Currency Demonetisation and Future course of Indian Economy

Suraj · Post by **Suraj** » 16 Nov 2016 22:38

For the Yenna Rais and Pee Aiyyos, ICICI has sent out the following FAQ:

IMPORTANT NOTES for NRIs/PIOs:

Q. I am currently situated overseas and I have some ₹500 & ₹1,000 bank notes. What should I do?
The specified bank notes can be exchanged or deposited in the NRO bank account by December 30, 2016 by visiting any of the ICICI Bank branches in India.

In case it is not possible for you to visit a branch in India by December 30, 2016, an opportunity will be given to you to do so at specified offices of the Reserve Bank of India (RBI), along with necessary documentation as may be specified by the RBI.

Further, you can authorise a representative who can deposit the cash in your NRO account on your behalf.

The authorised representative can approach the branch with the following documents:
• Copy of the Authority letter signed by the account holder(s)
• Copy of the Passport of the account holder which is self attested by the account holder (Incase the authority letter is a scanned copy)
• Valid Identity proof* of the authorised representative
(*Valid Identity proof is any of the following: 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).

Q. Whether I can deposit old bank notes into my NRO account?
Yes, you can deposit old bank notes into your NRO account. However, in terms of Question 4 of the RBI FAQs on Miscellaneous forex facilities any person resident outside India, not being a citizen of Pakistan and Bangladesh and also not a traveller coming from and going to Pakistan and Bangladesh, and visiting India may bring into India currency notes of Government of India and Reserve Bank of India notes up to an amount not exceeding ₹25,000 while entering only through an airport.

Q. I have a mandate holder in the NRO account. My mandate holder in India will be visiting the branch to deposit the cash? Do I require to give another authorisation request for acceptance of the cash?
No, since the representative visiting the branch is the existing mandate holder to the non resident account no separate authorisiation request is required. Please ask your mandate holder to carry a valid identity proof for identification while visiting the branch in India.

Q. I am an NRI/ PIO. I have only a NRE account. I do not have a NRO account. Can I deposit my cash in the NRE account?
You cannot deposit INR cash in the NRE account. You will need to make a request for opening of a NRO account in the same customer ID through the Internet banking logged in section or by calling our 24x7 Customer Care or making a request at the branch in India. The account will be opened within 2 working days. Post which you or your authorised representative may deposit the cash in the NRO account

Q. I am an NRI/ PIO. Do I have to complete the Re-KYC in my account to be able to exchange or deposit the specified bank notes?
For accounts where the Re-KYC or FATCA declaration is due, the Branches in India are authorised to accept the cash up to a maximum limit of ₹50,000.

Post completion of Re-KYC & updation of FATCA details in the account, the specified banknotes may be deposited in the NRO account without any limit. The account holder can submit the Re-KYC documents and the FATCA declaration through Internet Banking*.

*Applicable to account holders residing in FATF countries only.
Q. I am an NRI / PIO. Do I have to submit my PAN details to deposit the specified banknotes of value ₹50,000 or more?
Yes, PAN is required for INR cash deposits in the NRO account of value equal to or greater than ₹50,000/- .

You can update your PAN details in your account through internet banking or by making a request through our 24x7 Customer Care.

Incase you do not have a PAN card, you may submit a Form 60 for depositing the cash in the NRO account.

srinebula · Post by **srinebula** » 16 Nov 2016 23:05

Shiv sir,
You obviously know this topic better than me, but few points:
Remember "ArogyaSri" scheme in AP? I am sure you were aware of it. There was lot of fraud, but it also provided better health access to poor. Many people think this was one of the major contributors for YSR getting a second term in AP.

Since many members are talking about electoral strategies for Modi ji's second term:
before demonetization, someone mentioned loan waiver for farmers as a good way to get all the rural vote. Apparently 1-2lac cr will take care of the loan waiver. Now that this money is easily expected from demonetization, it might be a good populist electoral scheme. Economically very bad move of course.

shiv wrote:
Supratik wrote:Modi had promised health care for the poor. I expect some kind of health insurance scheme for BPL to be announced.
In my experience all "health insurance" schemes by government are utter scams and Modi will not be able to make them work. Won't expand on what I know - but health insurance is a way of feeding the black money monster again

chetak · Post by **chetak** » 17 Nov 2016 00:03

ragupta wrote:Right time to push for Govt funded election. I am sure most political parties would be willing to pass such legislation under given circumstances.

First step is for the political parties to accept RTI, which they will not.

How will you fund without transparency??

nachiket · Post by **nachiket** » 17 Nov 2016 00:13

Chandragupta wrote:
nachiket wrote:RE depreciation will be limited and temporary. There are millions of salaried families having only white money who were priced out of the market by the BM holders. If interest rates go down as is hoped along with an initial fall in RE prices, they will get back into the market and the prices will stabilize.
Nobody deals in 100% white in RE, specially in the secondary market. There is no big development happening inside Delhi or Gurgaon/Noida proper, now they are spreading out towards Greater Noida & Manesar as there is no land left. If someone wants to live inside Delhi, he only has choices of builder floors which are sold in crores in 70% black.

A south Delhi floor in an upscale neighbourhood used to go for 7-8 crores, who has that kind of money except big industrialists & NRIs? How many people are there in India who have income of 50L + in white? How many top management folks & CEOs have that kind of income and what is the number of such people?

My guess is RE will come down even more. People with Tech jobs will anyway live close to their offices which are in Gurgaon & Noida not in Delhi. Most upscale neighbourhoods are filled with Business people, big builders, industrialists etc who will be somewhat hit with the move.

RE is inflated because of corruption money. There are many sectors in Noida & Gurgaon where more than 50% of the land belongs to babus in state departments. It is registered in the names of their family & friends and they all collect rent from the property, take a cut and hand the rest to the babu who then goes on to buy more land. This is how it happens. I don't know how easy it is to find & seize such property but if it happens (and I hope to god it happens because these guys need to be punished, they are the fountainhead of corruption) you'll be stunned with the volume.

You seem to be conflating NCR with the whole of India. I personally know people who bought and sold flats in the secondary market in all white in Mumbai and Pune in the last few years.

nachiket · Post by **nachiket** » 17 Nov 2016 00:41

essay wrote: I don't believe this possibility exists. RBI cannot declare in March '17 or some other date that 30,000 crores of money (as an example) in 500/1000 denominations did not get deposited therefore they are striking that liability off their balance sheets.

RBI's liability will exist into foreseeable future and like a prudent manager of national economy, they will have to create contingency funds for this liability.

Why not? It would be prudent to take advantage of this.

g.sarkar · Post by **g.sarkar** » 17 Nov 2016 00:42

http://indiatoday.intoday.in/story/indi ... 12383.html
India Today Impact: Govt cracks down on cash jugaad mechanics
A series of investigative stories by India Today exposing the black-market trade of defunct currency has stimulated the Modi government to act tough on the rot.
Crooks sabotaging the nation's war on black money be warned.
A series of investigative stories by India Today exposing the black-market trade of defunct currency has stimulated the Modi government to act tough on the rot.
According to highly-placed official sources, the government has ordered a clampdown on touts, shadowy spot traders, jewellers, hawala operators, accountants and builders profiting from last Tuesday's dramatic surgical strike on tax cheats.
A day after the prime minister nixed the country's biggest banknotes to flush out unaccounted wealth, India Today's special investigation teams fanned out to shine the much-needed light on underground attempts to circumvent the historic currency regulation.
MONEY TOUTS, SPOT TRADERS
In narrow alleyways of Mumbai, right behind the RBI building, the SIT reporters secretly filmed a middle-aged woman and a young man brokering deals to convert black money into white as desperate hoarders scurried to save their dirty wealth.
India Today's investigative reporters found those touts were willing to organise exchange of the revoked bills with legitimate tender for a commission of 15 percent of the original value of the banknotes.
The undercover journalists also exposed operatives audaciously soliciting currency-exchange business near the RBI building on New Delhi's Parliament Street.
PM Modi's demonetisation drive already modified 10 times in 7 days
The special crews reported how illegal currency hideouts had moved into top gear, less than 24 hours after Modi's abolition of high-denomination notes.
A deeper investigation revealed lobbies of VAT-exempt traders lifting illegal currency at almost 40 per cent its value from sellers.
The probe found many of them didn't close their accounts on Tuesday after the prime minister's announcement. India Today's SIT unearthed their plans to deposit the outlawed notes back into banks for profits as high as 30 percent after paying income tax.
SHADY JEWELLERS, HAWALA OPERATORS
On Nov 10, the investigative teams exposed a number of bullion traders and hawala operators offering parallel platforms for hoarders of black money to park their unaccounted wealth.
India Today also reported heavy black-marketing of ornaments right in the jewellery hub of Delhi's Chandni Chowk.
MONEY DEALERS, BUILDERS
Next, India Today aired its expose of money dealers turning the nation's currency market into black literally for a fast buck.
In Delhi's Connaught Place, the undercover investigation found heavy black marketing US dollars for cancelled Indian rupees.
.......

Gautam

g.sarkar · Post by **g.sarkar** » 17 Nov 2016 00:53

http://www.firstpost.com/india/demoneti ... 09042.html
Demonetisation: Rs 5 cr cash, gold seized at major airports by agencies
New Delhi: Over Rs 5 crore of cash and gold have been intercepted by agencies at country's few major civil airports post the demonetisation of Rs 500 and Rs 1,000 currency notes by the government last week.
Officials said a special surveillance was launched by the CISF and the air intelligence units of the Income Tax department and the interceptions have been made at Delhi, Mumbai, Kolkata and Guwahati airports from 10 November.
"The total cash and gold intercepted since November 10 is about Rs 5 crore. While the currency is all in the scrapped denomination of Rs 500 and Rs 1,000, the gold detected as suspicious is about 15.62 kilogramme," they said.
They added that while the interceptions were largely made by the officials of the Central Industrial Security Force, the cases were later handed over to the I-T department for further investigations.
"These figures and instances are under investigation and we are looking if there is a tax evasion angle to it," a senior tax department official said.
......

Gautam

hanumadu · Post by **hanumadu** » 17 Nov 2016 01:00

Use 5 billion of the windfall to set up 5 technical institutes with a corpus fund of 1 billion each. A 5% return will give 50 million. Even if 25 million is for expenses, the other 25 million can be used to hire 250 highly qualified faculty at 100K each. A strong learning base is the most important factor in creating knowledge in India.

vijayk · Post by **vijayk** » 17 Nov 2016 01:27

May be we should all crowd source ideas and prioritze list be sent to PMO office

disha · Post by **disha** » 17 Nov 2016 01:53

Increase the budget of ISRO and start another research organization called "Deep Ocean Science Research Organization". With similar budget. We need to conquer both Aaakash and Paatal.

Each rupee invested in ISRO doubles its returns. It also saves lives. Same will be with DOSRO.

Primus · Post by **Primus** » 17 Nov 2016 01:55

nachiket wrote: You seem to be conflating NCR with the whole of India. I personally know people who bought and sold flats in the secondary market in all white in Mumbai and Pune in the last few years.

As I just mentioned earlier, a nephew of mine just bought an apartment in BLR last week, all white, got a bank loan for it.

Kamal_raj · Post by **Kamal_raj** » 17 Nov 2016 02:01

Let's do it after December I am still concerned and jittery till it passes of peacefully and successfully. Let's not count the chickens.....

g.sarkar · Post by **g.sarkar** » 17 Nov 2016 02:16

http://www.huffingtonpost.in/2016/11/16 ... ation-but/
The Debate Is No Longer About The Merits Of Demonetization, But About Nationalism, Jawans And Aged Mothers
And which spoiled, corrupt anti-national dares to be on the wrong side of that argument?
16/11/2016 2:12 PM IST
Acchi debate hogi" says Narendra Modi as he walks into Parliament in the middle of the demonetization storm this morning.
But the debate is no longer about demonetization, whether it works or not, whether its rollout has been mishandled or not. It has been transformed into a "debate" about a topic on which debate, achhi or not, is forbidden – nationalism.
Plastic is the new patriotism in cashless India. PayTM is the new khadi. Your debit card is your new charkha with which to spin the dreams of India Shining.
No one can defend black money, not even those who hoard it. So they oppose demonetization in the name of the poor, the card-less, the daily labourer who has no bank account, the old widow who stashed her life's savings under her mattress. But just because those politicians railing against demonetization might have their own selfish interests at stake does not mean the travails of those ordinary people hit hard by cash shortage are not real.
By making it a debate about nationalism, the government tries to cleverly sidestep a more contentious issue on which it is on less sure footing – implementation of the rollout rather than the hallowed aims of demonetization. The BJP has always assumed that it has the upper hand whenever it can turn any debate into a referendum on patriotism.
........

Gautam

vijayk · Post by **vijayk** » 17 Nov 2016 02:17

Demonetization Questions

shyamal · Post by **shyamal** » 17 Nov 2016 02:21

Please read this piece from Firstpost. A journalist has gone to rural MH(Kasara) and there are three short videos of peoples reaction.
He tries in a subtle way to get negative reacts. All reactions are positive. People talk about inconveniences but are ok with it because they are convinced it will bring greater good. Its amazing to watch the kind of confidence people have in Modi.
http://www.firstpost.com/india/demoneti ... 08084.html

achoudhury · Post by **achoudhury** » 17 Nov 2016 02:23

Former RBI Governer bats for Demonetization:

http://www.business-standard.com/articl ... 524_1.html

g.sarkar · Post by **g.sarkar** » 17 Nov 2016 02:27

http://www.dnaindia.com/money/report-de ... ps-2273976
Demonetization Effect: Indian Bank cuts deposit rates by 10-100 bps
Banks are being flooded with cash deposits after the government's demonetization move. More banks are likely to follow suit.
State-owned Indian bank has cut its deposit rates as it, along with the other banks in the country, continue getting huge pools of deposits following the government's demonetization move to curb black money and disable terror funding.
On November 8, Prime Minister Narendra Modi announced the decommissioning of Rs 500 and Rs 1,000 notes as a legal tender. Since then, crowds have been lining up outside banks and ATMs to deposit, exchange and withdraw cash.
The centre has set December 30 as the deadline to deposit or exchange all the old notes which has had people scurrying to exchange the now-worthless tender with acceptable bank notes.
Indian Bank announced the cut in deposit rates on its website. The deposit rates for nearly all the maturities have been cut in the range of 10 basis points to 100 basis points.
......

Gautam

hanumadu · Post by **hanumadu** » 17 Nov 2016 02:48

Regarding better implementation, wouldn't any out of the ordinary steps by the govt hint something was about to happen. Printing excessive 100s, 500s? Recalibrating ATMs in advance? By design or not, the unavailability of cash is pushing people and businesses towards cash less transactions.

disha · Post by **disha** » 17 Nov 2016 03:27

One major impact Modi can do is remove stamp duty on RE txns. All RE txns to be recorded on GOI stamp papers and 3rd party escrow companies encouraged. And ask cities to collect property taxes regularly. The incentive to avoid stamp duty by the buyer is nullified. The seller may still want in black., but a whistle blower system will minimize buyer side shenanigans.

I lost a longish post on the issue of why GOI did not print 5/10/100 massively.

Put it this way., to replace even say 1 lakh crore equivalent of notes in 100s., GOI has to print 10x notes. This is costly affair and further if GOI is planning to polymerize these notes in future - it is a wasted cost and opportunity. The cost is better invested in developing a polymer note at 5/10/100/500/1000 and 2000. Further the push towards e-payments and JDY will be stalled.

I think what Modi should do (and in following order)

1. Go after Benami properties.
2. Tighten loopholes in RE txn and further incentivize buying of properties in white only.
3. Introduce polymer notes for 5/10/100. This will make people scared to use Rs. 2000 and Rs. 500 since the ax on it may fall any time.
4. Strike out 2000 and 500 and 1 week later introduce new 1000 Rs. Polymer notes. And 3 weeks later introduce new 500 Rs. notes and back in circulation.

No exchange scheme offered for 2000 Rs. to newer notes.

shyamal · Post by **shyamal** » 17 Nov 2016 03:29

A vast amount of transactions below Rs 500 happen everyday. Bus tickets, train tickets, small purchases of rs 20-50, buying a news paper or a magazine. Under the present conditions its not practical that they will all become cashless in 1 month.
Its these transactions, and the (mostly) poor who deliver them that is suffering.
Its better to target from cashless for transactions about Rs 500 or 1000.
Otherwise a lot of people are going to be unemployed. There is going to be huge backlash.
The people trust Modi. He needs to honour that trust. Cashless is very good but complete cashless for small transactions is impossible in India.

The govt needs to get the lines shortened at the bank and ATMs as soon as possible. The longer these phase goes more and more news will come of robberies and deaths. That will bring down the morale of the people further.

The ink marking is a very good step. A marked person should only be allowed to exchange once a week. This will reduce the lines in bank and spare more cash towards ATMs.

Anyone got a 500 or 2000 out of an ATM yet?

Rishirishi · Post by **Rishirishi** » 17 Nov 2016 04:44

hanumadu wrote:Regarding better implementation, wouldn't any out of the ordinary steps by the govt hint something was about to happen. Printing excessive 100s, 500s? Recalibrating ATMs in advance? By design or not, the unavailability of cash is pushing people and businesses towards cash less transactions.

If you follow the previous statements of Modi and his advisors, they have warmly been talking about a cashless society. I think the introduction of Rs 2000 and new 500 notes is just a step in that direction. It gives people a chance to change their money. I am sure the reason for "note rationing" is not about RBI having too few notes. It is all planned and calculated. As are the issue with ATM's. How easy would it not have been to make the new notes exact the same size as the existing ones.

The lack of currency forces people over to using cards and e-walets. Finally I think we only need Rs 100 notes. Try to hord 1CR in Rs 100 notes. will weight 120 KG and need several suitcases.

Moving and dealing with large ammount of cash will simply become too unpractical. Busineses will simply shift over to white economy. T

Rishirishi · Post by **Rishirishi** » 17 Nov 2016 04:47

This must be the ulitame of Robin Hood schemes. The money horders are forced to give poor people money, so that it can be deposited in the bank. The poor may eventually end up with a lot of the cash.

Suraj · Post by **Suraj** » 17 Nov 2016 05:01

It's not the government's goal to make transactions in general cashless with this exercise. Several critical articles make that mistake, arguing "GoI failed to make India cashless economy! Long way to go to become cashless onlee!". The goal is and always was taking on the cash liquidty of the black money economy by eliminating the validity of that cash float and forcing deposits to be declared into the official banking system. That float is not coming back. Basic cash economy can be supported by the remaining currency upto Rs.100 plus the new 500 and to a lesser extent the 2000 .

Prem · Post by **Prem** » 17 Nov 2016 05:54

Kakkaji · Post by **Kakkaji** » 17 Nov 2016 07:18

Report about the 'ghost noters' (like the ghost voters in Kolkata:

The indelible ink is not going to be much of a deterrent for such people in Bengal. They have a well-honed process, and a lot of practice, to beat it. Posting the story in full:

Ghost voter so yesterday, ghost 'noter' circulates

Calcutta, Nov. 16: If the ink has spread from the ballot to the banking finger, so have the ghosts.

More than a week after demonetisation was announced, queues outside many banks in Calcutta have grown longer, often featuring unperturbed faces. The cash exchange is allowed in all scheduled commercial banks, regardless of whether a person is an account holder or not.

Many of those in the queues are from far-off places, travelling close to two hours on local trains to reach banks in the city to exchange notes. In Bhowanipore, Lake Gardens, Ballygunge and Kalighat, banks barely 100 metres from one another have been equally crowded.

Several senior officers said they suspected that a considerable number were "ghosts" standing in for others - a phenomenon Bengal has been familiar with during elections.

However, unlike elections, when a fake voter steals someone's vote without his or her knowledge, the "fake noter" is being placed in the queue by those who want to hide either their faces or their unaccounted-for wealth, according to several sources.

Conversations with several people in the queues and banks as well as local traders, residents and police officers have thrown up the following portrait of the "ghost noter".

What are they standing for?

For every Rs 4,000 exchanged, a ghost noter gets Rs 400 or Rs 500. The rate remains the same even when the banks run short of cash late in the day and are ready to exchange only up to Rs 2,000.

Unlike someone who has had to skip work to queue up, the paid queue members are usually patient. They are not wasting their time but earning. Not that they are always patient, though. At a bank in Lake Gardens, some were exposed when they tried to jump the queue. Challenged by the others, some admitted they were on a job.

"We were stunned. One of them said they had to queue outside another bank after this. Hence, the hurry," said Narendra Pai, a medicine store owner.

On average, it takes two to three hours to exchange notes at a bank. Two successful exchange missions means Rs 800 to Rs 1,000 a day.

In this pocket of Lake Gardens, there are four bank branches within 500 metres.

Many were moving from one bank to another - an unusual practice in a residential area. Another telling sign: none of the "floating" cash-seekers was depositing or withdrawing money.

A UBI official said: "The queue on the first day (November 10) when banks opened after demonetisation was understandable. We expected long queues on the second day too. But they have remained as long or have grown longer."

Exasperated, officials at one bank opened the rear door exclusively for their account holders.

This does not mean that all those who reach the city from elsewhere are ghosts. Several genuine customers too venture out of their neighbourhoods to widen their choice. One man told this newspaper two days ago that he had travelled 10km from Baguiati to Chowringhee for an ATM.

Modus operandi

Unusually for a residential neighbourhood like Lake Gardens, most of the ghosts had arrived by train. None worked there and all said the banks in their areas were even more crowded, so they had to travel. Near Purna cinema at Bhowanipore, a group had come from 12km away.

At Lake Gardens, many went to a photocopying shop. "Every morning in the past few days, they have taken multiple copies of the same identity card," said the shop owner.

Some of them go to another shop and get the copies laminated. After lamination, the photocopies look like passable identity cards. "My day starts with these people. All of them are outsiders. Some come with Aadhar cards and get them photocopied," the photocopy shopkeeper added.

Local plight

Residents across the city said their neighbourhoods were getting too crowded. "People start queuing from 8 in the morning. If a grocery is located beside a bank, its customers face difficulties," a Jodhpur Park resident said.

He added that more than half the faces in the queues seemed new, and these people asked for directions to other banks. As sometimes seen at election booths, the unfamiliar faces have been outnumbering the rest.

Who will keep tabs?

A bank employee said that verification had been rigorous in the initial days but it was not possible to maintain the same standard hour after hour, day after day. Bank personnel are used to verifying signatures but the sheer volume since the demonetisation appears to be overwhelming them.

"If someone produces the voter card of a dead person, there's no way I can know it," a bank employee said. He said the private bank had a software that could detect whether a person exchanging old notes had done so in any other branch of the same bank. "But not if it was done in another bank."

A branch head with a private bank in south Calcutta had narrated his experience of ghost voters to this newspaper on November 10. "One of them had a voter card that featured what looked like a photocopied photograph. It was apparent that these people had been sent by someone else to get the notes exchanged. All left without uttering a word of protest."

Six days on, as the queues kept lengthening, these checks had become lax. A bank employee asked: "Even if the photograph looks blurred and the face does not match, who'd want to get into an exchange when 200 people are waiting?"

Indelible ink

The indelible ink used to catch ghost voters is now being used to deter ghost noters.

But what is child's play for a ghost voter should not bother the ghost noter. A veteran ghost voter spoke in detail how to beat the ink using little other than household items. The formula is not exactly a secret like the Coca-Cola recipe, but no law-abiding citizen would want to know it.

Kakkaji · Post by **Kakkaji** » 17 Nov 2016 07:21

Rs 2cr Maoist seizure

Salboni, Nov. 16: The 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.

"We are also keeping watch in Bengal, where Maoists were once active, to prevent them taking their linkmen's help to exchange notes."

kvraghav · Post by **kvraghav** » 17 Nov 2016 08:28

The ink is really working. The crowds are down by 50 to 75 percent in front of all the bank branches that I see on my way to office.

Rahul M · Post by **Rahul M** » 17 Nov 2016 08:32

crowd today is ~15, yesterday was about 50, if not more. branch in front of my place.

Bart S · Post by **Bart S** » 17 Nov 2016 09:27

Which shows that this hoopla about long queues is not due to shortage of cash or the decision being wrong as claimed by hyperventilating media people, but just an attempt to abuse the system by unscrupulous elements.

yensoy · Post by **yensoy** » 17 Nov 2016 10:05

Suraj wrote:It's not the government's goal to make transactions in general cashless with this exercise. Several critical articles make that mistake, arguing "GoI failed to make India cashless economy! Long way to go to become cashless onlee!". The goal is and always was taking on the cash liquidty of the black money economy by eliminating the validity of that cash float and forcing deposits to be declared into the official banking system. That float is not coming back. Basic cash economy can be supported by the remaining currency upto Rs.100 plus the new 500 and to a lesser extent the 2000 .

I don't fully agree with this view sir.
1. There is definitely a push by GoI to make big transactions traceable, and cash is hard, nearly impossible to trace without a nuclear option like demonetization - which can't be the norm.
2. On the other hand, cashless is a long way off. Last week's exercise will not make the society cashless overnight - at best we can start seeing more use of mobile and card payments, especially among the young. More importantly we have to start seeing more card acceptance. In that way the squeeze put on retailers is a good thing, lacking that push they may revert to their cash merry ways very quickly.
3. Eliminating the float is a good idea, but nothing prevents money hoarders (black marketers, politicians, RE mafia...) from hoarding increasing amounts of cash over time. GoI/RBI can limit the cash they print, but it will cause hardship to the common citizen who won't have access to notes and change; ATMs and banks will run out of cash for customers to withdraw. Printing larger quantities of smaller denominations is a step, but a marginal one.

So while the basic cash economy can be supported by existing float, unless other measures are taken, the new notes will have the same fate as the old notes and more money will have to be printed for the consumer economy.

manjgu · Post by **manjgu** » 17 Nov 2016 10:20

much shorter Q at Surajkund, Faridabad, Haryana.

shynee · Post by **shynee** » 17 Nov 2016 10:22

Kerala will bear the biggest brunt of demonetisation: Cooperative banks gasping for breath - Firstpost

Sicanta · Post by **Sicanta** » 17 Nov 2016 10:43

SBI cuts deposit rates below 7%

http://www.financialexpress.com/industr ... -7/447603/

SBI chairman Arundhati Bhattacharya had said last week that since banks have got more than R3.25 lakh crore in deposits following the de-monetisation drive, sooner or later banks will cut deposit rates.Moreover, banks need to reduce their deposit rates in order to pass on the benefits of Reserve Bank of India (RBI) rate cuts, amounting to 175 bps since January 2015, to borrowers. This means that while borrowers can avail of cheaper loans, fixed deposits will turn progressively unattractive for savers.

vina · Post by **vina** » 17 Nov 2016 10:54

2. On the other hand, cashless is a long way off. Last week's exercise will not make the society cashless overnight - at best we can start seeing more use of mobile and card payments, especially among the young. More importantly we have to start seeing more card acceptance. In that way the squeeze put on retailers is a good thing, lacking that push they may revert to their cash merry ways very quickly.
3. Eliminating the float is a good idea, but nothing prevents money hoarders (black marketers, politicians, RE mafia...) from hoarding increasing amounts of cash over time. GoI/RBI can limit the cash they print, but it will cause hardship to the common citizen who won't have access to notes and change; ATMs and banks will run out of cash for customers to withdraw. Printing larger quantities of smaller denominations is a step, but a marginal one.

Well, believe me. EVERYONE I come across has bank accounts. Move all payments you make regularly have to check or electronic EFT/ IMPS payment.

My driver's salary is paid via IMPS. He gets the funds immediately and also the sms acknowledgment. I had opened a bank account for the maid long back when the LPG subsidy started going directly the the DBT . I had asked my wife to pay her electronically, but the maid was resisting asking to be paid in cash . Now the maid to gets paid electroncially.
The news paper wala came and gave the monthly bill yesterday. I asked him for his bank account detials and wired the money to him via IMPS. The milk walla too is on monthly payment and via cheques.

All other spending is always via the cards. The only use of cash is in the BMTC Volvo, because the monthly pass doesnt make sense. If BMTC & Metro go fully smart card way, that too goes. So you can manage literally without cash to a great extent and it will be like the US, where you go around with at max $20 and change in your wallet and use the card everywhere .

The ifrastructure exists for that in India. I find the entire business of traders / marriages etc not getting paid, cant order stock etc hugely over blown. All they need is to start writing cheques and using electronic payment. Anyone can well give a cheque or pay electronically to the Mandap, to the wedding band wala, the caterer, to the cab service, to the jeweller, and even to the priest!

And this is as good an excuse as any to do so. They cant refuse now. Just do it. I hope Modi keeps the squeeze on cash supply on and limits withdrawsls and also puts a big cash transaction withdrawal tax (on the lines of STT) of around 1% or so in the upcoming budget, so that the arbitrage between cash and electronic payments go away and you are indifferent, even if the vendor etc charges 1% more for card payments.

With GST , this no bill / tax evasion via paying cash goes down significantly, except for the end retail, where too , for a vast majority of goods, there will be online competition and organised competition.

All this requires is a little bit of behaviour modification and moving away from cash. All of us can do it and insist on it.

yensoy · Post by **yensoy** » 17 Nov 2016 10:54

Sicanta wrote:SBI cuts deposit rates below 7%
http://www.financialexpress.com/industr ... -7/447603/

Watch out for more heartburn in places like didiland. More pain for seniors who will complain about lowered savings rates (but may not appreciate accompanying lower inflation - that's human nature). Unfortunately it will give rise to more Peerless/Sahara kind of schemes.

Sachin · Post by **Sachin** » 17 Nov 2016 11:07

Okay time for a daily update

. SHQ gets a call from her boss in the morning. She thinks that their original holiday plan is on

. No it is not a holiday, and the manager requests her to get some marker pens. Yes the same one used by IT-Vity fellows on their drawing boards. Their branch would not be getting the indelible ink today.

On the way, there is the Vijaya Bank ATM which did not have cash but had around 40 people waiting in line. At a near by village the Canara Bank ATM had no cash, but there were around 4-5 locals hanging on. SHQ's bank branch ATM was any way out of cash, and the "guests" waiting to enter the bank was around 10-12. She said "guests" would be more once the bank opens up. Their office peon has gone to the HQ to get a load of Rs.500 notes. All hopes are on these notes coming in today. Local "hands of the law" are making daily visits (with the peon cribbing that they too are exchanging money

). The Axis bank ATM had a queue for around 30-35 people.

From what I can see the mad rush at the banks are slowly coming down, and normalcy may come back by this week end. I think the government first plans to complete the exercise at Nationalized and Scheduled banks first, clean up their lockers. And then exclusively focus on the cooperative banks across the nation.

vina · Post by **vina** » 17 Nov 2016 11:15

Sachin wrote:Okay time for a daily update . SHQ gets a call from her boss in the morning. She thinks that their original holiday plan is on . No it is not a holiday, and the manager requests her to get some marker pens. Yes the same one used by IT-Vity fellows on their drawing boards. Their branch would not be getting the indelible ink today.

That is not the same . The marker board pens are different, the indelible ink pens are different. The look the same though. If you write with the indelible ink pens on the white boards, you cant erase it.

sum · Post by **sum** » 17 Nov 2016 11:25

The ifrastructure exists for that in India. I find the entire business of traders / marriages etc not getting paid, cant order stock etc hugely over blown. All they need is to start writing cheques and using electronic payment. Anyone can well give a cheque or pay electronically to the Mandap, to the wedding band wala, the caterer, to the cab service, to the jeweller, and even to the priest!

Just one hypothetical pooch:
For any e-payment, we have to add a benificiary and wait 30 mins for activation and 1st 2 days, have to wait for 50k max limit....how is this usually worked around if we want to make a instant payment for some dealing and they cannot wait 2-3 days for the cool-off period of NEFT/IMPS/RTGS.

Shaktimaan · Post by **Shaktimaan** » 17 Nov 2016 11:32

In my corner of Mumbai, lines at banks are as long as ever. That's because I don't think we had too many rent-a-depositor type fellows doing multiple transactions anyway. The people in the lines were always legitimate.

But as Trump would put it, bankers have become HIGH ENERGY. They are much better organised now. The local SBI branch has built a shed/pandal outside, for the comfort of the people standing in line. They have also placed chairs for senior citizens and tables to fill out forms etc. The young crew of the HDFC branch is swarming around their line, filling out forms and helping out people before they reach the cashier.

Hausle buland hain.

Chandragupta · Post by **Chandragupta** » 17 Nov 2016 11:33

They should flush the market with Rs.100 notes and eliminate all other higher notes. All this cashless economy sounds good but behaviours dont change that easy. Plus we need to do a lot more in our power, cellular and internet infrastructure to make this possible. Introduce a weekly linit for withdrawal, require mandatory PAN number for all cash transactions above 10k and we are done. Who is going to hoard crores in 100 rupee notes?

All this euphoria abou going cashless is okay for BRF with all 99% IT janta but not everyone is comfortable with technology. Low value transactions will need cash for the next 10-15 years.