[diyguy]

Originally Posted by SilentEngine

As per my understanding there is a transaction fee of 2.5% or Rs 250 whichever is higher so you will be paying 10% just to withdraw 2500.

Thank you, I eventually did get this info from customer service too at Citibank . I think it is crappy that I need to pay to get my money out of their clutches. E.g. If I had cancelled a flight ticket and the refund amounting to a large sum got credited to my card.

On a separate note:
A thought that came to mind today - how many inner circle people would have been privy to this decision of demonetization?
Who has the right to decide that these few people have the privilege to this information and then wreck the havoc on this nation for the next 2-6 months?
Who took care to ensure these elite are all above board and did not launder their money first or alert their near and dear ones to this impending scenario?

[nowwhat?]

Originally Posted by sachinpk

Before I catch some sleep. The "poor people with no bank accounts" is just a sob story used to paint a different picture. There could be people like that but their numbers may not be high and they also would not have so much income.

This sob story is played out by the rich black money holders , as they really have no solid explanation for the money they have today. An honest man how ever rich has nothing to worry.

Agree with you wholeheartedly. After barely getting my head above water with some lower denomination cash last week, I called up my relatives in rural Kerala expecting them to be worse than I was, only to find out that they are nonchalant and used to living with 100s and 50s like they always did. All of them have bank accounts and their income is well documented.

Let us not shed crocodile tears for those in hypothetical situations.

[dark.knight]

The citizens are one of the main reasons why the tax authorities are seen as a complex, terrorising force with "bad" intentions, well maybe this assumption may not be half wrong but a lot of the fault is with the public.

It starts with the accountants (those I know, don't panic and assume that I'm labelling every CA on earth), they simply don't give sound advice. Here are a few tips from my end on how to sort your finances and be prepared for any situation always :

1) Keep bills and receipts - ALWAYS, doesn't matter if its fuel, hotel, groceries, electronics purchases, phones etc. Keep them in a shoe box but keep it.

2) Balancesheets are fine but they're misleading for the common man - just remember what the total was and what the new total is each month.. keep track of expenses religiously.

3) Always choose the modest route in terms of spending.. that modesty may depend on one's earning but even then never overshoot the income, always cut the expense to about 70-80% of the income.

4) Keep all options of payment open - in testing times this helps.. keep change withdrawn from banks, keep a card (debit preferably), cheque whatever.

5) Keep a trusted CA and lawyer handy at all times, when in high tide you need a lifeboat.

Also, it seems to me that there are two, violently opposed forces here.. one that wants to play by the (ever-changing-out-of-left-field) book 100% and calls out on those who don't and one who sees this situation as not at all ideal and wishes more could've been done for it.. I belong to the 2nd one. I know many blue collar people who have not received their salary until now and not even the Diwali bonus due to lack of change and they're struggling to run their home. Whatever may the reasons be for lack of change in banks, long queues, and passionate debates.. we must understand that there're a group of people who cannot voice their opinion and bear with the situation because they have no choice and make far more sacrifices than we do (one of the workers was pick-pocketed only yesterday whilst standing in the long queue to get a change of a measly Rs.1000 note -yes! beware, they exist).

As always time will tell, till then might I suggest that the gauntlets be dropped? Also as a freelance business consultant this is what I'm seeing real-time - every form of "tweaking", adjustments, accomodations and brainstorming is happening to diffuse the situation, and it will continue to happen till the end of time. Have pin, will poke holes and the pin is the birth certificate.

[ecenandu]

Originally Posted by Sawyer

I found this white paper on the site of the Ministry of Finance, GOI, on the subject of black money and how to address it:
http://finmin.nic.in/reports/whitepa...kmoney2012.pdf
It is a 100 page or so document, that deals with the subject from all angles and sets out all the many things that are recommended to be done to comprehensively deal with the subject.
I have done a first quick read to see what this paper says on the demonetisation step, but so far I haven't found a single reference to it in all the steps that are recommended in this white paper of the GOI.
Very puzzling.

Thanks for the report.

It would be really interesting to read the report, which led to the current demonetization few years down the line, if they release, that is.

So the 5-6 % of 'black money' in cash is on total undisclosed income. The percentage of cash seized is more than that in jewellery.

[Sawyer]

Originally Posted by heavenlybull

I have relatives in remote villages in Uttrakhand and at least one family member has a bank account in the nearest town. I don't think situation is so bleak in villages anymore.

The problem with that statement is that it is anecdotal and cannot be used to jump to any general conclusion about how things are unfolding in all of rural India. No one really knows - perhaps things aren't as bad as I suspect they are, perhaps they are worse than that.

And I don't see any of the media spending effort and the time to go and report from the villages across the country because that means some hard travelling and hard work.

One thing is for sure; all of India now talks very effectively during elections. Some important state elections are around the corner, and the national one isn't too far away now. The verdicts that will be seen there will be conclusive evidence of the felt consequences by the silent majority of India.

[mukeshgoel]

Originally Posted by diyguy

Thank you, I eventually did get this info from customer service too at Citibank . I think it is crappy that I need to pay to get my money out of their clutches.

There is a charge of Rs.100-250 (depending on card) for depositing cash against your citibank credit card dues. I read it in the documents received with the credit card.

Never tried it myself in my 20 years of citibank credit card ownership.

[Sawyer]

Originally Posted by ecenandu

It would be really interesting to read the report, which led to the current demonetization few years down the line, if they release, that is.

I have not found any report that led to the current demonetisation; the one on the Ministry of Finance website is from 2012 and has no reference at all to demonetisation as a useful step against black money. I am starting to think that the current step has been taken by a very small group of people, thinking that they know best. Which does not necessarily mean that they are not correct, but the odds aren't looking good to me; the final equation will of course have to be the long term one of success achieved in eliminating black money versus the total pain caused by the disruption.

PS: One thing that jumps to mind in reviewing the report is the huge number of governmental agencies and laws that are already in place to counter the black money problem and the huge number of further steps recommended in the report for addressing this issue. A unintended funny statement is about the need for an agency to coordinate the work of all these agencies!
What the report does NOT address is simplification, streamlining and elimination of the colossal bureaucracy and waste in government that has become like hyacinth in our stagnant rivers. If that was done successfully, it will be the single biggest surgical strike that will address the problem without disrupting the life of the poor by both making it easy to be a tax payer and by reducing the amount of taxes we all have to pay because we don't have to fund the hyacinth anymore. But how can one expect anybody to carry out a surgical strike against themselves? So, for all the talk about the banking transaction tax that can be used for precisely this purpose, all that will be done is a banking transaction tax over and above all the existing taxes instead of in place of them because the bureaucracy has a vested interest in maintaining the status quo, or, preferably, in complicating it further.

[ecenandu]

Originally Posted by Sawyer

the final equation will of course have to be the long term one of success achieved in eliminating black money versus the total pain caused by the disruption.

The current step alone will not eliminate the black economy for sure. I hope this is one among the many steps to be followed.

[Sawyer]

I was so cheered to read a report just now in the morning paper on the sturdy common sense in rural India. It made my day, particularly after reading everywhere the excited and hysterical atmosphere that has arisen among supposedly savvy and very educated Indians.

The report in today's Times of India, Pune Mirror is headlined: Rural calm away from city storm.
And the reason for the calm? Be prepared to be shocked:-))
Quote from the report:
All this calm is because in most places, the demonetised Rs 500 and Rs 1000 notes are still good here. Most traders, restaurant owners and even locals do not flash a look of disbelief when you hand over one of the notes that were discontinued post November 8.
"What is the point in panicking? These notes are still money, at least till December end. We are not turning down customers who come to eat here just because they have old notes" said Hemant Kadam, owner of a popular restaurant....
" I have nothing to fear, I will walk straight to a bank with these notes and deposit them in my account. Why should people go hungry because of an announcement" declared another restaurant owner.
Traders of agricultural commodities, construction materials and retailers are also willingly accepting discontinued notes. Their only condition is that a buyer must not seek change, as it is in short supply.
Unquote
Three cheers to these enlightened people for not being led in the way a herd of sheep are led.
PS: Because of this, the cash on hand I was planning to deposit once the rush is over, has started shrinking! Now I shall wait till middle of next month before depositing it, if any remains - why bother the banks till then? And why deposit it now, and have to also stand in a line to withdraw the new Rs 2000 notes which, very funnily, are equally useless for lack of return change?

[Sawyer]

This report on how easily the situation is being dealt with by people that aren't easily led, begs the question:
What really would have happened if the demonetisation effective date was also kept as December 31, with just one warning - that any deposits in the banks from November 8 would be notified to the IT department, if these exceed a total of Rs 2.5 lakhs, for allowing for declared income to be matched with these deposits?

What could the hoarders done even with that additional time, that would however have allowed for much less of the chaos and disruption of today? With a time deadline of 50 days, no one dishonest would still want to be left holding the problem by accepting black money. And honest acceptors can still accept it today, if they are comfortable declaring it as income. After all, no existing law says that you cannot accept, declare as income and pay tax on sales, the proceeds of which are received in money, demonetised or not. Black or white.

But it would have been less spectacular, less macho, with less chest thumping about surgical strikes. But also with much less disruption that this nuclear explosion has caused; with less on the cost side of the inevitable cost benefit analysis of the move that will be made by every Indian the next time he/she casts a vote.
PS: Under this method, even the farcical exchanging of Rs 4500 without routing the transaction through the bank, and the consequent inking of fingers would not have been necessary. The only way to exchange notes could have been via bank account routing and all the public sector bank staff could have been ordered to go to every nook and cranny of India to serve anyone that needs a bank account to be opened for doing this.
PPS: and I have to admit, I burst out laughing on reading this just now:
http://www.ndtv.com/india-news/in-gu...-lateststories

[Juggy]

Originally Posted by Sawyer

I was so cheered to read a report just now in the morning paper on the sturdy common sense in rural India. It made my day,
Three cheers to these enlightened people for not being led in the way a herd of sheep are led.

Thank you for that and all the interesting tidbits you add to this conversation. It restores some of my faith in our civic community led initiatives. Here in Bangalore, on the 2nd day of the announcement and even before the Atms became inoperable, our local medical store offered to take the locals 500 & 1000 notes till Dec 30th. He was quite vocal about it, and only asked that in return we not demand change for anything below 500, and just swipe a card instead.
I'm sure he showed good business sense, but he also didn't panic his community by disavowing them.

[Sawyer]

Originally Posted by Juggy

I'm sure he showed good business sense, but he also didn't panic his community by disavowing them.

The second part is the really noteworthy thing at a time when everyone from the government down is doing its best to create a panic. The government did this, for example, by "allowing" petrol pumps to take these notes for some more time - a panic inducing statement by implying that thereafter, and elsewhere, people were "not allowed" to take these notes. Utter nonsense, as demonstrated by your chemist and mine, and by the people who are happy to even be named in the newspaper report I quoted from; someone should take the ministers that use this language to court and prosecute them for the massive damage that is being caused by these pronouncements. Many black money hoarders have not done as much damage.

So what the man did also showed a lot of courage, give him credit for that. If anything that will allow the country to pull itself through this crisis, it is this courage rising to the fore in unexpected parts of the country.

[sachinpk]

I am also now going to follow the RBI guide line, and only making limited posts on this thread. The reason, things may be getting personal and that is not what I was here for. Why begin a day with fighting??

Originally Posted by Sawyer

And I don't see any of the media spending effort and the time to go and report from the villages across the country because that means some hard travelling and hard work.

And ultimately the media would find villagers who are totally nonchalant and leading the way they always used to live before Nov 8th. Fuel costs gone, their own well being gone and their hidden agenda not achieved.

I have not found any report that led to the current demonetisation; the one on the Ministry of Finance website is from 2012 and has no reference at all to demonetisation as a useful step against black money. I am starting to think that the current step has been taken by a very small group of people, thinking that they know best. Which does not necessarily mean that they are not correct, but the odds aren't looking good to me; the final equation will of course have to be the long term one of success achieved in eliminating black money versus the total pain caused by the disruption.

My understanding is that this operation was not meant to be a "text book" operation. The last this was tried out was in 1978 and the notes which got pulled out were Rs.100 (if I remember right). Now that was a time when only the rich had so many of these notes. And one more thing is that the value of economy based on the Rs.100s were also less. Today I hear that 86% of the floating currency we have in India's market is in Rs.500 & Rs.1000 (this is excluding counterfeits and unaccounted money).

This not being a "text book" operation, there would not be any standard operating procedures. Decisions were taken at a high level, and they also could not do a "pilot" phase in any small state. Because that would trigger alarm bells on the black money hoarders. So secrecy had to be maintained. The black money hoarders were not idiots, and they knew each and every rule, so they had to be caught by surprise. Yes, there would be set backs and challenges. But I would like to take this as a war (which needs to be won), consisting of many battles (which can be lost, or won). World War II was to end early when the Brits and US launched "Op. Market Garden". This operation failed, but ultimately Brits and US did win.

Originally Posted by ecenandu

The current step alone will not eliminate the black economy for sure. I hope this is one among the many steps to be followed.

You are right. Let the new notes come, and using that say you bribe a police man. Black economy has started right there. But what is happening now is a hard reset, where lots of money made through these shady practises are all getting invalidated. Bribe takers now need to start from scratch.

I end this post with some events from across India
Kerala will bear the biggest brunt of demonetisation: Cooperative banks gasping for breath
However, after four days, the RBI withdrew the permission because of the suspected risk of counterfeit currency and black money being laundered. The justification for this move was that these banks could create pre-dated fixed deposits and their staff are not trained in detecting counterfeit notes.
....
Both the fears, which incidentally are also raised by some of the BJP leaders in the state, are genuine because unconfirmed reports showed that immediately after the announcement of demonetisation, many of these banks took large sums of old cash and registered them as pre-dated fixed deposits.

Rs 2cr Maoist seizure
he CRPF today claimed seizing Rs 2 crore in the demonetised 500 and 1,000-rupee notes from Maoists in Jharkhand, Bihar and Chhattisgarh.
...
"We have recovered Rs 1.10 crore from Jharkhand, Rs 80 lakh from Bihar and Rs 10 lakh from Chhattisgarh," CRPF director-general K. Durga Prasad said at an event in Salboni, West Midnapore.

Demonetization Effect: Indian Bank cuts deposit rates by 10-100 bps
-----
For me the happiest part is the money from Maoists, terrorists and hawala dealers getting seized. The damage these groups have been doing to the society is not just financial. It is even cultural; capable enough to destory the social fabric in the country.

[sgiitk]

I think all channels agree that the pressure is easing out. However, I wil not trust them for anything more. I expect near normalcy by next week. Of course the amount of liquidity may take a few weeks to get to near normal.

Now it seems the people seem to be converging on that declare and pay taxes is better than burning or destroying notes.

I am sure they will definitely cross 6 lakh crores in deposits, maybe much more. So I think the GoI has crossed the threshold, and I expect this measure to survive.

One more evidence, see the desperation of the opposition to exercise their vocal cords before life normalizes.

Yesterday, my wife went out shopping. Things were as normal as usual, except a minor reduction in traffic, and the sweet shop having no customers for chaat. The vegetable and fruit shops were business as usual, with no significant changes in prices. Only the sweets man said business it at the 30% level, (was near zero for two days) but improving fast.

I just cannot understand the mad rush for the ₹2000/4500/2000 (from tomorrow) exchange. You could deposit in your account and draw 10,000 (now 24,000) a week, per account. If I have a crore (or even a lakh) how much do I gain by the puny exchange. Zilch.

[kiku007]

Originally Posted by Sawyer

What really would have happened if the demonetisation effective date was also kept as December 31, with just one warning - that any deposits in the banks from November 8 would be notified to the IT department, if these exceed a total of Rs 2.5 lakhs, for allowing for declared income to be matched with these deposits?

But it would have been less spectacular, less macho, with less chest thumping about surgical strikes. But also with much less disruption that this nuclear explosion has caused; with less on the cost side of the inevitable cost benefit analysis of the move that will be made by every Indian the next time he/she casts a vote.

People with unaccounted money would have bought Real Estate, Gold, Diamonds, Cars etc. for about 10L Crores in 20 days