then expecting the other party to compensate. I'm expected to lose money in exchange and associated costs in time spent, because my legally earned currency one fine day becomes illegal to tender.
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Old 10th November 2016, 08:03   #228
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Default re: Government scraps Rs 500 and Rs 1000 notes!

Some updates:

Neighbor farmer has a debit card and have asked me to accompany him when buying groceries from town. I already got 2 bitter gourds for the service(!)

Farm worker has only a single 500, he has approached me to get 100s. I asked what is he doing for food, he said he got enough rice to sustain on porridge for a month. In fact, he doesn't seem bothered about it at all.

The milkman has asked if i could pay him in advance this months bill using new currency(if i get it). He got 10k at home, but no time to deposit it.

For tractor ploughing the fields- he agreed for deferred payments but asked me to buy diesel when coming from town. No urgency for fertilizers as of now.

In a summary, there's not much of a fuss about it in the rural side where i live.
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Old 10th November 2016, 08:38   #229
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Default Re: PM scraps 500 and 1000 rupee notes!

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Originally Posted by TarunSC View Post
1. This will (in principle) help the country to do away with the backlog of fake currency and the problem of black money as all big deposits only over a certain period of time have to be taken into account. But how will it stop the cycle of black money which will restart after a lag period maybe.

6. I have no doubts about the intention of this step but am highly skeptical of the long term viability of the move and the fact that is this an actual answer to the menace of corruption and black money or just a temporary solution.
I think this move helps in three ways:

1. It of course, completely wipes out the black money held in currency form and severely cuts the value of real estate holdings. Already RE stocks have tumbled; see: http://www.ibtimes.co.in/dlf-hdil-in...k-money-703172 and people are burning currency it seems.

2. The law, policy and technology for much more advanced transactional tracking is already in place; it is going to be quite difficult to create new wealth that the taxperson does not know about.

3. The government can consider a system where such a currency withdrawal happens every few years; making cash hoarding impractical.

So then people are left with two options: hold movable assets, or send the black wealth abroad. For pretty much any movable asset acquisition nowadays we have to quote PAN or pay electronically. Further, apart from gold I don't think any of the remaining options (works of art, fine watches, automobiles...) are easily liquidatable. There are already controls on gold transactions with more to come in the next budget, I expect (Jaitley had to roll back some stuff last time).

I'll be honest in that it is not clear to me what our government is going to do about black wealth stashed abroad. So far, whatever information they seem to have is from external sources like Wikileaks and ICIJ. Is our strategy to flow with the international tide against Swiss and Carribean banking? I don't know.

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Originally Posted by TarunSC View Post
2. We do not have sufficient currency notes printed and there will be a considerable lag period before things get back to normal.

3. A majority of people in small towns and villages do not have any bank accounts, let alone credit and debit cards and the several other online means of payment and it will be really difficult for them to survive this period of liquidity crisis.
These I think are misinformation. One article I read said RBI had ramped up Rs. 100 note production in recent weeks. A casual look at official JDJ website says 25 crore accounts have been opened under the scheme so far. Since the scheme target was one account per household, that I think we can take that to mean nearly 100 crore individuals are covered, which definitely puts paid to the "majority don't have bank accounts" view. NPCIL claims that nearly 25 crore Rupay cards have been issued; so we can say that about 100 crore people are covered there too.

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Originally Posted by TarunSC View Post
5. Though I am a salaried tax payer and against black money from any source I feel that the impact on local retail shops and real state sector is going be negative(with varying degree) in the short run atleast.
And these are the biggest tax evaders too. I have heard builders in NCR ask for 40%+ in black money? A retailer who's open 300 days a year needs to earn only Rs. 850 a day to be in the taxable income bracket - if we assume 5% margin, then daily turnover of only Rs. 17,000. I expect several local retail shops do fall in this category but none of them pay a single rupee in tax. Also remember that only about 1-2% of Indians pay taxes (if we exclude the ones who have to pay because of the TDS regime, I guess pretty much nobody pays taxes on their own).

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Originally Posted by benbsb29 View Post
I had the exact same feeling when i saw the gung-ho brigade praise this decision. I refer to it as a case of changing goal posts mid-play and then expecting the other party to compensate. I'm expected to lose money in exchange and associated costs in time spent, because my legally earned currency one fine day becomes illegal to tender.
GoI ought to be held accountable only for the currency you hold within its jurisdiction. Outside of it, all one should expect of GoI is to have the necessary policy and legal framework that enables currency exchange from INR to whatever the local currency is. Such a framework exists, and there are any number of businesses that operate within this framework to provide currency exchange services. Now it should be up to you to take advantage of such services.

Alternately, you could simply mail the currency you have to someone in India who you trust to do the honours.
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Old 10th November 2016, 08:39   #230
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Originally Posted by pedrolourenco View Post
The people with the maximum black money have already stashed it away abroad or in the form of Gold & Property.
But how will people transact on these two commodities now, with the noose being tightened, and high monitoring happening on deposits...? Anything above two lakhs will require the tax ID to be furnished. Most cash movement will generate a trail to be traced. People with crores in their coffers will have a difficult time. How many cars/electronic items can they purchase if they succeed to pawn of their gold or property (which they will not) at a loss. Property as it is, was composed of three components: real value + black + premium value (which is the appreciation). Now the black portion is stuck in a glut which will directly affect the premium value or appreciation.

No ways are people going to sell their property at just value + real premium. The greed is always there in Indians, to make the most of a deal, and will try to bake in the black component (which they too paid in black) for the total sum. Who will fulfill this gap. Unless they wait for white rates to match the overall calculation. Inventory is going to pile up higher on the all ready latent housing units sitting there, doing nothing as of now..!

Example (say last year):
1. House value: 60 L
2. Premium : 40 L
3. Of a total 1 C (20L was paid in black).

Now:
1. House value: 60L
2. Premium as per market: 50L.
3. Total Value: 1.1C

Person goes in for a sale, and expects 1.1C of which it is mandatory he receives 20L in black. Will he..? Ideally this was easy, and the pure 20L black + some portion of the premium (to lower the overall cost -- sans house registry was lower) was injected back into the system. How will it happen now. Will there be any receiver for this 20L in black. This is just a minute example, to be honest.

Quote:
Originally Posted by pedrolourenco View Post
The 2K note defeats the purpose of this exercise.
Basically this has been done to re-set the system for a while. After a while slowly the rot will creep back into the system. People will horde again..? Or what if: again there is a demonetization with a window of 4 Hrs.? Time can only tell. They are draining the sea to catch a submarine. Let us see what all is left over..!

Last edited by SDP : 10th November 2016 at 09:42. Reason: As requested
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Old 10th November 2016, 08:48   #231
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Default Re: Government scraps Rs 500 and Rs 1000 notes!

ATM's in public places will not function today too.

Last edited by SDP : 10th November 2016 at 09:41. Reason: Quoted text removed as the post has been deleted.
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Old 10th November 2016, 08:48   #232
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Default Re: Government scraps Rs 500 and Rs 1000 notes!

In cities what's working is online banking, debit/credit cards, food coupons, mobile wallets.

In rural areas, tier two cities for daily rations/supplies what's working is "trust". I have heard many instances where friendly neighborhood shops wholeheartedly supplied essentials to their costumers on trust basis and were saying you can make the payment as soon as you have money in your hand. Also, many people rely on weekly, monthly payment with these kind of shops. Again trust plays main roll.

Even in real Bangalore (not real-estate Bangalore) it is working and I experienced this. Some even accepted Rs 500 notes and issued change to their loyal customers.

Last edited by Nempuguru : 10th November 2016 at 08:56.
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Old 10th November 2016, 08:49   #233
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Default Re: Government scraps Rs 500 and Rs 1000 notes!

Educational institutions who hoarde crores of donation money I heard are in trouble. Generally people having lots of it will be in trouble and should be considered as a punishment/penalty for doing the illegal thing.

I have also heard that during the voluntary declaration scheme some people have declared in advance (and paid the tax part of 45%) of having some cash on them. This is to keep them safe in future for more such hoarding !

Unless we have validity on any money or equivalent (similar to cheque, you have to use or deposit irrespective of it passing multiple people), the problems will keep coming back after a while.

Last edited by srishiva : 10th November 2016 at 08:50.
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Old 10th November 2016, 09:01   #234
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Default Re: Government scraps Rs 500 and Rs 1000 notes!

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Originally Posted by creative420 View Post
Has anyone withdrawn money from the ATM? I can go to my local hole-in-the-wall idli shop 😞
Many colleagues at office withdrew money from the ATM located inside the office campus. In fact the queue is on at office even now. The machine is dispensing only 100s though. Don't know if ATMs with public access are functional.
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Old 10th November 2016, 09:09   #235
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Default Re: Government scraps Rs 500 and Rs 1000 notes!

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Educational institutions who hoarde crores of donation money I heard are in trouble.
Mathrubhumi is reporting massive, crippling losses to hawala operators in Malabar.

Another interesting perspective is in this article:

http://www.tribuneindia.com/news/pun...te/320725.html

"Some of the candidates have made numerous trips to Canada, the US and UK over the past year to collect the “election fund”. They will not be able to use it in the elections."
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Old 10th November 2016, 09:58   #236
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Default Re: Government scraps Rs 500 and Rs 1000 notes!

Queue at SBI Yemlur Branch a short while ago.
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Government scraps Rs 500 and Rs 1000 notes!-sbi.jpg  

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Old 10th November 2016, 10:46   #237
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Default Re: Government scraps Rs 500 and Rs 1000 notes!

Know your limits...

Withdrawal from ATM 2000 per day
Withdrawal from account through cheque 10000 per day AND 20000 per week (including withdrawal from ATM
Exchange of currency 4000 per day
No restriction on deposit of currency into you savings or current account
Carry your ORIGINAL identity proof. DO NOT carry copies
Reach out to your bank for any other restrictions that have been put in place.
ATMs are likely to be operational by tomorrow

My request to all..
Please be patient when at the bank. The tellers are doing their best to help everyone out.
Do not resort to panic withdrawal. Although your withdrawal limit is 10000 if you can manage with a lesser withdrawal, please do so.
It is quite possible that you may face situations where there is shortage of currency notes in some branches / areas. Please do not shout at the branch officials.
Go to your bank only if you have an urgent need to withdraw cash.
For deposits, would recommend that you space it out (unless it is an emergency) as you can deposit Old High Denomination notes till December 30th
Try and educate the help at home and office. These are the people who can be taken for a ride by the unscrupulous elements.

New currency notes have already arrived at banks. So try to take a mix of small and high denomination notes
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Old 10th November 2016, 10:52   #238
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Default Re: Government scraps Rs 500 and Rs 1000 notes!

The latest : Penalty for deposits above 2.5 lacs.http://www.ndtv.com/india-news/depos...-lateststories
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Old 10th November 2016, 11:05   #239
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Originally Posted by Eddy View Post
Which is not fair who declared the money under the amnesty scheme. They paid 45%, while someone who deposits now will pay a max of 30%.

Unless of course, there is an investigation into how he got this money which the 45% guys escaped.
Any deposits above 10 lakhs will be verified against the tax returns of that individual. If the income has not been declared, then a penalty of 200% will be levied.

Hence the people who have come forward voluntarily under the amnesty scheme have done the right thing.
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Old 10th November 2016, 11:37   #240
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Originally Posted by Venkat_Figo View Post
Any deposits above 10 lakhs will be verified against the tax returns of that individual. If the income has not been declared, then a penalty of 200% will be levied.

Hence the people who have come forward voluntarily under the amnesty scheme have done the right thing.
The return which they can match with will be filed in july 2017.
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