[poloman]

Originally Posted by sgiitk

I am closely monitoring the amount of cash coming in, vs the total amount of ₹14.5 lakh crores reportedly in circulation. If the surrendered amount reaches this total then the possibilities are frightening. How did it happen, who played the dirty tricks, what is the actual amount in circulation. By all accounts the counterfeits are about 1% at worst.

Sir, As per the latest RBI reports the total 500 and 1000 in circulation is around 15.5LC as on Nov8. 14.5 LC figures quoted is about notes in circulation 6 months back. 80% of that has come back. If you expect 10% more in the coffers. About 1-1.5LC may get extinguished. There was a big jump in the deposits end of month which was attributed to petrol pumps depositing old notes which may not happen this month. Even then around 1.5 to 2LC black money has been channeled to banks with IDS or got laundered.

[joslicx]

Originally Posted by mayankk

This is comparable to the time one has to spend at the ATM in the current climate of "demonetisation"?
We didn't realize that the time spent and the availability of cash is the same as before?

No obviously not. But this just says there is a cost to cash - both monetary as well as time. Handling cash has a cost. Getting it in the first place has a cost. Its not FREE! Maybe people's time is being wasted in the endless queues and all now, but there were queues earlier as well and lot of time was being wasted in that. An accountant who has to pay salary in cash to the labor, for example, has to go to the bank and draw money from there, then carry it (which is risky so there is a cost there) and then distribute it (which again has a cost, as there might be "fake" workers getting benefits - which is what is largely happening in NREGA type schemes).

Lets not discount cost of cash. Its a huge number. Millions probably never get the benefits that were meant for them because the money was siphoned off by others and since it was cash theres no trail.

[sachinpk]

Not really surprised with the series of busts happening at Bangalore. The first major haul was that of two KA Govt. officials who were caught with lots of money in old & new currency. Now a PWD contractor who was accused helping them, has now also confessed that he helped two ministers, 4 IAS and 5 IPS officers in the same way :P. And today evening another 2.5 crores seized from a home under guard of an old woman and two guard dogs!

One thing for sure, the new 2000 notes seems to be leaving a trail of evidence which the RBI, Enforcement Directorate and Income Tax people are just scanning through.

[sukhoi30]

Originally Posted by poloman

Even then around 1.5 to 2LC black money has been channeled to banks with IDS or got laundered.

Yes, and that is why this exercise may not be a 100% success. Govt. introduced this scheme so that bulk of the black money would be destroyed. But unscrupulous people have found ways to get their hands on the new currency notes plus many deposited their black wealth into the banking system.
With the kind of cash being caught from various corners of the country, it seems that there are many more people who took advantage of certain loopholes and converted/exchanged their black money effectively.
What I am hearing is that now bank employees are involved in depositing black money "illegally" and then letting people withdraw multiple times in new notes.
In the process, common people on the streets are having to wait endlessly for cash as such people are taking away the cash.
Who do you blame? The Govt. or such unscrupulous fellows who have misused the system? What other way is there to plug this?
If the Rs. 500 notes do not come in adequate numbers before Dec 30th, then I would rate this entire demonetization exercise as a failure.

[srikanthns]

Originally Posted by joslicx

No obviously not. But this just says there is a cost to cash - both monetary as well as time. Handling cash has a cost. Getting it in the first place has a cost. Its not FREE! .

I agree. There is another cost aspect also. When disbursing salary in cash which was prevalent in Central Govt Offices barely 10 years back, there was a cash handling allowance paid to do this work!

[poloman]

Originally Posted by sukhoi30

Yes, and that is why this exercise may not be a 100% success. Govt. introduced this scheme so that bulk of the black money would be destroyed. But unscrupulous people have found ways to get their hands on the new currency notes plus many deposited their black wealth into the banking system.

There are some reports now coming out that bulk deposits were made to loan accounts not savings or current accounts. Banks made sure that their NPA got reduced in the process. Not sure if this is so bad as laundering in new notes.

[vishnurp99]

Originally Posted by sgiitk

I am closely monitoring the amount of cash coming in, vs the total amount of ₹14.5 lakh crores reportedly in circulation. If the surrendered amount reaches this total then the possibilities are frightening. How did it happen, who played the dirty tricks, what is the actual amount in circulation. By all accounts the counterfeits are about 1% at worst.

Actually the amount in circulation is 15.44 lakh crores. 3 Lakh crore has to still come in. I would expect at least 90% of the cash to come in because of the amnesty scheme. I mean - Let's say you have some black money, would you want to loss 100% of it or would you want to pay 50% of tax , add another 15% for lockin cost of 4 years for GKY and enjoy the rest 35%. Remember that even the normal taxation rate is approx. 33%.

Only that portion of the money which is blatantly illegal (because it's from Bribes/smuggling/extortion) will not come back into the formal economy. I would still expect the government revenue to go up by approx. 2 lakh crores when you add up the tax gain and the gain from extinguished notes.

[sourabhzen]

Originally Posted by joslicx

Queues were always there, even before demonetization also.
Heres quoting this @wef article:

Oh really? I never realised that. May be I was lucky enough to find cash in ATMs without standing in lines

[sachinpk]

Originally Posted by poloman

There are some reports now coming out that bulk deposits were made to loan accounts not savings or current accounts. Banks made sure that their NPA got reduced in the process. Not sure if this is so bad as laundering in new notes.

In cities like Bangalore there are lots of people who had enough and more money, but would deliberately default on loan payments. They knew that the process to reclaim their dues is too cumbersome. And if these people had political clout, then no bank manager would bother to do any recovery work.

But what also happened is that lots of these crooks also had the habit of keeping their illegal money in cash. So when the going got tough they approached the banks to deposit the money to their own saving accounts (which helped them get the bank loans in the first place). The banks just allowed them to do that. Now as soon as the money hit the account, all their loan defaults were recovered from their savings account. The loan agreement which these crooks had signed in the first place allowed such provisions. Net result, lots of NPAs of banks got cleared out. The money due to the bank came in. These crooks who willfully defaulted their loan now cannot even openly cry.

Originally Posted by vishnurp99

Only that portion of the money which is blatantly illegal (because it's from Bribes/smuggling/extortion) will not come back into the formal economy. I would still expect the government revenue to go up by approx. 2 lakh crores when you add up the tax gain and the gain from extinguished notes.

Agree with you. The news that RBI expected a low level of deposits itself seems to be cooked up by the media outlets of India. I am yet to see any official statement by the RBI that it expects say xx% black money to vanish. But yes, a lot of people did put the money in their accounts - hoping that they can convince the government that the money was legitimately earned. Putting the money in the bank account at least gives people a chance to argue their case.

I am eagerly awaiting the day when Primary Co.Op banks across the country are asked to come up with their account books, and the KYC details of the account holders. NABARD who did checks in District co.op banks in Kerala, have already said that 1000 crore of money lies in these accounts with no traceable owner.

[sgiitk]

Originally Posted by vishnurp99

Actually the amount in circulation is 15.44 lakh crores. 3 Lakh crore has to still come in.

Thankyou and @poloman; for correcting the figure. Today the next block Hospitals, Chemists, etc go out of the permitted list. Let us see how much come in here. I frankly do not expect much more than 10%, ie 1.5 lakh crores to be extinguished. What bug me are reports of duplicate notes with the same nos, some series in circulation, which was never released, and the like. I have seem three sets of pics on WhatsApp with two notes with the same serial nos. Let us see the final results. I do not expect much cash to be surrendered after 31 December. Also, let the figures of duplicate counting come in.

Also, despite all the hoopla, how much currency is being seized, and what is the percentage which is being caught. I will be surprised if they manage to catch even 10% of the currency 'diverted'.

[mayankk]

Originally Posted by joslicx

No obviously not. But this just says there is a cost to cash - both monetary as well as time. Handling cash has a cost. Getting it in the first place has a cost. Its not FREE! Maybe people's time is being wasted in the endless queues and all now, but there were queues earlier as well and lot of time was being wasted in that. An accountant who has to pay salary in cash to the labor, for example, has to go to the bank and draw money from there, then carry it (which is risky so there is a cost there) and then distribute it (which again has a cost, as there might be "fake" workers getting benefits - which is what is largely happening in NREGA type schemes).

Lets not discount cost of cash. Its a huge number. Millions probably never get the benefits that were meant for them because the money was siphoned off by others and since it was cash theres no trail.

This is relevant to the queues and the time wasted how???? Today. I am talking in context of what is happening today, not 3 years or 30 years back.

[Samurai]

Originally Posted by sachinpk

One thing for sure, the new 2000 notes seems to be leaving a trail of evidence which the RBI, Enforcement Directorate and Income Tax people are just scanning through.

On 9th November, I had made a conjecture that new notes could be traced using encryption keys and data analytics.

Originally Posted by Samurai

The new currencies will obviously have tracking feature. Not the GPS nonsense that is going around. But it may contain digital signatures encrypted using very strong private key owned by the RBI. It is impossible for Pakistan to mimic this, unless they steal the private key. And the currency counting machines all over the country could read it using the public key. Fake currency will be very hard to spread because of this.

Next they may also use the signature to track the movement of money. Just feed the daily transactions of cash from currency readers all over the country to a giant computing center that can analyse the movement of cash. Data analytics can do the rest. The government can easily track how the currency is moving around the country. Once they understand the movement of cash, they can choke the nerve centers of this black money movement.

These are conjectures, but easily implementable using current technology.

A week I later read that government has indeed installed such software to monitor movement of cash.

Hours before Modi’s address to the nation, FINEX server, operated by Financial Intelligence Unit (FIU-IND) was upgraded and re-tested to analyse real-time Cash Transaction Reports (CTR) and Suspicious Transaction Reports (STRs) received from all the private and state-owned banks scattered across the country.

Source

And now new cash hoarders are getting caught at a frequency that was unheard of earlier. Now I am wondering whether my guess was much closer to truth.

[nowwhat?]

Originally Posted by sgiitk

What bug me are reports of duplicate notes with the same nos, some series in circulation, which was never released, and the like. I have seem three sets of pics on WhatsApp with two notes with the same serial nos.

I am beginning to doubt the credibility of your sources. Everyone knows that Whatsapp is a tool for rumor-mongering especially by those with ulterior motives. I personally experienced it during the recent Kaveri agitations, in fact many of us in our resident's association Whatsapp group had to calm others and tell them repeatedly not to view provocative pictures and videos forwarded by others. There are numerous viral images and videos circulating on Whatsapp of some tearing ₹2,000 notes apart to look for the elusive micro nano GPS chip and others washing their ₹2,000 notes to prove that the color goes away.

You had also mentioned about notes printed without a serial number, but I fail to see how anyone could have peddled any more than a few of those. That would have been a glaring omission akin to not having Gandhi's picture on the note.

The ₹1.544 million lakh crores is a widely publicized figure, I too had mentioned it on this thread along with a link to the news article over a week ago.

Originally Posted by sgiitk

Let us see the final results.

You're right on this!

I personally cannot fathom the expediency behind this move, but I guess it had to be done some time. Whether it was bold or political suicide is something only posterity will tell. The opposition seems to be sensing a rare moment of vulnerability in the government and is going all hammer and tongs at it, for the moment it seems to have effectively killed GST from rolling-out next year which may now only happen in 2018. The government will be desperate for good news in January, if all goes well we will get some decent numbers from demonetization and hopefully the February budget will see some reductions in Income Tax. As we all know, demonetization alone will not solve all our problems, concerted efforts to nab tax evaders thereby widening of the tax net and the move to a less-cash society will need sustained efforts.

[srishiva]

Originally Posted by Samurai

On 9th November, I had made a conjecture that new notes could be traced using encryption keys and data analytics.

Source

And now new cash hoarders are getting caught at a frequency that was unheard of earlier. Now I am wondering whether my guess was much closer to truth.

But there is no signature, all they are doing is monitoring which bank disbursed how much money and which accounts got how much money.

Finding which bank did suspicious amount of transaction wont even need the serial numbers. They know how much money was sent to which bank and how much they exchanged.

Using the serial number of notes (i hope RBI knows which serial numbers were distributed in which city/bank) can also be used.

This whole exercise was not to find fake notes (for which signature is required). But just movement of money.

[Samurai]

Originally Posted by srishiva

But there is no signature, all they are doing is monitoring which bank disbursed how much money and which accounts got how much money.

You mean my conjecture was not 100% accurate? Then I am not different than any astrologer. I am crushed. I hoped for signature for identification, and analytics for analyzing movement of cash. It was the day after demonetization, when none of us had seen the new notes.

So I pointed out that one of my guesses may be right.