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Old 10th November 2016, 16:36   #286
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Default Re: Government scraps Rs 500 and Rs 1000 notes!

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Originally Posted by SaNdY_AR View Post

I was thrilled when an announcement of this magnitude was made by our PM and I completely supported this deed. Now after a couple of days I feel that there could have been more vigor to stress the facts, the intention and misery surrounding this act to commoners
The government should do more to assuage the everyone's concerns.
I said this yesterday and I will say it again.. Rs.500 and Rs.1000 is worthless is that message that everyone got. The fact that these notes can be exchanged, albeit with some hassle, is not being passed along.
I had to get some cash today and it took me 3 hours (at two banks) to get a sum of Rs.20,000. And guess what? They had just Rs.2,000 bills, no 100s, no 500s. The banks werent even sure when they might receive new stacks of 500s.
I am okay with the 2000 denomination as it will solves my purpose. But if I were to buy something worth say Rs.200 I am in big trouble.
Such restrictions affect the common man the most, and they are the ones who can ill afford it.

PS: There is going to be a mad rush at the ATMs to get Rs.100 bills.
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Old 10th November 2016, 16:46   #287
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Default Re: Government scraps Rs 500 and Rs 1000 notes!

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Originally Posted by Queryanalyzer View Post
..
I said this yesterday and I will say it again.. Rs.500 and Rs.1000 is worthless is that message that everyone got. The fact that these notes can be exchanged, albeit with some hassle, is not being passed along.
...
Where did you hear this message? Did the PM say this in the address to the nation? Or did any news-channel or newspaper mentioned it?

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PS: There is going to be a mad rush at the ATMs to get Rs.100 bills.

Why?
Yesterday the old 500 and 1000 Rs notes were invalid and the new 500 and 2000Rs notes were not out. So 100 and lower was the only valid currency available for cash transactions YESTERDAY. Today the banks have opened and new 500 as well as 2000Rs notes are available. So why would people be chasing 100Rs notes from ATMs now?
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Old 10th November 2016, 16:46   #288
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Default Re: Government scraps Rs 500 and Rs 1000 notes!

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Originally Posted by Nissan1180 View Post
If they were serious about black money, why not keep a deadline till the end of the financial year? People could be asked to get their notes changed after presenting their ID cards. That's not what happened. In order to shock the system, they did it overnight (I'm not going into the political reasons behind this-that's not a topic for this forum).
And what did people do with their money? They bought gold.
Every jeweler in the metro cities experienced a spurt in sales of gold bars in the last few days. I wouldn't be surprised if people hired proxies to buy their gold for them in order to make it untraceable.
I'm deeply disappointed that you take such a biased view of the situation. Perhaps it's not an inconvenience for you-perhaps you have someone who could go through the trouble of changing your currency without you being physically present. But that's not how the majority of this country's population feels. Yes, it is a bold step. Yes, it will make some of the cash appear in the bank's balance sheets. But is there any strategic thought behind what would happen when the new notes are introduced? None. Things would go back to being the same.
Not everyone who dislikes a government decision is against India-many of us contribute more value to the country than the bureaucrats and politicians running the show. Lets not be judgmental about things so quickly.
If the gold has been brought with plastic or by exchanging denominations less than 100, then it is not an issue.

If the gold was brought with 500 or 1000 rupee denominations, even the jewelers have no option but to turn them back & deposit in their accounts, hence this will result in currency being accounted for. I don't understand how this will make it untraceable.

The whole point of shocking was necessary, agreed this has caused a great deal of inconvenience for the common man, my mother is a cancer patient & she is undergoing treatment & has a daily need for medicines, I can feel what you are going through, all I can say is this was needed for the greater good.

The cycle is bound to restart with the introduction of the 2000 rupee note, but atleast all the black monies would now be accounted for & there is a trace. Timely measures will be needed in the future as well, may the future govt will discontinue the 2000 denomination. I believe this is not only a bold step but a necessary one as well.
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Old 10th November 2016, 16:50   #289
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Default Re: Government scraps Rs 500 and Rs 1000 notes!

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Originally Posted by kartavya View Post
Just wanted to understand the move better so my question.
How does this affect the black market going forward (except current cash in hand ofcourse)? What is stopping the same people to not deal in real estate in black?
So the way I would understand is this:
A sizeable amount of cash in hand (50 lacs +) would either have to come in lumpsum from an external source/ person or would have had to be withdrawn from one or more accounts progressively. Since the existing 500/1000 notes are now banned there won't be many "sources" of black money anymore, except the ones having bundles of Rs 100 notes. So for a future black deal in the real estate one has no choice but to withdraw cash from one or more accounts. Considering that the Govt. has also decided to closely monitor cash withdrawals going ahead this is going to be difficult without being flagged to the I.T dept. It would probably take 10 yrs for someone to accumulate a large chunk of cash in small increments without getting noticed and to see big cash transactions happening all over again....which is when the next demonetization of these notes can probably be implemented...Just my thought - am sure there is more economics involved in this.
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Old 10th November 2016, 17:01   #290
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Default Re: Government scraps Rs 500 and Rs 1000 notes!

One simple way that the Govt. could have avoided a lot of panic (for Rs. 100) would have been to fill all the ATM machines with only Rs. 100 currency notes for the last month or so (before the announcement). That way a lot of people would have naturally ended up with Rs. 100 notes.

While I wholeheartedly support this decision, I am also wondering why are they bringing back Rs. 500, 1000 and also introducing Rs. 2000?
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Old 10th November 2016, 17:03   #291
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Default Re: Government scraps Rs 500 and Rs 1000 notes!

The title of this thread is incorrect. In fact, the 500 & 1000 rupee notes are NOT scrapped. The 500 rupee note is being replaced with a new one. The 1000 rupee note is planned to be reintroduced next year. And a new 2000 rupee note is now brought in!

A better move would have been to take out 1000 Rs notes entirely from circulation, NOT to introduce 2000 Rs note and stick ONLY with 500 Rs notes - with better design & security. This will actually have a better impact on cash hoarding going forward.

Introduction of 2000 Rs note, without fixing the huge cash economy first will only result in increased & easier cash hoarding as larger sums can be transported & stored with fewer notes.

See this article why many Govts are debating killing large bills, but cost-benefit has to be analyzed. For India, I dont think we need bills higher than 500 Rs.

http://time.com/money/4226174/kill-1...uro-phase-out/
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Old 10th November 2016, 17:07   #292
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Default Re: Government scraps Rs 500 and Rs 1000 notes!

I also personally feel the 2000 denominations should not be introduced as of now. It would be great if only 500 denominations are introduced. It will definitely have a high impact on black money with just lesser denomination currencies.
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Old 10th November 2016, 17:17   #293
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Default Re: Government scraps Rs 500 and Rs 1000 notes!

So someone hires 10 jobless guy and gets them to visit upto 10 banks everyday for 10 days.
They give in 4000 rupees in the old thousand and five hundred rupee notes.

As proof of identity they use any fake driving license photocopy. Since its for the 4,000 no one is really paying a lot of attention.

Everyday they clear 4,00,000 and in ten days they have cleared 40 Lakhs.

Even if they are paid 50,000 each for someone sitting on a good amount of black money this is a cheaper and cleaner way to get the new 2000 notes.
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Old 10th November 2016, 17:21   #294
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Default Re: Government scraps Rs 500 and Rs 1000 notes!

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Originally Posted by gsurya View Post
The title of this thread is incorrect. In fact, the 500 & 1000 rupee notes are NOT scrapped. The 500 rupee note is being replaced with a new one. The 1000 rupee note is planned to be reintroduced next year. And a new 2000 rupee note is now brought in!

A better move would have been to take out 1000 Rs notes entirely from circulation, NOT to introduce 2000 Rs note and stick ONLY with 500 Rs notes - with better design & security. This will actually have a better impact on cash hoarding going forward.

Introduction of 2000 Rs note, without fixing the huge cash economy first will only result in increased & easier cash hoarding as larger sums can be transported & stored with fewer notes.

See this article why many Govts are debating killing large bills, but cost-benefit has to be analyzed. For India, I dont think we need bills higher than 500 Rs.

http://time.com/money/4226174/kill-1...uro-phase-out/
You have a point there. People who are queuing up for 2000 notes today will find it very hard to spend it. Suppose you want to buy vegetables for 200, the shop keeper has to give you 18 hundred rupee notes, which he is not going to do. Govt should tightly control release of this 2000Rs note. I don't want a situation going forward where every ATM starts dispensing 2000 and 500. These notes are really hard to spend and people will anyway prefer plastic for such high value deals.

Last edited by poloman : 10th November 2016 at 17:23.
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Old 10th November 2016, 17:28   #295
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It could be the other way too. Hoarders might start collecting 2000 notes and stock up for use later, even at a small premium.
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Old 10th November 2016, 17:29   #296
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Default Re: Government scraps Rs 500 and Rs 1000 notes!

Quote:
Originally Posted by kartavya View Post
Just wanted to understand the move better so my question.
How does this affect the black market going forward (except current cash in hand ofcourse)? What is stopping the same people to not deal in real estate in black?

The two big advantages I see are the negation of fake currency and the negation of loads of black cash in hand. Those two points in itself are big positives for the government. That said I don't see how the government can stop transactions in black in the future with this move. Or am I missing something?
Pre-demonetization - people with black money(cash) were ready to pay in cash, and also probably were paying without much bargaining/negotiations. This caused regular unhindered increase in price of real estate, and related services ( read color work, furniture work, and so on). Salaried people were forced to join this and spend their white money without receipt. I have seen architectures, builders etc. clearly preferring customers with hoards of cash, who were ok without receipt - while giving cold shoulder to salaried class, who would haggle for each expense.

Post-demonetization - people with large chunks of unaccounted money, their cash is overnight downgraded to paper. All builders, land traders, architecture community - who were big beneficiary of trading without receipts, is suddenly exposed and left with no or little cash. I believe this in turn will shift the buying power back to people with white money, who many time would insist for paying thru check, will demand for receipt and thus for a foreseeable period creation of black money will be considerably controlled and reduced.
Similarly with jewelers, person with white money is never comfortable buying gold, diamonds or ornaments without receipt, due to worries about fake items, and redemption at the time of emergency, while class with huge cash will always prefer receipt less transaction - which will significantly reduce post-demonetization.

This is my view on current situation - you may present other similar or counter examples to forward the discussion.

Regards,
JLS
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Old 10th November 2016, 17:30   #297
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Default Re: Government scraps Rs 500 and Rs 1000 notes!

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Originally Posted by SDP View Post
Where did you hear this message? Did the PM say this in the address to the nation? Or did any news-channel or newspaper mentioned it?
I am not talking about me. I can use debit/credit card for almost all of my needs. I am talking about the vegetable vendor, the street sweeper, the construction workers. Neither I nor my sisters could manage to buy anything from the local stores (the ones that dont accept cards) around here. Why? Because they dont want to be stuck with the 500 bill.

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Why?
Yesterday the old 500 and 1000 Rs notes were invalid and the new 500 and 2000Rs notes were not out. So 100 and lower was the only valid currency available for cash transactions YESTERDAY. Today the banks have opened and new 500 as well as 2000Rs notes are available. So why would people be chasing 100Rs notes from ATMs now?
Like I said in my post I want to two banks (HDFC and AXIS) and neither had 100s or 500s. I had Rs.1500 (500*3) and I couldnt exchange them because the new 2000 bill was all that they had.
You should try going to a local store/eatery and give them Rs.2000.
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Old 10th November 2016, 17:37   #298
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Default Re: Government scraps Rs 500 and Rs 1000 notes!

RBI needs to flood the market with 50/100 rupee notes in the interim, instead of releasing the 2000 rupee note which is practically useless for a while without adequate supply of lower denominations to transact against.

A few acquaintances ended up getting some money from the bank, but can't do anything with it (unless they're willing to spend the whole round figure), because nobody has enough change to transact. Having a new 2000 rupee note today is as good as having one of the discontinued denominations.

The situation with small-time traders is pretty dire, esp. ones selling perishable goods (milk, fruits, veggies etc.). They don't have cash to stock material and their customers don't have cash to buy stuff. Some level of credit and IOUs is working on trust basis in small communities, but isn't sustainable beyond a couple days once stocks run out and aren't replenished.

Last edited by Chetan_Rao : 10th November 2016 at 17:41.
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Old 10th November 2016, 17:51   #299
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Originally Posted by Chetan_Rao View Post
RBI needs to flood the market with 50/100 rupee notes in the interim, instead of releasing the 2000 rupee note which is practically useless for a while without adequate supply of lower denominations to transact against.
Yes, I knew this would be the problem and that is why I decided not to go and exchange my cash in the bank today. I would rather deposit the cash in bank and withdraw from the ATM tomorrow when that starts. You will get more Rs. 100 notes in the ATM machines.

These unscrupulous people are being cornered by the Govt. in every way possible. I am loving this.

http://timesofindia.indiatimes.com/i...w/55353605.cms

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NEW DELHI: The great Indian 'jugaad' has failed this time. People were lining up at airport counters of airlines to buy tickets using their stack of Rs 500 and Rs 1000 notes.

On Thursday evening, airlines said that the tickets being sold like this will be "strictly non-refundable and won't be cancelled". SpiceJet confirmed this move and Vistara tweeted about it.

"We got instructions from the DGCA to do so. They, in turn, got their orders from the highest level of government (read PMO) as the relaxation was meant to ensure genuine travellers do not face hardships. This was not meant to be misused as a old-to-new note conversion trick," said a senior airline official.

Last edited by noopster : 12th November 2016 at 10:56. Reason: Merging Back to back posts
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Old 10th November 2016, 18:07   #300
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Default Re: Government scraps Rs 500 and Rs 1000 notes!

People fall for solutions that sound simple to them. Solutions like killing murderers, castrating rapists and chopping of hands of thieves. It is like putting a skin coloured band-aid on a wound. A quick and easy fix for a more complex problem. Nobody cares about addressing the root cause. Why people hide money? How to make people spend than hide it? To bring the money back into the economy, you should rather encourage people to spend it. Not penalise people for earning it.
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