[Sree73]

Originally Posted by SDP

1. The system is in place. Its not 'make an entry into a register and submit a faded zerox copy'. The exchange transactions have to be done through a new window/page/UI in the system where the ID is recorded. Without a valid Govt ID, the exchange transaction can not be done at all.

2. The system is online and real-time. So same person trying to exchange 4000Rs more than once in a day ... even from different banks, is getting stopped right at the second attempt.


System changes ACROSS all banks is not a joke. If Govt pulled this off, that only indicates how well the whole thing is planned, prepared, coordinated and being executed.

Originally Posted by SDP

Sorry, not true. Its once per day. Please check my detailed post just 2 posts above.

You can still believe that the cash exchange of Rs 4000 is per day. But in reality it's just once in the next 15 days which RBI may review later. RBI circular never said it's once per day. It's majority of the media / public interpreted wrongly bringing in the 'per day' clause of some other statements in the circular/FAQ.

And moreover, for 4000 cash exchange, bank account is not needed. Only one of the following Ids are required. Ofcourse you need the Rs. 4000 in old currency of 500/1000 (Aadhaar Card, Driving License, Voter ID Card, Pass Port, NREGA Card, PAN Card, Identity Card Issued by Government Department, Public Sector Unit to its Staff). So, an online platform preventing an individual from the second attempt of 4000 exchange is also not there. (Even though it's not permitted)

Regarding online/realtime platform is concerned, no such platform exists as of now amongst all the entities mentioned for the cash exchange scheme. Cash exchanges are enabled not ONLY among banks, but among all Issue Offices of RBI and branches of commercial banks/RRBS/UCBs/State Co-op banks or at any Head Post Office or Sub-Post Office.

[vigsom]

Originally Posted by Gannu_1

Tolls have been waived off until 14th. Extended from the previous 11th date. That's a welcome news.

For the grand tourers , that is a saving of approx Re.1/km.

[Sawyer]

Originally Posted by mayank0782

It IS illegal. The official statement clearly mentioned that these notes are illegal tender starting Nov 8 midnight and should not be used for any transactions. (Except in hospitals/fuel stations etc. till Nov 11). Anyone still found doing transactions in old currency is bound to face legal implications. Also, as someone pointed out the supermarkets/stores/jewelry shops cannot deposit the 500/1000 old currency in their accounts if they received it after Nov 8th.

I don't agree, check the law and tell me the section under which it is illegal. Just some one pointing this out does not make it so, it has to be said so formally in a law passed by Parliament in the past.
Again, up to demonetisation, it was illegal to refuse to accept these notes for goods sold or services rendered. Now it is legal to refuse to do so.
PS: There is a very interesting corollary to this, based on the fact that the validity of any currency as medium of exchange is a belief system more than anything else. IF enough people that hold unaccounted cash in the form of these notes behave as if Modi has not said what he said, none would face a problem! They could go on running a parallel economy, using these notes as a medium of exchange, as before. Even if it was illegal, it would not be any more illegal that what they were doing anyway with this untaxed money, so there is no real additional risk other than the following:
1. Exposure to counterfeit currency
2. Risk of loss from soiled or damaged notes that can no longer be exchanged for new valid ones.
In fact the question that I don't have an answer to - what happens if this money is discovered in a raid, one year from now? One can say, it is just pieces of paper like monopoly money, so why are you arresting me, under which law, for hoarding paper?!

[binand]

Originally Posted by Sawyer

I don't agree, check the law and tell me the section under which it is illegal. Just some one pointing this out does not make it so, it has to be said so formally in a law passed by Parliament in the past.

Here you go:

http://finmin.nic.in/172521.pdf

Read 2(i) on page 3 & 2(ii) on page 4. It very clearly says that for the first 15 days, one can exchange notes of aggregate value of 4000 (after 15 days this limit will be reviewed). Note the absence of the word "daily" or equivalent.

Originally Posted by Sawyer

what happens if this money is discovered in a raid, one year from now? One can say, it is just pieces of paper like monopoly money, so why are you arresting me, under which law, for hoarding paper?

I imagine the burden of proof will be on the hoarder to prove that they accumulated all those notes after 9/11/16.

[SDP]

Originally Posted by Sree73

You can still believe that the cash exchange of Rs 4000 is per day. But in reality it's just once in the next 15 days which RBI may review later. RBI circular never said it's once per day. It's majority of the media / public interpreted wrongly bringing in the 'per day' clause of some other statements in the circular/FAQ.

RBI has not said 'per day', whereas they were particular about mentioning 'per day' everywhere else (ATM withdrawals, at-counter withdrawals etc). In fact, its media like the EconomicTimes article that someone here quoted that has "once" as the interpretation.

...So, an online platform preventing an individual from the second attempt of 4000 exchange is also not there. (Even though it's not permitted)

Is this your assumption or you know this for sure? Can you please point to a source if you got it from a trustworthy entity?

I have said the platform exists based on half an hour discussion with someone who has been issuing exchange notes since last 2 days at a proper bank. I am definitely not going to get a screenshot/photo of the user-interface of the online platform just to prove a small point.

There are others (e.g. Divya Sharan) who have shared first-hand experience of exchanging notes on 2 consecutive days.

You can choose whatever you want to believe.
But nothing like a first-hand experience. So if time permits, try exchanging more than 4000 in a day and try exchanging 4000 each on 2 different days.
My view is that you would be stopped on the first experiment and would not face any issues for the second experiment.

Regarding online/realtime platform is concerned, no such platform exists as of now amongst all the entities mentioned for the cash exchange scheme. ....State Co-op banks ... Head Post Office or Sub-Post Office.

Now, this is a distinct possibility and if it is true, its a loophole through which some people can escape temporarily. At RBI level, there is everyday accounting of every Rupee that has gone out under an exchange. So even if the loophole exists, people exploiting it would eventually be tracked.

[Sree73]

Originally Posted by SDP

Is this your assumption or you know this for sure? Can you please point to a source if you got it from a trustworthy entity?

I have said the platform exists based on half an hour discussion with someone who has been issuing exchange notes since last 2 days at a proper bank. I am definitely not going to get a screenshot/photo of the user-interface of the online platform just to prove a small point.

I have 2 of my coursemates working in banking. One as a chief manager in pvt sector bank and other as a divisional head in a public sector bank. Had some discussion with them yesterday.

The current platform is a one just triggers within bank network if some one tries with the same credentials again. If name is slightly changed or another id is used, it will not give any alarm. Note.. you do not require bank account to exchange 4000. It's not linked to bank account and highlights if the exact entries are made again. But, if you are depositing the amount, it's a different scenario as it has to be with an account..

[binand]

Originally Posted by Sawyer

based on the fact that the validity of any currency as medium of exchange is a belief system more than anything else. IF enough people that hold unaccounted cash in the form of these notes behave as if Modi has not said what he said, none would face a problem! They could go on running a parallel economy, using these notes as a medium of exchange, as before. Even if it was illegal, it would not be any more illegal that what they were doing anyway with this untaxed money

There are some fundamental issues in your line of argument here.

First of all, the "currency is a belief system" comes from the fact that the government underwrites (ie, accepts the liability of honouring) currency. Hence the words "I promise to pay the bearer..." on every note. As long as these notes are legal tender in the white economy, this government promise holds good and hence the note has value. The moment they are restricted only to the black economy, their value goes to zero.

The government in addition, manages a bunch of other things - like a law & order framework that protects your assets, judiciary, administrative departments etc. Once you decide to operate purely in the black economy you lose the protection of all these. Suppose you use 10 crores from your hoard to buy 10 acres of land. How are you going to assert your ownership? The registration department will not register the land in your name unless you deduct 1% TDS and pay it in to the treasury (and we are assuming that after 9/11, the white and black economies are completely split with no overlaps or touchpoints). So you will need to build your own gang of "enforcers" to assert your ownership. How do you know that the seller gave you the full 10 acres? You need a surveyor. How do you know that the seller actually has ownership on the land, that another individual will not claim it as theirs? You see, maintaining the touchpoint with the white side has real tangible benefits. You have to pay your minions who help you keep your black empire intact; but they will need to interface with the white world. So you need to pay them with valid currency.

Then there is the question of wealth. We will assume that the black economy will also create wealth. But the amount of currency available in the black side will be constant (not being replenished; it might actually diminish). This will result in devaluation of the currency on the black side. How do you counter that? Maybe by going back to barter system. This effect needs serious thinking through, but I imagine this will eventually lead to the collapse of the black side.

[Sawyer]

Originally Posted by binand

Read 2(i) on page 3 & 2(ii) on page 4. It very clearly says that for the first 15 days, one can exchange notes of aggregate value of 4000 (after 15 days this limit will be reviewed). Note the absence of the word "daily" or equivalent.

This has nothing to do what I said about supermarkets or anyone else continuing to accept the notes, for deposit into their bank with no intention to seek to exchange these directly without having the transaction reflected in their bank account, for which the 4000 limit applies; and what I have said goes back the definition of legal tender and what it means in legal terms.
Think about this - when a small shop gives you back some toffees as small change, not having the coins, and you accept these in settlement of the transaction voluntarily, has any law been flouted? Now, if the shop was to force you to accept these, it would be illegal to do so, but only as long as you were not agreeable to take these. The toffees have just become an another medium of exchange when it is voluntary on both sides, there is nothing illegal about the transaction.
PS: and to your next post, remember what I had said about using the invalid notes, that it would not be any MORE illegal that it was in the past. All the issues you posed were also there in the past! I would use 5 crores of new money/cheque, and five crores of the invalid money to buy the land that is worth Rs 10 crores, and I could do so if the seller was willing to do so, which he would be if he could in turn move the five crores of invalid money in the same way. All illegal, but it was so pre demonetisation as well, so what is different post demonetisation?! But this is nothing more than an interesting thought experiment, it will not happen that there will be enough people that are willing to use the invalid money for this to work. But it needs to be understood that it is the lack of enough people coming together to retain this belief that will stop this from happening, nothing else.

[binand]

Originally Posted by Sawyer

Think about this - when a small shop gives you back some toffees as small change, not having the coins, and you accept these in settlement of the transaction voluntarily, has any law been flouted?

Yes. Section 31 of the RBI Act says that only RBI (and in some cases, union government) is authorized to issue legal tender in India.

[Sawyer]

Again, legal tender means a medium of exchange of value given/received that is illegal for anyone to refuse to accept; barter deals, and other mediums of exchange that are acceptable to both sides are not legal tender, but their use in itself is not made illegal by the RBI act.

Formally defined: Legal tender is any official medium of payment recognized by law that can be used to extinguish a public or private debt, or meet a financial obligation. The national currency is legal tender in practically every country. A creditor is obligated to accept legal tender toward repayment of a debt.

Other ways of repayment of debt, if acceptable to the creditor, are not illegal.

[dark.knight]

India's credit card economy isn't evolved yet.. nowhere close to America's, its not fully 'wise' to curb the use or spread of cash-money in the country today and expect larger use of credit cards without the proper infrastructure. Yesterday I was in a "slightly" upscale establishment where a person was waiting to pay by card - debit card was denied due to "machine" problem, then he took out the grail card - the AMEX, again denied due to lack of machine and finally the 3rd card an ordinary credit card worked.

In another instance an associate who wanted to pay for lunch took out his credit card, their machines had died and cash was the only way out and he had "zero" of it. If not for my cash he'd have been embarrassed to a much larger degree. Petrol bunks always take an hour to clear the payment thru card, cash is lightning quick in comparison. Establishments do not have much idea on efficiently clearing the bill via card, to a large degree the nation has been cash-hungry and that must change now starting with this "surgical strike" so to speak.

I'm ok with the shake-up, it is a needed jolt to the system but the notes haven't reached the hands of the public yet.. the blue-collar house workers all are strapped for change until now and its up to their employers (us) to bail them out using cash yet again. The government should have made adequate arrangements for swapping of notes as promised and in all of the financial establishments so as to thin out the queue. I'm only doubting if this will have the required effect at all (rhetorical question, not to be replied to ).

[binand]

Originally Posted by Sawyer

Other ways of repayment of debt, if acceptable to the creditor, are not illegal.

You are right. I was under the impression you were arguing a different point (just scrolled back and read this conversation). Yes, stores can accept the now-invalid older notes for as long as they please at their risk. Just that they will have no legal protection when the stuff hits the fan for them (what if somebody pays them with FICN that they didn't detect?).

[Sree73]

Originally Posted by Sawyer

Again, legal tender means a medium of exchange of value given/received that is illegal for anyone to refuse to accept; barter deals, and other mediums of exchange that are acceptable to both sides are not legal tender, but their use in itself is not made illegal by the RBI act.

We are mixing different aspects. No one is saying that barter system is made illegal by RBI. I can give you 2 Jack-fruits and in-turn accept 5 coconuts as far as we are in agreement. It's not illegal.

We are talking about a currency which is made illegal by the issuing authority and there is no guarantor for the value of that. Some exceptions are allowed in few area just to reduce the inconvenience of the public for few days. It's valid only in that said area. So, old 500/1000 currency notes are illegal beyond midnight of 8th Nov. (Except the few exceptions given). If a jeweller accepts the 500/1000 rupee note today towards the sale of jewellery, both the giver and the taker are punishable under law.

[Sawyer]

Originally Posted by dark.knight

I'm only doubting if this will have the required effect at all (rhetorical question, not to be replied to ).

It is an excellent question; this measure is like a bypass for a heart patient. Very useful and effective, IF followed up with right diet and enough exercise. Otherwise, in five years or so in this case, back to square one. And like a patient can die of repeated bypasses, such actions also aren't to be taken lightly. It isn't like taking a natural and therefore safe laxative, a la Piku.

Originally Posted by binand

. Yes, stores can accept the now-invalid older notes for as long as they please at their risk. Just that they will have no legal protection when the stuff hits the fan for them (what if somebody pays them with FICN that they didn't detect?).

Exactly and as long as they are in compliance of Income tax for the associated income they will be ok. And the other point I was making is, as I said, just an interesting thought experiment to extend the legal tender concept. But a jugaad that, if anyone can pull it off, Indians can and will.

[dark.knight]

Originally Posted by Sawyer

It is an excellent question; this measure is like a bypass for a heart patient. Very useful and effective, IF followed up with right diet and enough exercise. Otherwise, in five years or so in this case, back to square one. And like a patient can die of repeated bypasses, such actions also aren't to be taken lightly. It isn't like taking a natural and therefore safe laxative, a la Piku.

The long and short of it is that money has been and will always be an imperfect concept. Everyone and everyone they know will now tell me twice over to go back to stone age and do barter system or to rob people blah blah, that isn't my point at all. I grew up in the monetary world and I cannot possibly imagine any other better way out of this, because the society at large isn't trustworthy and money negates that factor of distrust as a neutral holding facility (the bank) and a overall supervisory authority (the government) make it secure for us.

That STILL doesn't make money a perfect concept - it can survive only thru inflation, deflation, demonetisation, changing valuations etc. Another side effect of it is that it'll also create ultra-rich and ultra-poor, but its the only answer we have today because of the fragmentation of being.

"Blacks" and "whites" have co-existed for decades and will continue to do so for as long as notes exist and no I'm not talking of race. Money bills themselves were promissory notes issued by "self-appointed" bankers for holdings in gold and they are the last remaining tangible proof of our stake in gold, on earth (whatever may gold be worth). The rest are only intangible, promissory notes or should I say data, on the same. Cashless society would mean only one thing and those who have interpreted my post correctly will already know what it is.

Nevertheless adapting and adoption is the name of the game, evolve to survive in this real life rendition of the movie The Running Man.