Government scraps Rs 500 and Rs 1000 notes!

[carwatcher]

Also, what stops people from using other payment means.

We take pride in announcing using the alternate modes at personal level but when the same methods made kind of mandatory by the Govt, we all start complaining.

Maybe that's what is called reluctance to change.

Odd-Even, Sunfilm ban, etc. etc.

Can any movement succeed without active public participation. But in our country even if public chooses to co-operate, we have paid media and opposition parties to create unrest at any cost.

Originally Posted by SDP

What stops people from going to the bank (instead of ATM) and withdrawing upto 24000 Rs in one shot (using a cheque) without any transaction charges?

[perty]

Originally Posted by SDP

What stops people from going to the bank (instead of ATM) and withdrawing upto 24000 Rs in one shot (using a cheque) without any transaction charges?

The bank itself.
When I turned up at their doorstep with a self cheque for 24000, they sent me away stating that they dont have cash. This happened at 2 banks for me, one a private bank and another a PSU bank, in the last week of December. The maximum they were willing to disburse was 10000 and I have to either call up 2 days in advance and ask for some cash to be reserved or make daily trips to the bank to withdraw money.
A few weeks from now I'm sure I will look back on this and reminisce on how 2016 brought back memories of the ration shop queues of the 80s for those who were around then.

[sgiitk]

Originally Posted by perty

The bank itself.
When I turned up at their doorstep with a self cheque for 24000, they sent me away stating that they dont have cash. This happened at 2 banks for me, one a private bank and another a PSU bank, in the last week of December. The maximum they were willing to disburse was 10000 and I have to either call up 2 days in advance and ask for some cash to be reserved or make daily trips to the bank to withdraw money.
A few weeks from now I'm sure I will look back on this and reminisce on how 2016 brought back memories of the ration shop queues of the 80s for those who were around then.

My son had a similar experience with Axis. He has a supposedly highest priority account with them. He went to draw money, just three people in the queue. They were only dishing out 4,000. He walked out and three days later he went into StanC (he is Priority there) and drew 24,000 each from two accounts. StanC were giving up to 24k to anybody who was drawing money.

[dark.knight]

Originally Posted by msdivy

A question, if cash situation restores to normalcy, does it mean people have gone back to cash like before, or have they gone cashless? In case they have gone back to cash, what changed from before Nov 8th to after Dec 30th?

I'm one of those people who believes that cash, whether devalued, revalued, or demonetised, should exist, PERIOD.

The original intent of the demonetisation was to bring out massive sums of unaccounted notes which were neither being utilized nor being declared, I'm talking of sums in excess of 8-9 digits, anything lesser is a joke and is of little consequence. They were successful in that because the very notes were made useless, so many of those who had stored them like grains in a warehouse had to have them changed after paying heavy taxes. I'm sure if not 100%, that in 75% of the cases they've recovered such high-value sums that were simply rotting in locations only to change hands when purchases of huge real-estate and/or jewelry are done. Those notes were doing great harm because they were creating inflation to ridiculous levels in certain sectors such as real-estate and luxury shopping.

I've no problems with that and in fact it was a much needed purge of the system. Where the government went wrong is in insisting that EVERY payment should be done in digital or card, and that too with an infrastructure that isn't even 1/10th ready for the same. Cashless society is anarchy, pure and simple, it gives the government too much leverage and power over the people not to mention the future scope of charging a transaction fee per transaction which will again result in inflation.

Money is holdings of power, no government has the right to throttle withdrawals and insist on cashless dealings. If one has earned it, he/she can withdraw it in the note form. They can, however do endless investigations into sources of funds and take taxes for the same if any mismatch happens. We ALL know which are the largest holders/creators of so called "black", the rule-makers themselves.

As usual, my view, no negotiations.

[Samurai]

I have never been to ATM since Nov 8th, and the last time I withdrew cash from Bank was on Dec 8th, that too just 10k. Meanwhile, our cook gave us whole lot change in 100s. My cash usage has gone down to 10% of my earlier usage. At least 9/10 shops I visit accept card. I use cash only for transactions below 200 bucks.

I even switched to a much smaller wallet, don't need a wallet that used to hold 20-30 notes before. Now I have less than 10 notes most of the time.

[prasadee]

How about foreign exchange at the airport? If i want INR for $1000, would I get it without any problems ? I do not want to use my US issued credit cards as the foreign transaction fee is high.

[poloman]

I had withdrawn around 9K in 500Rs notes a week back. Finding no reason to keep that or place to spend that, deposited 5000 Rs back in bank. In all small shops in our area PayTM is the norm. Also the maid and flowerwala are willing to give change for 2000 in good quantities if I am in need.

[sachinpk]

Originally Posted by dark.knight

I'm one of those people who believes that cash, whether devalued, revalued, or demonetised, should exist, PERIOD.

And I am sure, cash would continue to exist in India. Sooner or later tea vendors, peanut vendors (who currently use PayTM) may fall back to cash based transactions.

I've no problems with that and in fact it was a much needed purge of the system. Where the government went wrong is in insisting that EVERY payment should be done in digital or card, and that too with an infrastructure that isn't even 1/10th ready for the same.

What needs to be done (which I feel the government would do) is to ensure that there is no liquid cash available to do large transactions. The problem which existed was 85% odd money circulated in India were in Rs.500 & Rs.1000 notes. And this led to large scale hoarding. What is required would be to have large denomination of smaller notes available plenty. But buying lands using suit cases of money etc. should be discouraged (let them use container trucks carrying smaller denomination notes instead ).

Purchases above a limit has to be done using digital payments, cheque or DD. If people are so finnicky about Digital payments let them go back to cheque or demand drafts. In India every excuse (especially the one of "ease of use") is generally given only to byepass some law or make corruption easier. Earlier every traffic violation was a court offence (in many foreign countries it still is). The excuse of "ease of use" was brought in, and police officers were given the rights to collect spot fines. We all know what happened. Now for very many cases we are going back to the old way; mandatory court appearance (as that is becoming the true detterance).

[Chetan_Rao]

I'm still unable to understand what the 2000 Rupee note is intended to do.

It's useless short-term because of lack of lower-denomination notes to transact against - which is impractical to fix because of the kind of logistics required to print/circulate value equivalent to even half the demonetized notes - and long-term it will make hoarding even easier.

What gives?

[RSR]

Originally Posted by Chetan_Rao

I'm still unable to understand what the 2000 Rupee note is intended to do.

Yep, the continued existence of the new 2000-rupee note over the long term goes against whatever arguments were put forth in favour of demonetisation of the old 1000s & 500s.

The 2000-rupee note should simply go as soon as possible - either through a slow, silent & stealthy process or with a loud, sudden big bang.

[WindRide]

Originally Posted by Chetan_Rao

I'm still unable to understand what the 2000 Rupee note is intended to do.

I would love to imagine the 2000 note was a honey-bait to get blackies to convert to it en-masse and then do a surgical-strike-ishtyle 8.00PM announcement that from midnight 2000 notes are invalid. Lots of heart aches and attacks guaranteed.

[sachinpk]

Originally Posted by RSR

The 2000-rupee note should simply go as soon as possible - either through a slow, silent & stealthy process or with a loud, sudden big bang.

I feel Rs.2000 came in as a kind of "hold all" currency. Which also did not work the expected way. Rs.2000 may go out, but not as a big bang. Once adequate circulation of small notes are in place, RBI can just ask banks to collect what ever Rs.2000 comes in and issue small denomination notes instead (and perhaps also silently note down people who comes up with bundles of Rs.2000 notes at one shot). Govt. may also give a much longer notice period to return such notes.

[Chetan_Rao]

Another demonetisation drive anytime soon will be suicidal, hurting confidence in the INR overall and repurcussions will go far beyond local economy. A silent recall seems more prudent.

My question anyway wasn't about what happens to it in the future, I wanted to understand the rationale behind its introduction.

[msdivy]

Originally Posted by dark.knight

As usual, my view, no negotiations.

Thanks for your candid views. On Nov 8th, I was one of the folks who got excited about the announcement of note ban. I was hoping the Government would announce further measures and introduce new legislations to nip black economy. But nothing happened. All we got was new formula every day, sometimes every hour on rationing of currency notes by RBI. When they introduced the 2000 rupee note, I knew, they had blown it. The Government had not put much thought into the effort. Demonetization is a bludgeon which missed the target. So what we have now? We are trying to build a cashless economy where the majority don't have debit or credit cards.

People have great belief in the prime minister and hence the 50 day period has been mostly peaceful. Otherwise, we might have ended as Venezuela, where the plan was withdrawn after 2 days of unrest & looting. I wish I would be wrong and the prime minister has something worth to show to the people, for the ordeal they had to go through.

Originally Posted by sachinpk

And I am sure, cash would continue to exist in India. Sooner or later tea vendors, peanut vendors (who currently use PayTM) may fall back to cash based transactions.

Now that cash situation has eased a bit, vendors, who had displayed 'PayTM Accepted Here' have removed those stickers and have gone back to cash.

Originally Posted by WindRide

I would love to imagine the 2000 note was a honey-bait to get blackies to convert to it en-masse and then do a surgical-strike-ishtyle 8.00PM announcement that from midnight 2000 notes are invalid. Lots of heart aches and attacks guaranteed.

I wish it was the case. But the cat is out of the bag. All the black money hoarders who converted their loot to 2000 notes have got the clue and would have converted again to lower denominations or have converted into another form.

Originally Posted by Chetan_Rao

I'm still unable to understand what the 2000 Rupee note is intended to do.

The launch of 2000 note was announced many months back. Since demonetization was announced abruptly, Government didn't have anything except these new notes and they promptly introduced it. If Government had planned the note ban, then they may as well have printed 100 rupee notes instead of the 2000s or 500s. The element of surprise of demonetization was wasted. But during those 50 days period, this is what 2000 note did - it helped black money hoarders to convert their black cash into 2000 notes.

Originally Posted by Chetan_Rao

A silent recall seems more prudent.

Would like to hear what Nov 8th demonetization effort has achieved, what a normal recall of 1000s & 500s wouldn't have achieved.

PS: Parody - Will reveal the exact benefits from demonetisation only if you re-elect me in 2019

[Chetan_Rao]

Originally Posted by msdivy

.........
Would like to hear what Nov 8th demonetization effort has achieved, what a normal recall of 1000s & 500s wouldn't have achieved......

Not a question I can answer I'm afraid. My question about the 2000 Rupee note was borne out of the same perplexity.

Personal opinion, this was more carpet bombing than surgical strike, and the proverbial rats and cockroaches have found a way to survive, as they always do.