RBI to Introduce ₹2000 Banknotes

[Vivek]

Santosh Got first Note
Vivek

[Vivek]

For depositing in to account, the bank need not have new notes to disburse.

Yes But I can use it online now.
Also 4k amount notes are given now
Vivek

[Bimat]

For depositing in to account, the bank need not have new notes to disburse.

True, but the majority of the people want 4k in cash and as soon as bank is running out of cash, they are simply closing the counter. They are not even doing online deposits as the crowd is huge. I just read that police were called by a bank in Okhla (Delhi) after crowd turned violent after bank refused to give them cash.

Aditya

[Pabitra]

True, but the majority of the people want 4k in cash and as soon as bank is running out of cash, they are simply closing the counter. They are not even doing online deposits as the crowd is huge. I just read that police were called by a bank in Okhla (Delhi) after crowd turned violent after bank refused to give them cash.

Yes, there are reports of chaotic conditions prevailing all over.
The intentions may have been good but logistic nightmare may undo whatever good was planned.
It is easy to use high sounding words on political platform or using gift of gab in court room but one should not lose ground root reality ( if they had ever known it).

[dheer]

Its key how the distribution logistics work out in next few days. If they are good; then yes. If there is to much friction, then it will alienate quite a few people and could turn out to be bad.

[Pabitra]

The way to eliminate black money is to abolish high value denominations, like EU ( or at least Finland) eliminating 500 € note and not replace 1000 Rupees note with 2000 Rupees note. This basically makes the intent clear. Overnight the storage space requirement gets halved.

Kindly do not mistake action for achievement.

[dheer]

This is mixed bag.

[Figleaf]

You cannot compare Finland and India. In Finland, many transactions, even small amounts, are done electronically. In India, cash is king. It is quite possible for Indian people to hold a very large amount of cash temporarily for a good reason, as is proven by the sad story of the woman farmer who committed suicide because she had sold land for cash and thought she was made penniless by the banknote change.

Peter

[Pabitra]

What about Nigeria where the parliament forced the President to withdraw the issue of a higher denomination note?
Does the Parliament stand nowhere as representatives of the public in a democratic set up?

Would that women farmer get her life back?
There are several such stories going around of common persons suffering for such a chaotic scene, especially in rural areas and small towns.

[Enlil]

This can't be true!!! So if they withdraw the ₹2000 banknotes after say 3 years, I have to suffer again from all this? This is crazy! It seems to me that clueless people are taking the decisions. Horrible!

Aditya

But it is a good way to Dollarise an economy, as people would loose trust in the local currency.

[Pabitra]

Add tight foreign exchange control regime and you have perfect formula for pauperisation of masses and enrichment of political elite ( on whom such controls are not applicable). Perfect fit for a political party who knows that they are not fit to rule andwould not get to see victory on electoral front for many terms.


Not being an economist, I can only guess the reasons why the earlier Central Bank Chief did not agree to this proposal for so long and his replacement is a person who is pliant enough to agree to political populism tactics.

[dheer]

The general perception I gather is, quite a few people are facing hardships. Some are very genuine, a tax driver has kept around Rs 50K to make a repayment. Another has around Rs 2 lacs at home as he is building his house, some are not able to get operation done, etc etc.

However overall most/everyone is thrilled. They are all ready to take up the inconvenience but are all smiles to see the hordes getting defeated.

It now depends on how frictionless this can be made further ... that is what will decide whether this was a good move or bad move.

[zwiggy]

It's amazing how cash oriented the society is... And thus how ignorant/suspicious of banking. I took a taxi (Ola) last night knowing that I can pay using an online wallet. The taxi driver sat complaining about how he can't even fill deisel since no one is paying him in small cash and  he is not accepting 500/1000 notes since he is unsure if the refilling stations will take them or not.

I asked him about how he gets the payment for the ride I was taking. He said that he gets it deposited in his bank account every few days. So I wondered aloud what the issue was if he has a bank account and a debit card. He said - what use are those when he needs diesel? Um, did you know that you can pay with a debit card at a filling station? He had no idea that he could do that... He thanked me and said he will now go home to get his debit card!!

[Bimat]

According to RBI, there are around 700 million debit cards in India (many of us have more than one card). So that means around 600 million Indians do not have a debit card or even a bank account. What should those people do?

In urban areas, it is easy to find ways of payment. Once you go to rural areas, the real problem starts.

Starting midnight today, nobody will accept old notes except banks. Most of the ATMs are still closed as they haven't received cash. What should foreign tourists do, as airport counters are also not accepting old notes. I saw a lot of foreign tourists cursing Indian government on social media as all their travelling plans are now useless. They have been forced to cancel their plans. Of course, they can make payment using card wherever possible, but what should they do with cash they have (which is going to be a good amount)?

Aditya

[dheer]

It's amazing how cash oriented the society is... And thus how ignorant/suspicious of banking.

It not something with ignorant / suspicion. Its more a habit and old habits are hard to break. It also the mindset when you actually spend something in cash you realize the value and using plastic means that is hidden; one needs to do some amount of book keeping to figure out how much money is left. Remember the infrastructure was horrible just a decade ago, phone lines didn't work. I remember in upto 2005-2006, merchants need to swipe the card multiple times to get through to connectivity ... the phone line costs were high ... all this is changing, but we are still not there yet. People have slowly adopted to withdrawing cash from ATM's. It would take them a while to understand book-keeping and doing transactions by Debit card.