Currency Demonetisation and Future course of Indian Economy

disha · Post by **disha** » 26 Nov 2016 23:05

atamjeetsingh wrote:Every time he takes stock out off storage receipts are printed with the no of petis gone out from his stock.So he has solid proof of his income. Secondly he said with 6 adult persons in his family he can deposit 15lakhs, 2.5laks/person each no questions asked. He is waiting for maximum cash to be collected and will heads toward bank in the last week of Dec.
Added later: Retialer will accept your old currency but wont give you change back. Suppose you bought veg & fruit worth rs350 and wants to pay using old currency he will take your 500 rupees note but wont give you change back.

Great example of hair cut of BM hoarders. Let us say I buy 700 Rs. of apples and give demonetized Rs. 1000 back., I will lose Rs. 300/- That is a 30% cut on wealth transfer from my POV., for the farmer in question there is a one time windfall of 30%. Again this is a significant tax on the BM., of course the BM is coming back into the system as a white money and increased revenues for the farmer. What's to complain?

disha · Post by **disha** » 26 Nov 2016 23:25

parashara wrote: An example to illustrate this is: Assume a guy was in a coma from 1 Jan 2016 to 31 Dec 2017. He wakes up to find that his stash of old notes is no longer legal tender and not acceptable at any bank in the land. He can, however, show up at an RBI office, present his notes and ask to be compensated via deposit, exchange or in gold. The RBI cannot turn around and say that while he was in a coma, the value equivalent of his stash was transferred as dividend to the GoI and as such has evaporated.

This is the rub.

The rub here is what was the guy doing with his stash of old notes? Your case applies to only that person who is in coma., does not have a caretaker or a family member to help out and has a significant stash of old notes who precisely is taken care medically from November of 2016 to April of 2017 and wakes up after that. Plausible but how many? As many cases as to account for lakhs of crores?

Another rub., let us say that Kallya has a yacht with 10k crore in cash going to andamans and the yacht sinks. Again all this is accounted money., which Kallya has borrowed from Bank of Bengaluru, Kerala in white. Now that money in cash is literally under water. What are the next steps RBI will take? What happens if Kallya's friend Dallya has tacked on additional 5k crore cash in old notes (unaccounted) on it? Please do not ask your banker friend this question., we do not know him/her and you cannot be his/her proxy. Try to find an answer to that. Simple logic will actually lead you to the right answers here.

Rishi Verma · Post by **Rishi Verma** » 26 Nov 2016 23:31

^^ before the guy in coma wakes up to see all his money gone, he will find that his left kidney is gone too...a bigger rub, then he will think about the money under his pillow only to find that his relatives have replaced the currency with shredded newspaper.

disha · Post by **disha** » 26 Nov 2016 23:43

^^ Lol. Precisely. Such comatose sheikh-chilli what aboutery I think belong to the Bakistan thread.

g.sarkar · Post by **g.sarkar** » 27 Nov 2016 01:28

http://timesofindia.indiatimes.com/busi ... 642605.cms
Pakistan's central bank calls India's demonetisation move 'extreme'
TNN | Nov 26, 2016, 11.35 PM IST
NEW DELHI: Despite having the weakest collection in taxes in South Asia, Pakistan's central bank governor Ashraf Mahmood Wathra called India's demonetisation policy as an "extreme" step to boost financial inclusion, tax collection and battle graft.
"To my imagination that is a very, very extreme measure," Governor Wathra said in an interview with Bloomberg economic and financial news service, reported in Pakistan's Dawn.
.....

Gautam

svinayak · Post by **svinayak** » 27 Nov 2016 01:35

g.sarkar wrote:
http://timesofindia.indiatimes.com/busi ... 642605.cms
Pakistan's central bank calls India's demonetisation move 'extreme'
TNN | Nov 26, 2016, 11.35 PM IST
NEW DELHI: Despite having the weakest collection in taxes in South Asia, Pakistan's central bank governor Ashraf Mahmood Wathra called India's demonetisation policy as an "extreme" step to boost financial inclusion, tax collection and battle graft.
"To my imagination that is a very, very extreme measure," Governor Wathra said in an interview with Bloomberg economic and financial news service, reported in Pakistan's Dawn.
.....
Gautam

Pak has nothing to do with another countries currency.

UlanBatori · Post by **UlanBatori** » 27 Nov 2016 01:49

How dare U! Pakistan prints ALL valuable currencies!! No wonder he calls the step extreme: now they have to set up INR 2000 from scratch, plus all that unused INR1000 supplies waiting for shipment!

UlanBatori · Post by **UlanBatori** » 27 Nov 2016 01:53

What if my 6th coujin Appu goes to the RBI with a stack of notes and says RAW asked him to keep in the safe? Can't report to tax because he is an undercover agint...

disha · Post by **disha** » 27 Nov 2016 02:00

UlanBatori wrote:What if amy 6th coujin Appu goes to the RBI with a stack of notes and says RAW asked him to keep in the safe? Can't report to tax because he is an undercover agint...

^^ They will first uncover his under-cover as part of KYC norms. Under ki baat hain.

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

svinayak wrote:
g.sarkar wrote: Gautam
Pak has nothing to do with another countries currency.

It was a slow din sir, no IEDmubarak on Fridin, so I went ahead and did the deed. Pak Govt has nothing to do with its own currency most of the time.
Gautam

anupmisra · Post by **anupmisra** » 27 Nov 2016 02:04

UlanBatori wrote:How dare U! Pakistan prints ALL valuable currencies!! No wonder he calls the step extreme: now they have to set up INR 2000 from scratch, plus all that unused INR1000 supplies waiting for shipment!

No worries there for the bakis. It's all been figured out.

PLAN B. Ganja Sharif should propose the reuse all those counterfeit currency notes and unprinted paper as toilet paper for those 40 million bakis (who defecate in the open) when the baki goberment builds new water-less toilets (after Modi redirects the Indus and Ravi into India and leaves the pakjab high and dry).

Problem solved.

shynee · Post by **shynee** » 27 Nov 2016 02:19

darshan · Post by **darshan** » 27 Nov 2016 02:58

There are many rumors running around and many people falling for it. One being about the gov't enforcing gold and having IT guys go after public's bank lockers. Many from older generations are recalling days of IT raids where jewelry is confiscated and you are running around to get it out of IT people's hands. It may be possible but still not worth falling for this rumor and keeping anything at home to be stolen.

On a side note (some real questions being asked by staff drivers for whom my extended family opened up bank accounts to deposit their salaries),
how does one go about ensuring people who are minimally literate (meaning can read and write numbers) and are fearing bank staff taking over their money?
how does one ensure that it is okay to pay using cards to the same public? They would like to know and verify their bank balance after each such transaction.
Are there any safe guards in terms of fraudulent transactions and banks returning money? Will bank make you run around to get your money back once you loose due to your card information or bank information being stolen?
This from the business side, how will courts react if small business ends up loosing money due to cyber heist? Some examples from US side, https://krebsonsecurity.com/category/smallbizvictims/

Neshant · Post by **Neshant** » 27 Nov 2016 03:06

While I'm not against govt weeding out corruption, there is a fine line.

Moves to enforce a digital currency system that is under the control of the govt or worse yet private banksters is bad.

First it suggests that the wealth you earn is not yours to keep. When it is you who earns the wealth and someone else who decides when and how they can take it from you at a moment's notice, that is the definition of serf dome.

Second and more importantly, concentration of peoples' wealth in the hands of a small bureaucracy at the top invites thieves of all kinds. Goldman Sachs & JP Morgan are now experts at stealing the productive output of their nation through financial chicanery, stuffing govt regulatory positions with their ex-employees, bribing politicians through various means and elevating corrupt ones who do their bidding (i.e. give them bailouts & control over the monetary system) to power.

Digital currencies and other monetary systems are OK - as long as it exists in the free market (private enterprise creates the money) and people VOLUNTARILY use it because they see benefit in it.

Idiot bankers dreaming of forcing people to deposit their money into bank accounts so it can be stolen through inflation is not a sign of preventing theft. It is theft. "Profits" attained by banking interests from that theft is black money. In western countries the theft at the top dwarfs the corruption at the bottom in scale.

India should NOT fall into that line of thinking where govt or some guy sitting up in an ivory tower at the central bank thinks he knows what's best for the people by stealing their wealth supposedly for the greater national good. The national good is served through capitalism and the people acting in their own financial interest.

Lastly let me say the United States and indeed its Constitution was founded on the very principle that money should NOT be under the control of banksters. In their age, gold & silver as money was the only way to enforce the premise that people who earned the wealth deserved to keep it - well before keynesian nonsense started making rounds. That is literally written into their Constitution yet is ignored by Federal Reserve banksters who stand to gain from the imposition of fiat money.

shyamal · Post by **shyamal** » 27 Nov 2016 03:07

I get SMS every time any transaction happens on my bank accounts or credit cards - deposits, withdrawals, transfers, debit card swipe, credit card swipe. I guess their accounts can be set up similarly?

About cyber heist - I guess there is more possibility of pickpocket or a theft from home when they use cash.

disha · Post by **disha** » 27 Nov 2016 03:29

yensoy wrote:Disha, just throwing together some random words doesn't make an argument...

IMHO your further conversations with DavidD should be carried out in L&M thread., (s)he is just trolling us. But then every troll has its uses.

Background:

In 2012., it was estimated that some $600 Bn of black money moved out of China. In fact the outflow only accelerated and it is estimated that some $1-$1.2 trillion moved out of China. Take a moment and think through it., some $1-1.2 Trillion USD moved out of China. This is the unaccounted wealth which the poor peasants of China do not have access to and never will have access to.

Cases where cash held in such large numbers that they were rotting was discussed in 2015/2016. https://www.ft.com/content/8309863e-ab3 ... 8207902122

Of course., all this 'cash' was generated via the remarkable growth of China. The cash escaped via Chinese hawala network into various developed countries. In fact it propped up the RE market in several nations (US/Canada/Australia).

Present:

India has been growing @7-8% since last two years and it is expected that its growth will only accelerate. This will generate lot of BM and my personal fear *was* that the money *would* have left the Indian shores propping up a new wave of RE in developed countries.

Here is a statistic to chew on. India has a population of 1.2 Billion. If 10 million suddenly leave its shores for say US buying up RE there., India will find no change. In fact for her., that 10 million population is a rounding error. For US., that will be a massive churn. Leave Canada/Aus/former UK aside.

Anyway coming back to BM., it would have been quite possible that some $200 Billion would have unofficially been lost to 'developed' countries in the next 2-5 years.

The surgical strike on BM if seen from the above perspective is thus the right strike curtailing ill-gotten wealth leaving Indian shores.

This is what rankles China and Chinese., the chinese media got totally modified (eg.) http://www.atimes.com/article/chinese-m ... ack-money/

“Modi’s move is very bold. We cannot imagine what would happen in China if the country bans its 50 and 100 yuan notes,” the Global Times said in an editorial titled ‘Modi takes a gamble with money reform.’ The 100 yuan is China’s highest currency note.

Imagine if China had gone and demonetized it earlier., would it have saved atlas 50% or USD 600 Bn leaving its shores? Would not that have curbed the current stagflationary conditions in China?

Of course their constipation can be seen when its official daily puts out garbage like this:

“Demonetization is a gamble for Modi. He bet on both the execution ability of the government and the tolerance level of the Indian society, hoping that the benefits of this reform can outrun the negative social impacts and low morale,” the editorial said, adding that the “Western-style” democratic system of India allows little room for such bold moves.

For me., one issue which demonetization has minimized is that in the next 5-10 years of India growth., unaccounted wealth will be less likely to leave Indian shores in large quantity propping up the western states. Something which both Harbard/Umbridge eCONomists and Lootyens eCONomists have purposely not discussed.

hanumadu · Post by **hanumadu** » 27 Nov 2016 03:41

atamjeetsingh wrote:Every time he takes stock out off storage receipts are printed with the no of petis gone out from his stock.So he has solid proof of his income. Secondly he said with 6 adult persons in his family he can deposit 15lakhs, 2.5laks/person each no questions asked. He is waiting for maximum cash to be collected and will heads toward bank in the last week of Dec.
Added later: Retialer will accept your old currency but wont give you change back. Suppose you bought veg & fruit worth rs350 and wants to pay using old currency he will take your 500 rupees note but wont give you change back.

There is a small problem here. If the receipts are dated post nov 8th, he cannot use them to show income in old notes.

darshan · Post by **darshan** » 27 Nov 2016 03:46

Wealth transfer to western countries reminds me of my cousin who studied at NYU and while studying there he shared a pad with another student whose father was a police officer in India and had bought him this pad and a car. I am pretty sure that pretty much all corrupt officials are utilizing similar routes for their kids and sending them off to international schools and also transferring many of their collections through hawala systems.

ShauryaT · Post by **ShauryaT** » 27 Nov 2016 04:06

Sachin wrote:
ShauryaT wrote: I was not saying demonetization can be challenged. I am saying, withdrawal limits on legal tender will likely be challenged, if the limits are sought to be sustained.
Then how come even today banks can set a minimum balance to be retained in the accounts?? So I guess there is some provision out there to decide on the minimum balance. And even before Nov 8th there were restrictions on how much a person could with draw from ATMs, or transfer through NEFT & IMPS. But off course the limits are above what we see today.

Your money in your bank is your property. It is with the bank for safe keeping, for which a bank may charge you a fee. Although India does not have a "right" to property, the 44th amendment took that away, property cannot be subject to limits, without authority of law (300 A). All we have so far is a gazetted notification not an ordinance or an act in parliament.

Furthermore, in other democracies the freedom to use cash if restricted would hinder the fundamental right to free speech is a position some would take. But at a basic level, it is your money. The credibility of the RBI vests in its unconditional promise to honor the value of the currency. If you start putting restrictions on that promise, it will come at the cost of the credibility of that promise.

As to the restrictions on the channels (ATM, etc), it is like even on an ordinary day, you cannot just go and withdraw 1 CR from your bank account at your local bank. There could be such other limits due to security concerns. These restrictions are due to logistical issues and not fundamental. IOW: your withdrawal from your account can be arranged, the bank only has to take care of the logistical challenges, usually done through a notice period.

ShauryaT · Post by **ShauryaT** » 27 Nov 2016 04:25

disha wrote: The surgical strike on BM if seen from the above perspective is thus the right strike curtailing ill-gotten wealth leaving Indian shores. .....

For me., one issue which demonetization has minimized is that in the next 5-10 years of India growth., unaccounted wealth will be less likely to leave Indian shores in large quantity propping up the western states. Something which both Harbard/Umbridge eCONomists and Lootyens eCONomists have purposely not discussed.

A wrong assessment IMO. First, on the ground the BM conversion to foreign currency has increased since Nov 8. You are banking on the logic that this move will now suddenly compel a majority of BM hoarders to comply and live within the system. If history is a guide, these moves to compel using hard compliance routes usually trigger an even more determined population to not fall in line and figure even more creative ways to cheat the government. The IT raids of the 70's is a reminder. We are Indian not Chinese to simply bend over and comply to the wishes of a high lord. What is more likely to happen in the next 5-10 years is a fast conversion of new BM to non Indian currency, including forex realizing fully well that a hoard of the currency - a bad decision always is more hazardous in light of this demonetization act.

disha · Post by **disha** » 27 Nov 2016 04:33

darshan wrote:Wealth transfer to western countries reminds me of my cousin who studied at NYU and while studying there he shared a pad with another student whose father was a police officer in India and had bought him this pad and a car. I am pretty sure that pretty much all corrupt officials are utilizing similar routes for their kids and sending them off to international schools and also transferring many of their collections through hawala systems.

In my univ. days., I knew of several from TN (one from Coimbatore) who were scions of not even as high up in chain as the police officer. One's parents were launderers of the political money and the 'extra' brought him 6 years of college + pad + car. Another totaled his car and got another car. Parent was in electricity dept.

And then there was one! Put it this way., I am 2-degrees separated from Karti Chidambaram

Each of the kid were not personally bad., but they were part of a system that leeched of the Indians. And since 'easy come easy go' is a true maxim., none of them added anything further.

In effect., this DeMonetization has put a reset on such leeching.

disha · Post by **disha** » 27 Nov 2016 04:54

ShauryaT wrote: A wrong assessment IMO. First, on the ground the BM conversion to foreign currency has increased since Nov 8. You are banking on the logic that this move will now suddenly compel a majority of BM hoarders to comply and live within the system. If history is a guide, these moves to compel using hard compliance routes usually trigger an even more determined population to not fall in line and figure even more creative ways to cheat the government. The IT raids of the 70's is a reminder. We are Indian not Chinese to simply bend over and comply to the wishes of a high lord. What is more likely to happen in the next 5-10 years is a fast conversion of new BM to non Indian currency, including forex realizing fully well that a hoard of the currency - a bad decision always is more hazardous in light of this demonetization act.

You are confusing the existing horde and its conversion and the impact of the US elections. Yes., there is the case of pressure on INR due to immediate buy up of dollars., and it is confused with BM conversion to foreign conversion. Also you are confusing current with future.

How can BM to foreign conversion happen if the hawala channel is clogged up? At the same time INR conversion to USD is still happening and the weeks after November 8., it accelerated. One data point there is Trump one election and against the predicted fall in DJIA., it actually went up - basically the dollars are being invested in US and the FIIs in India are selling INRs for the USD. Also the 'demonetization' to them has added an element of 'uncertainty' so like a herd they are trying to "protect" their investment.

The current BM horde as pointed out cannot be converted to USD since the hawala channel is clogged up. Hence the statement "on the ground BM conversion to foreign currency has increased" itself is thus without basis.

ShauryaT · Post by **ShauryaT** » 27 Nov 2016 05:07

>>The current BM horde as pointed out cannot be converted to USD since the hawala channel is clogged up. Hence the statement "on the ground BM conversion to foreign currency has increased" itself is thus without basis.

Contradicts what i know is happening, not theory, not rhetorical but actual people who are doing it. US election, Trump, DJIA....these things do not even come into the equation.

darshan · Post by **darshan** » 27 Nov 2016 05:33

ShauryaT wrote:>>The current BM horde as pointed out cannot be converted to USD since the hawala channel is clogged up. Hence the statement "on the ground BM conversion to foreign currency has increased" itself is thus without basis.

Contradicts what i know is happening, not theory, not rhetorical but actual people who are doing it. US election, Trump, DJIA....these things do not even come into the equation.

Yes you can pick up one USD at 50% premium with old notes which also seems to be proposed tax rate for declaration. Though I am still not sure how these forex people are dumping their old notes and bringing in dollars.

Prasad · Post by **Prasad** » 27 Nov 2016 05:46

Re fake note discussion in the previous page - uncle who works in a bank says fake notes are immediately destroyed. If they come across >=5 notes they have to call the police.

Suraj · Post by **Suraj** » 27 Nov 2016 05:46

ShauryaT wrote:A wrong assessment IMO. First, on the ground the BM conversion to foreign currency has increased since Nov 8.

Tell us, after Nov. 8, what is 'black money' ? After that you can explain how it gets converted to foreign currency.

Akshay Kapoor · Post by **Akshay Kapoor** » 27 Nov 2016 06:10

ShauryaT wrote:
Sachin wrote: Then how come even today banks can set a minimum balance to be retained in the accounts?? So I guess there is some provision out there to decide on the minimum balance. And even before Nov 8th there were restrictions on how much a person could with draw from ATMs, or transfer through NEFT & IMPS. But off course the limits are above what we see today.
Your money in your bank is your property. It is with the bank for safe keeping, for which a bank may charge you a fee. Although India does not have a "right" to property, the 44th amendment took that away, property cannot be subject to limits, without authority of law (300 A). All we have so far is a gazetted notification not an ordinance or an act in parliament.

Furthermore, in other democracies the freedom to use cash if restricted would hinder the fundamental right to free speech is a position some would take. But at a basic level, it is your money. The credibility of the RBI vests in its unconditional promise to honor the value of the currency. If you start putting restrictions on that promise, it will come at the cost of the credibility of that promise.

As to the restrictions on the channels (ATM, etc), it is like even on an ordinary day, you cannot just go and withdraw 1 CR from your bank account at your local bank. There could be such other limits due to security concerns. These restrictions are due to logistical issues and not fundamental. IOW: your withdrawal from your account can be arranged, the bank only has to take care of the logistical challenges, usually done through a notice period.

RBI 'Promise to pay sum of 500 Rs' has not been reneged on. People have been allowed to deposit it in their accounts and that promise is still alive when they withdraw new 500 or old 100 Rs. If they choose not to deposit then that's their problem.

Rishirishi · Post by **Rishirishi** » 27 Nov 2016 06:20

How is the situation on the ground in India now. Are the lines in banks less now ? I really hope this currency mess gets fixt fast. Poeple will start to hurt soon.

ShauryaT · Post by **ShauryaT** » 27 Nov 2016 06:23

Suraj wrote:
ShauryaT wrote:A wrong assessment IMO. First, on the ground the BM conversion to foreign currency has increased since Nov 8.
Tell us, after Nov. 8, what is 'black money' ? After that you can explain how it gets converted to foreign currency.

OK, sir, precise wordings to please your honor!! Demonetized currency, which was BM pre-Nov 8, AKA old notes converted to foreign currency, mostly USD. How? Human carriers most popular is what i hear.

vijayk · Post by **vijayk** » 27 Nov 2016 06:24

At least in hyderbad, no cash in icici and vijaya bank branches I went. No 100s and 500s on Thursday. Came back empty

ShauryaT · Post by **ShauryaT** » 27 Nov 2016 06:27

Akshay Kapoor wrote:
RBI 'Promise to pay sum of 500 Rs' has not been reneged on. People have been allowed to deposit it in their accounts and that promise is still alive when they withdraw new 500 or old 100 Rs. If they choose not to deposit then that's their problem. With respect to your argument you are not on thin ground here - you are floating on an abyss.

Did I say RBI has reneged or will? What argument are you referring to - that continued regulation on withdrawals is likely to meet challenges? Time will tell or tell me where is the theory wrong in law and past precedence?

Suraj · Post by **Suraj** » 27 Nov 2016 06:29

ShauryaT wrote:OK, sir, precise wordings to please your honor!! Demonetized currency, which was BM pre-Nov 8, AKA old notes converted to foreign currency, mostly USD. How? Human carriers most popular is what i hear.

What is "demonetized currency" ?

That's like saying 'money that's not money', quite literally. As of midnight Nov 8 all that currency has Rs.0 face value. All Rs.14 lakh crore of it. The reason I'm teasing you is that a lot of people are calling it 'money', or worse 'demonetized money'. It is not money. It has NO value. It doesn't have any value until exchanged at a bank . A limited number of places were willing to exchange it for services and goods, but those avenues are gone. Even the exchange window is over.

No foreign exchange bureau takes these old notes. Not even on Nov 9. I know, because people around here asked around at Travelex, Western Union etc. They all shut acceptance of these old notes almost immediately. All you're talking about a handful of people with dollars in hand willing to risk exchanging useless old notes for real money at a steep notional premium, hoping that they can somehow deposit that money without the IT man knowing. By definition this is impossible to scale up.

Ultimately all these claims diminish into various chota mota hacks that a few people at most can accomplish, to a limited extent. There's $240 billion of Rs.500 and 1000s out there. Almost 50% of it has already been deposited. There's not enough dollars in the Indian black market to support even a fraction of the remainder.

ShauryaT · Post by **ShauryaT** » 27 Nov 2016 06:33

Suraj wrote:No foreign exchange bureau takes these old notes. All you're talking about a handful of people with dollars in hand willing to risk exchanging useless old notes for real money at a steep notional premium, hoping that they can somehow deposit that money without the IT man knowing. By definition this is impossible to scale up.

Not sure on the scaling part. Out of 14, six lakhs crores of old notes are already deposited, 35 days more to go.

Suraj · Post by **Suraj** » 27 Nov 2016 06:34

ShauryaT wrote:
Suraj wrote:No foreign exchange bureau takes these old notes. All you're talking about a handful of people with dollars in hand willing to risk exchanging useless old notes for real money at a steep notional premium, hoping that they can somehow deposit that money without the IT man knowing. By definition this is impossible to scale up.
Not sure on the scaling part. Out of 14, six lakhs crores of old notes are already deposited, 35 days more to go.

Well, what are you trying to say, besides supporting my argument here ?

hanumadu · Post by **hanumadu** » 27 Nov 2016 06:44

ShauryaT wrote:>>The current BM horde as pointed out cannot be converted to USD since the hawala channel is clogged up. Hence the statement "on the ground BM conversion to foreign currency has increased" itself is thus without basis.

Contradicts what i know is happening, not theory, not rhetorical but actual people who are doing it. US election, Trump, DJIA....these things do not even come into the equation.

This issue has been addressed here before. If some body exchanges his old currency for forex, the burden of converting the old money to new money is now on the guy with the old notes. Either he explains where he got the money from or he loses the money. The whole efficacy of this demonetization rests on the ability of the govt's ability to detect such transactions. Hawala is the most affected by this operation. They would be the last people who would willingly add to the pile of their useless currency.

shiv · Post by **shiv** » 27 Nov 2016 06:55

ShauryaT wrote:Your money in your bank is your property. It is with the bank for safe keeping, for which a bank may charge you a fee.

In India your money in a savings account earns a minimum of 4% per annum in interest and you don't pay the bank anything. In other words your deposit is a loan to the bank with a promise that you can take the money out at any time subject to a minimum balance. I am not sure of the legal differences between a simple deposit where the bank charges you for safekeeping (like a bank locker) versus a savings account such as the one I have described.

disha · Post by **disha** » 27 Nov 2016 06:59

Okay., a simpler wording for what I call 'current BM' : "Erstwhile unaccounted rupees with a face value rendered worthless unless accounted for".

For the Hawala transfer to work., somebody sitting in US gives dollar in exchange for rupees in India. For the 'current BM' to be converted to say USD., the dollar is in exchange for worthless Rs. 1000/Rs. 500 notes. What does the buyer of that notes do with it? It is not accepted even for land or gold. Unless it is accounted., it is worthless!

Now if somebody is running a export/import business., then by over invoicing/under invoicing the 'current BM' can routed in to the system and laundered. This entails transaction cost at two levels., the cost of the dollar goes up because whoever is buying your 'BM horde which is technically worthless since it is unaccounted' can actually become worthless paper not even good for "raddi". This is risk and high cost. The second txn cost is when the books are cooked for over/under invoicing. How will the business account for such a sudden surge in revenues? Or sudden increase in cost of goods? Loss? Profits? Particularly when the global economy is slow. Note [repeated ad-nauseam] this chits are worthless unless accounted for! So why would somebody give USD for worthless paper?

So again., just because my friends-friends-fourth cousin-72 times removed states that the 'current BM' is being converted into foreign currency - it does not mean it is being done so. The cause of the fall in rupee value needs to be looked somewhere else. Just because we have a data point and a theory., we cannot use confirmation bias to fit that data point to the theory.

At this stage., shourya'ji - you have to point out the steps how 'current BM' is being converted into foreign exchange. Unless that point, your statement is invalid.

ManuJ · Post by **ManuJ** » 27 Nov 2016 07:02

http://timesofindia.indiatimes.com/city ... 643592.cms

One has to dial *99# from their mobile phone, not necessarily a smart phone, and follow the instructions to complete the transcation. This system is being introduced to transfer money to small vendors who do not have swipe machines.

A drive to create awareness on how to operate the cashless transaction for vendors and small shops and the public will commence on Monday at Mapusa and Panaji, in Goa.

Also, there will be no minimum limit on the cashless transfer of money. Chief minister Laxmikant Parsekar said no fees will be charged for any of these transactions over the mobile.

Yagnasri · Post by **Yagnasri** » 27 Nov 2016 07:09

Cross post from Judiciary thread.

I feel that SC may create problems on notes issue. I am surprised that it is, in fact, hearing this matter in the first place. RBI as a regulator on board and in such cases SC hardly ever interfered till now.

hanumadu · Post by **hanumadu** » 27 Nov 2016 07:12

There's also a drive to get bank accounts for all workers so their salaries can be paid through check or transfer. No more excuses like 'oh no, my workers do not have a bank account. How am I going to pay them?'.