World of Coins

Adjacent hobbies => Collecting banknotes => Indian subcontinent => Topic started by: Bimat on November 08, 2016, 03:51:42 PM

Title: ₹500 and ₹1000 Banknotes are No More Legal Tender
Post by: Bimat on November 08, 2016, 03:51:42 PM
Prime Minister has just announced that banknotes of denomination ₹500 and ₹1000 are no more legal tender in India. The decision will be implemented with immediate effect.

More details soon.

Aditya
Title: ₹500 and ₹1000 Banknotes are No More Legal Tender
Post by: Bimat on November 08, 2016, 04:10:23 PM
So RBI is introducing newly designed ₹500 and ₹2000 banknotes. Current ₹500 banknotes are no longer legal tender but you can exchange them at banks.

Aditya
Title: ₹500 and ₹1000 Banknotes are No More Legal Tender
Post by: Bimat on November 08, 2016, 04:55:49 PM
So you can exchange your old ₹500 and ₹1000 banknotes in banks but you have to show your identity proof. Hmm.

Tomorrow is going to be a chaotic day. ATMs closed, banks closed. ::)

Aditya
Title: Re: ₹500 and ₹1000 Banknotes are No More Legal Tender
Post by: dheer on November 08, 2016, 05:36:40 PM
Fantastic Move to curb black money.

Now all the older notes will become extremely rare  >:D
Title: Re: ₹500 and ₹1000 Banknotes are No More Legal Tender
Post by: Enlil on November 09, 2016, 03:22:42 AM
You really think this is going to curb black money, those who have the means would have converted their currency into other valuable products long ago. This is a publicity stunt. Also what did the 1978 currency demonetisation, the 1000, 5000 and 10,000 do?
Title: Re: ₹500 and ₹1000 Banknotes are No More Legal Tender
Post by: Pabitra on November 09, 2016, 05:09:06 AM
This is a publicity stunt. Also what did the 1978 currency demonetisation, the 5000 and 10,000 do?

Of the 1500 million notes in circulation, only 140 million were deposited back and rest never came back. I am sure bank note collectors were happy to get them at fraction of face value.
Title: Re: ₹500 and ₹1000 Banknotes are No More Legal Tender
Post by: dheer on November 09, 2016, 05:37:59 AM
Of the 1500 million notes in circulation, only 140 million were deposited back and rest never came back. I am sure bank note collectors were happy to get them at fraction of face value.

Are these the right figures? I think even the Rs 1000 note was de notified around same time.
Title: ₹500 and ₹1000 Banknotes are No More Legal Tender
Post by: Bimat on November 09, 2016, 03:38:25 PM
If you have black money in the form of gold, visit a jeweler and get it liquidated. Gold price up by 4k to 34k per 10 grams in single day. No identity proof required if your purchase is below 50k/day. Black money turned white without any hassles!

Aditya
Title: ₹500 and ₹1000 Banknotes are No More Legal Tender
Post by: Bimat on November 09, 2016, 04:20:15 PM
You really think this is going to curb black money, those who have the means would have converted their currency into other valuable products long ago. This is a publicity stunt. Also what did the 1978 currency demonetisation, the 1000, 5000 and 10,000 do?

Absolutely agree! A wise person would never keep his/her black money in the form of cash. It may be in the form of gold/land/drugs but not cash. Only politicians may face problems as they have to keep huge stock of money as money distribution during polls is very common in India. Builders, businessmen etc. will safely escape.

Moreover, introduction of ₹2000 banknote and a redesigned ₹500 banknote makes the whole exercise a futile one.

Aditya
Title: ₹500 and ₹1000 Banknotes are No More Legal Tender
Post by: Bimat on November 09, 2016, 05:14:28 PM
As expected, a massive jugaad (as we say in India) has started.

Photo from Kolar, Karnataka: MLA and few politicians have given money to people in a meeting; 3 lacs (300k) per head as a loan.

Aditya
Title: Re: ₹500 and ₹1000 Banknotes are No More Legal Tender
Post by: Enlil on November 10, 2016, 02:33:38 AM

Moreover, introduction of ₹2000 banknote and a redesigned ₹500 banknote makes the whole exercise a futile one.

Aditya

Mainly because the corrupt people will ask for lower denominations now, the new 500 and 2000 rupees they will dispose of quickly.

And the poor have to suffer what they must.

http://www.bbc.com/news/world-asia-india-37921672
Title: Re: ₹500 and ₹1000 Banknotes are No More Legal Tender
Post by: dheer on November 10, 2016, 04:08:08 AM
Absolutely agree! A wise person would never keep his/her black money in the form of cash. It may be in the form of gold/land/drugs but not cash. Only politicians may face problems as they have to keep huge stock of money as money distribution during polls is very common in India. Builders, businessmen etc. will safely escape.

Moreover, introduction of ₹2000 banknote and a redesigned ₹500 banknote makes the whole exercise a futile one.

Aditya

They also keep in USD/EUR/GBP currencies.  >:D
It is risk mitigation technique apart from Swiss and other tax heavens.
Large players have way back mitigated the risk and have only nominal amount in INR in black money. But there are tons of small shops / small business / doctors / path labs / CA / Lawyers / etc, they all have tons of black money at homes.
Title: ₹500 and ₹1000 Banknotes are No More Legal Tender
Post by: Bimat on November 10, 2016, 06:06:49 AM
Petrol pump owners have discovered new way to make (more) black money: You pay them using old ₹1000 note and they will give you petrol of ₹700. ₹300 (which effectively is new black money generated) is their profit. ::)

Those who have unaccounted black money in ₹1000 notes are preferring to get petrol instead of just burning them or paying huge penalty to government.

Aditya
Title: Re: ₹500 and ₹1000 Banknotes are No More Legal Tender
Post by: dheer on November 10, 2016, 07:22:55 AM
Petrol pump owners have discovered new way to make (more) black money: You pay them using old ₹1000 note and they will give you petrol of ₹700. ₹300 (which effectively is new black money generated) is their profit. ::)

Those who have unaccounted black money in ₹1000 notes are preferring to get petrol instead of just burning them or paying huge penalty to government.

Aditya

The other trick employed is quite a few would give them Rs 100 notes. They keep it and sell them in market for Rs 1000 notes. Because they can legally deposit the OHD into banks upto the collection of the day.

There are other such means ... so every good or bad thing, there are opportunists who do make money. >:D
Title: ₹500 and ₹1000 Banknotes are No More Legal Tender
Post by: Bimat on November 10, 2016, 03:10:30 PM
This is tragic. Who will be held accountable for this?

Indian farmer commits suicide after banknotes of Rs500, Rs1000 banned

November 10, 2016   

NEW DELHI: A farmer in southern India committed suicide fearing she would be left penniless after the government's shock decision to withdraw high denomination notes from circulation, police said on Thursday.

Kandukuri Vinoda, 55, had a large amount of cash at her home in 1,000 and 500 rupee ($15, $7.50) notes and panicked that her savings had become worthless when she heard Prime Minister Narendra Modi's surprise announcement on Tuesday.

"The family told us she panicked after hearing about the note ban and hanged herself at her home," local police officer Raj, who only uses one name, told AFP.

Vinoda from Mahabubabad district, east of Hyderabad city, had sold some land last month and was paid around 5.5 million rupees ($82,500) for it in cash.

She used some of the money to pay for her husband's medical bills and planned to use the rest to buy a new plot of land, local media reported.

Many Indians living in rural areas keep large amounts of cash at home because of a lack of banks in remote areas and to avoid paying taxes.

The withdrawal of the notes is part of Modi's campaign against corruption and "black money", and the government has tried to reassure worried citizens that only tax dodgers will suffer under the move.

Police in northern Uttar Pradesh state said they were investigating reports that people were burning off sacks of notes to avoid declaring them and being landed with heavy penalities.

"We have sent the samples for forensic tests and asked bank authorities to authenticate these are currency notes," police chief of Bareilly district Joginder Singh told AFP.

Earlier this year, the government ran a four-month tax amnesty, which saw Indians declare nearly $10 billion in hidden wealth.

But the scheme ended last month and anyone now depositing large amounts of cash could face a bill of up to 200 per cent in back taxes.

Source: Gulf Today (http://gulftoday.ae/portal/f300f631-f6f0-4321-bcf5-f194374f3933.aspx)
Title: Re: ₹500 and ₹1000 Banknotes are No More Legal Tender
Post by: Jostein on November 11, 2016, 05:17:47 PM
The Spanish media has made a great coverage of the "shock" event. Here is the news given at the public television: http://www.rtve.es/noticias/20161110/colas-dos-horas-bancos-india-para-cambiar-billetes-ilegales-500-1000-rupias/1441080.shtml

 ;)
Title: Re: ₹500 and ₹1000 Banknotes are No More Legal Tender
Post by: dsuramou on November 14, 2016, 10:10:24 AM
I am looking for some advise here!

I have been collecting 500 & 1000 deno notes governor wise . With this announcement by the PM I am in a state of dilemma whether to hold back the collection or to surrender it for face value in the bank.  Post the cutoff of 31st Mar 2017, ideally these would not value any thing. Looking to hear views from people who are in the same stage.

Thanks & Regards

Title: ₹500 and ₹1000 Banknotes are No More Legal Tender
Post by: Bimat on November 14, 2016, 10:18:54 AM
I am looking for some advise here!

I have been collecting 500 & 1000 deno notes governor wise . With this announcement by the PM I am in a state of dilemma whether to hold back the collection or to surrender it for face value in the bank.  Post the cutoff of 31st Mar 2017, ideally these would not value any thing. Looking to hear views from people who are in the same stage.

Thanks & Regards

I'm told that you can exchange these notes for an indefinite period (which ideally should be the case), but the only thing is that only a few banks will accept them and you will have to additionally provide some sort of declaration along with the notes (like an affidavit). Can someone confirm this? (Preferably with some sort of evidence, like RBI notification)

Aditya
Title: Re: ₹500 and ₹1000 Banknotes are No More Legal Tender
Post by: dheer on November 14, 2016, 10:39:54 AM
I am looking for some advise here!

I have been collecting 500 & 1000 deno notes governor wise . With this announcement by the PM I am in a state of dilemma whether to hold back the collection or to surrender it for face value in the bank.  Post the cutoff of 31st Mar 2017, ideally these would not value any thing. Looking to hear views from people who are in the same stage.

Thanks & Regards

This is no different from, did you keep the older series of lower denominations and Rs 500 ... i.e. pre-gandhi series? These were also withdrawn last year. So if you have kept them, then logically you should also keep these.

If the question is you were collecting [Rs 500 and Rs 1000] for fun and at some point in time wanted to cash them out;  then I guess you should cash them out now.

Although one cannot predict things, most of Rs 500 / Rs 1000 will be available at discount or at face value for next few years. i.e. large horders not able to get rid of stuff, will dump it. However due to dynamics of distribution, we don't know what got retained and what got returned. So it may flare up some insets / years and make other cheap ...

After 5-10 years, everything will become antique and will have price. If inflation continues the way it is currently; these denominations will be worthless in 10-20 years and quite a few would be willing to collect ...
Title: Re: ₹500 and ₹1000 Banknotes are No More Legal Tender
Post by: dheer on November 14, 2016, 10:41:40 AM
I'm told that you can exchange these notes for an indefinite period (which ideally should be the case), but the only thing is that only a few banks will accept them and you will have to additionally provide some sort of declaration along with the notes (like an affidavit). Can someone confirm this? (Preferably with some sort of evidence, like RBI notification)

Aditya

Right now there is no notification, so 31-Mar-2017 is the date. However like you said, this would definitely get some extension. Whether this will be life long or few more months, we will have to wait and watch.
Title: Re: ₹500 and ₹1000 Banknotes are No More Legal Tender
Post by: dheer on November 14, 2016, 10:45:24 AM
As expected, a massive jugaad (as we say in India) has started.

Photo from Kolar, Karnataka: MLA and few politicians have given money to people in a meeting; 3 lacs (300k) per head as a loan.

Aditya

There was subsequent clarification, prima-facie this was done on Monday, well before the announcement. It is a common practise in rural area, the loans are given as cheques and then cheques are encashed in a public function.
Title: Re: ₹500 and ₹1000 Banknotes are No More Legal Tender
Post by: dsuramou on November 14, 2016, 11:45:14 AM
Right now there is no notification, so 31-Mar-2017 is the date. However like you said, this would definitely get some extension. Whether this will be life long or few more months, we will have to wait and watch.


Does any body has any contact of RBI so that we can seek more clarity on this ?

Thanks & Regards
Title: Re: ₹500 and ₹1000 Banknotes are No More Legal Tender
Post by: dheer on November 14, 2016, 01:04:54 PM

Does any body has any contact of RBI so that we can seek more clarity on this ?

Thanks & Regards

RBI is not going to tell any more now than what's already been formally said. Things are in flux and no one even in RBI can predict the future policy. It all depends on various factors. In times like this, its best wait for formal press release. Don't go by hear say.
Title: ₹500 and ₹1000 Banknotes are No More Legal Tender
Post by: Bimat on November 14, 2016, 03:17:44 PM
Here's a seven month old news (Dated April 08, 2016), in which SBI (India's largest public sector bank) chairman talks about 'abnormal increase in deposits' due to 'rumors of demonetization of ₹500 and ₹1000 banknotes'. Does anyone here still believe that this was a top secret until November 08, 2016? I certainly don't. ;)

Rs 500, Rs 1,000 note rumours, not polls, behind cash surge: SBI

By Mayur Shetty, TNN | Updated: Apr 08, 2016, 12.17 PM IST

MUMBAI: The State Bank of India has said that RBI governor Raghuram Rajan's contention that polls are driving the surge in cash in the hands of the public does not explain the current spike, which is higher than other election years. The bank has said in a report that it is rumours of demonetization of Rs 500 and Rs 1,000 notes that is possibly driving people to withdraw cash in order to deploy them in 'safe' assets.

"We have seen even bigger elections in earlier years but the increase in currency with the public has not been that high. This time it is hurting our deposit growth and, after a long time, our deposit growth is less than advances," said SBI chairman Arundhati Bhattacharya. She said the reason for the cash surge was still a mystery. Some have attributed it to the jewellers' strike, which is preventing cash deposits.

In the research report, SBI chief economist Soumya Kanti Ghosh said that the common perception is that FY17 being an election year, people are hoarding cash. "However, had this been true, even FY14 should have shown the similar trend. In fact, that year witnessed a decline. Also in FY12, when Punjab and Uttar Pradesh went to polls, currency in circulation actually witnessed a significant decline. Does this mean that elections in Punjab and Uttar Pradesh are relatively more transparent than say other states like Bihar (reason for the possible increase in currency in 2015)"?

The report adds that elections may be only a small reason, but the bigger factor could be the trend in demonetization. "There are suggestions in public domain and even analysis that are suggesting that higher denomination notes may be replaced. We believe as a result of that people may be using more of high-value currency to purchase safe haven assets," the report said.

Bhattacharya, however, did not have an opinion on demonetization and said that was something that was picked up by the research department from what is being talked about in the environment.

The report warns that if demonetization is being contemplated, a road map needs to be created. "It needs to be done in steps and be balanced with creation of necessary electronic and digital infrastructure in the country, coupled with creating awareness and financial literacy for ensuring that the man on the street is not put to undue hardship," the report said.Going into the advantages of demonetization, the report said that demonetizing Rs 500 and Rs 1,000 currency notes will bring a huge amount of the funds kept in these denominations into the banking channels and will facilitate a reduction in domestic black money transactions.

But this would also be a headache when it comes to logistics. "At the branch level, the cost of handling cash would zoom and there would be complete chaos as the funds kept in these denominations will be flushed into the banking channels," the report said. The report goes on to say that introduction of a Rs 5,000 note will also not solve the problem and would continue to result in ATMs running dry several times a day.

Source: Economic Times (http://economictimes.indiatimes.com/industry/banking/finance/banking/rs-500-rs-1000-note-rumours-not-polls-behind-cash-surge-sbi/articleshow/51739571.cms?from=mdrt&from=mdr)
Title: ₹500 and ₹1000 Banknotes are No More Legal Tender
Post by: Bimat on November 15, 2016, 06:00:22 AM
RBI is not going to tell any more now than what's already been formally said. Things are in flux and no one even in RBI can predict the future policy. It all depends on various factors. In times like this, its best wait for formal press release. Don't go by hear say.

I think RBI is legally bound to refund the full amount paid in old ₹500 or ₹1000 banknotes, irrespective of when they are returned, as each and every note mentions so ("I promise to pay the bearer the sum of [...] Rupees"). As long as a valid proof is being presented, this should be no problem.

Having said that, this is a complex legal issue and we may see intervention by court at some point of time. Interesting times ahead. ;)

Aditya
Title: ₹500 and ₹1000 Banknotes are No More Legal Tender
Post by: Bimat on November 16, 2016, 10:11:18 AM
30 tonnes of gold, worth around $1 billion, has been imported in last one week after ₹500 and ₹1000 notes were demonetized. It's assumed that large amount of black money has been used to buy gold!

Link (http://www.business-standard.com/article/markets/demonetisation-impact-1-billion-worth-of-gold-imported-so-far-since-nov-9-116111500555_1.html)

Aditya
Title: Re: ₹500 and ₹1000 Banknotes are No More Legal Tender
Post by: Figleaf on November 16, 2016, 10:19:45 AM
Reminds me of the story of two conservationists:

"Do you realise that somewhere, a woman gives birth to a baby every 4.3 seconds?"
"You are right. We have to find that woman and stop her!"

Stop that ship o'gold! :D

Peter
Title: Re: ₹500 and ₹1000 Banknotes are No More Legal Tender
Post by: Abhay on November 16, 2016, 11:36:34 AM
30 tonnes of gold, worth around $1 billion, has been imported in last one week after ₹500 and ₹1000 notes were demonetized. It's assumed that large amount of black money has been used to buy gold!

Link (http://www.business-standard.com/article/markets/demonetisation-impact-1-billion-worth-of-gold-imported-so-far-since-nov-9-116111500555_1.html)

Aditya

This is not correct. The fact is that all the Gold that has been purchased after 8th Nov, 2016, is the Gold which was lying as Closing stock as on 8th Nov, 2016 with the Bullion Dealers/Jewellers.

This is simple to explain. As per the Current demonetization scheme, all the Currency notes of 500/1000 became illegal at 12:00 Midnight on 8-9 Nov. So, the sale of the Gold was shown in the earlier dates, and thus, the sales made upto 8th Nov, with the old currency notes, will be considered legal.

This is a route which is being adopted by all the other trades also, for channelizing the old currency notes  into the banking system.

Abhay 
Title: ₹500 and ₹1000 Banknotes are No More Legal Tender
Post by: Bimat on November 16, 2016, 11:49:20 AM
This is not correct. The fact is that all the Gold that has been purchased after 8th Nov, 2016, is the Gold which was lying as Closing stock as on 8th Nov, 2016 with the Bullion Dealers/Jewellers.

This is simple to explain. As per the Current demonetization scheme, all the Currency notes of 500/1000 became illegal at 12:00 Midnight on 8-9 Nov. So, the sale of the Gold was shown in the earlier dates, and thus, the sales made upto 8th Nov, with the old currency notes, will be considered legal.

This is a route which is being adopted by all the other trades also, for channelizing the old currency notes  into the banking system.

As the article mentions, many gold traders are giving back dated bills to those who want to buy gold using their black money. So it is very much possible that they are stocking up gold entirely for black money hoarders...

But what will these traders do with the commission (in the range of ₹10,000-₹20,000 per 10 grams) which they have gathered? It's again black money in old notes, right? ??? A Delhi based gold trader sold gold for ₹41,000 per 10 grams right after PM made his speech, but bill showed ₹31,000. What exactly is their strategy?

Aditya
Title: Re: ₹500 and ₹1000 Banknotes are No More Legal Tender
Post by: dheer on November 16, 2016, 11:52:46 AM
The same link shows "The country’s import of the yellow metal had stood at about $3.5 billion in October, according to GFMS Thomson Reuters estimates."

So compared to 3.5 billion for Oct, around 1.9 billion so far ... not to far off.
Title: Re: ₹500 and ₹1000 Banknotes are No More Legal Tender
Post by: dheer on November 16, 2016, 11:54:47 AM
As the article mentions, many gold traders are giving back dated bills to those who want to buy gold using their black money. So it is very much possible that they are stocking up gold entirely for black money hoarders...

But what will these traders do with the commission (in the range of ₹10,000-₹20,000 per 10 grams) which they have gathered? It's again black money in old notes, right? ??? A Delhi based gold trader sold gold for ₹41,000 per 10 grams right after PM made his speech, but bill showed ₹31,000. What exactly is their strategy?

Aditya

I guess most of the Jewellary there is no problem at all. They will just show large amount as making charges. Even after paying VAT / Taxes, they still make handsome profit.

On bullion bars / coins, not sure if there is a regulation that they have to sell at a specific price. If there is no regulation, they can sell at whatever price and invoice it for that amount, pay taxes and make money.
Title: ₹500 and ₹1000 Banknotes are No More Legal Tender
Post by: Bimat on November 16, 2016, 02:52:29 PM
Interesting news from North East:

Assam: Bhutan currency used as legal tender due to cash crunch

GUWAHATI: With the unavailability of Indian valid currency notes in adequate numbers, Bhutanese currency is being reportedly used as legal tender in parts of Assam bordering the Himalayan country.

Local television reports showed areas near to the Bhutan border in Kokrajhar district of the state where Bhutanese currency is being used for transaction.

While Bhutan currency is used in normal times also, its use is very limited and mostly confined for dealings across the border. But local people told television channels that they are now being compelled to use Bhutanese currency, exchanged against de-valued Indian high denomination notes of Rs 500 and Rs 1000.

An Indian note of Rs 500 is exchanged for Rs 400 worth of Bhutanese currency, while a Bhutanese Rs 500 note is held for its face value. The situation was the reverse prior to the demonetization move, when Indian Rs 500 fetched as much and the Bhutanese Rs 500 was taken for value of Rs 400.

Local people while speaking to newsmen said the nearest banks and ATMs are located 50-60 km away through bad roads and there is no surety of getting notes exchanged even if one visits the branches and stands in long queues. ” We are being forced to use Bhutanese currency in these parts. If the government could send mobile money vending machines, it would help us immensely,” the people pleaded before the television cameras.

Meanwhile, there was hardly any respite for the common man as serpentine queues in front of banks and ATMs continued throughout the state. The bank authorities said the situation is expected to improve as more ATMs are being recalibrated to dispense smaller denomination notes and new Rs 500 notes are also arriving.

Source: The North East Today (http://thenortheasttoday.com/assam-bhutan-currency-used-as-legal-tender-due-to-cash-crunch/)
Title: Re: ₹500 and ₹1000 Banknotes are No More Legal Tender
Post by: Enlil on November 17, 2016, 01:16:06 AM
Sounds like this is turning into a disaster.
Title: ₹500 and ₹1000 Banknotes are No More Legal Tender
Post by: Bimat on November 17, 2016, 07:05:19 AM
Sounds like this is turning into a disaster.

Over 40 people have died due to demonetization (heart attack due to standing in queue for a long time, farmer suicides as a result of cash crunch, private hospitals refusing treatment etc). ::)

A person has filed a case against PM and RBI Governor in the court saying that it's his basic right to withdraw whatever amount he wants from his account and government can not put any restrictions on it.

They are changing cash withdrawal/exchange rules everyday and creating confusion (new rules have just been announced). They are now putting indelible blue ink on the finger (as it's done duing elections) when you exchange old notes for new notes at bank counter so that same person doesn't exchange money from different banks. What a shocker!

Yesterday, government told parliament that it was RBI's decision and not PM's. It seems that RBI governor will soon be made a scapegoat. He hasn't faced media/press even once after the decision was announced.

Aditya
Title: Re: ₹500 and ₹1000 Banknotes are No More Legal Tender
Post by: dheer on November 17, 2016, 08:48:12 AM
Over 40 people have died due to demonetization (heart attack due to standing in queue for a long time, farmer suicides as a result of cash crunch, private hospitals refusing treatment etc). ::)


The number look exaggerated. Even a single death is sad. In today's hyper media, it is difficult to find out what is true and what is twisted facts. In one of the case of infant death; the investigations have revealed that the birth was at home and when taken the doctor, she advised them to immediately take the newborn to neonetal center in Sion; this was delayed by parents. The other where a person died outside HSBC Bank, the clarification from HSBC was carried in Corrigendum HSBC does not have any ATM or Branch in that area.

Distinguishing facts from fiction is becoming more difficult  :)
Title: ₹500 and ₹1000 Banknotes are No More Legal Tender
Post by: Bimat on November 17, 2016, 09:13:11 AM
Reminds me of the story of two conservationists:

"Do you realise that somewhere, a woman gives birth to a baby every 4.3 seconds?"
"You are right. We have to find that woman and stop her!"

Stop that ship o'gold! :D

Reminds me of an American major, who said "We had to destroy this village in order to save it" during Vietnam war. ;)

(Applicable to Indian government here)

Aditya
Title: ₹500 and ₹1000 Banknotes are No More Legal Tender
Post by: Bimat on November 17, 2016, 09:15:42 AM
Some unique methods of queuing have been discovered. Link in Marathi, but the photos tell a story. ;)

Link (http://www.loksatta.com/trending-news/unique-queue-seen-out-of-many-banks-1341260/)

Aditya
Title: ₹500 and ₹1000 Banknotes are No More Legal Tender
Post by: Bimat on November 19, 2016, 03:14:29 PM
Banks recirculate soiled banknotes by spraying perfumes, insecticide

IANS, New Delhi |  Updated: Nov 19, 2016 17:37 IST

Fuelled by an unprecedented cash crunch after the government spiked high-value currency notes, some banks are receiving soiled, smelly Rs 100 notes for recirculation.

Many customers in Delhi complained to IANS that they received mouldy notes, some of which smelt ‘very bad’.

A bank manager, who asked not to be named, told IANS, “The RBI is sending old 100 rupee notes stored for years but not destroyed, These notes smell. We are spraying them with perfumes and insecticides before disbursing them.”

The manager said Rs 100 notes worth millions of rupees have been recirculated to narrow down the huge demand-supply gap in cash after the November 8 demonetisation of 500 and 1,000 rupee notes -- which accounted for 86% of the currency in circulation by value.

Usually, such soiled notes are returned to banks by the customers and they finally end up in RBI offices where they are shredded and ferried to dumping sites.

The finance ministry and the RBI have repeatedly insisted after demonetisation that there is sufficient number of new Rs 2,000 and Rs 500 notes to replace the old notes.

But long queues outside banks and ATMs continued on the 11th day since the government declared that two high-value banknotes would no longer be legal tender.

Some attribute this crunch to logistics - it will take time to get the new notes to bank branches across the country.

Others say it is related to printing capacity - based on capacity of four currency presses in the country the demand-supply mismatch will take anywhere between six and nine months to bridge.

Source: Hindustan Times (http://www.hindustantimes.com/india-news/banks-recirculate-soiled-banknotes-by-spraying-perfumes-insecticide/story-tlDj7jQJYgxhsYsfIOUQdN.html)
Title: ₹500 and ₹1000 Banknotes are No More Legal Tender
Post by: Bimat on November 24, 2016, 04:29:42 PM
I want to meet the idiots who are taking such decisions. ₹5000 per week for a foreign tourists? And an entry in passport for that?!? Do these people even realise what damage they are doing to the tourism industry? We all knew that there's a shortage of new notes, but this is new low!!!

Aditya
Title: Re: ₹500 and ₹1000 Banknotes are No More Legal Tender
Post by: Enlil on November 24, 2016, 10:26:04 PM
I was suppose to go to a wedding in February in Punjab. Now I do not think so.
Title: Re: ₹500 and ₹1000 Banknotes are No More Legal Tender
Post by: quaziright on November 24, 2016, 11:03:07 PM
My friend who is in India currently got me some of the old banknotes and this new one. However he's suggested that I forget ever coming to India for a vacation and go to Sri Lanka instead. Apparently, its got much better hygiene standards, people are more honest and tourist friendly, and the air is much cleaner. This whole démonétisation thing doesn't give me a good impression of a place to visit, especially now that when I think about it, the Maldives is probably more easily accessible from Sri Lanka. I'll probably take his advice. Though I may still see the country if it is ever a stop over en route elsewhere., but probably won't make it a destination
Title: Re: ₹500 and ₹1000 Banknotes are No More Legal Tender
Post by: Enlil on November 25, 2016, 12:35:27 AM
Oh so you can not exchange them after 24 November.
http://timesofindia.indiatimes.com/india/Demonetisation-tightens-No-more-exchange-of-Rs-500-and-Rs-1000-notes-Centre-announces/articleshow/55603482.cms
Title: ₹500 and ₹1000 Banknotes are No More Legal Tender
Post by: Bimat on November 25, 2016, 05:55:48 AM
Oh so you can not exchange them after 24 November.
http://timesofindia.indiatimes.com/india/Demonetisation-tightens-No-more-exchange-of-Rs-500-and-Rs-1000-notes-Centre-announces/articleshow/55603482.cms

That's correct. On November 8, PM had said that people can exchange their old notes for new ones with a limit of 4k per head till November 24, after which the limit will be increased. This exercise was to be carried out till December 30. Subsequent RBI notification also said the same. A couple of days later, RBI clarified that the limit of 4k per person is not 4k per person per day, but only once till December 30. All these notifications are in public domain.

What has been decided yesterday is a complete U-turn by the government. ::) Now you MUST deposit the old notes in your bank account and withdraw money from ATM (with a limit of 2.5k per day/24k per week max). The problem is that most of the ATMs are still running dry. I was at a busy railway station in Mumbai on Wednesday where there were 10 ATMs and only one of them had cash, with long queues outside it. Now imagine the situation in rural areas!

Bank employees' association has already said that it will take at least 6 months to restore all the cash flow. They have also claimed that at least 11 bank employees have died due to immense pressure of the work and they are demanding resignation of RBI governor for all this mismanagement...

Aditya
Title: Re: ₹500 and ₹1000 Banknotes are No More Legal Tender
Post by: dheer on November 29, 2016, 09:48:08 AM
Close to 60% of the OHD has been received till date. With 4 more weeks to go, it looks like substantial amount of OHD will get recovered at Banks.

This means India did not have any Black Money, or the it was conveniently exchanged to new currency. Goes to show how creative people can be and how ineffective any medicine can become.
Title: ₹500 and ₹1000 Banknotes are No More Legal Tender
Post by: Bimat on November 29, 2016, 10:12:04 AM
Close to 60% of the OHD has been received till date. With 4 more weeks to go, it looks like substantial amount of OHD will get recovered at Banks.

This means India did not have any Black Money, or the it was conveniently exchanged to new currency. Goes to show how creative people can be and how ineffective any medicine can become.

First week of demonetization: Aim was to curb black money.

Second week of demonetization: Aim was to prevent fake banknotes; ready to be sent to India on India-Pakistan border.

Third week of demonetization: Aim is to make India a cashless (or less cash) society.

Next week: ?

 :D ;)

Aditya
Title: ₹500 and ₹1000 Banknotes are No More Legal Tender
Post by: Bimat on November 29, 2016, 10:17:07 AM
By the way, when the old ₹500 banknotes were demonetized, there were around 1600 crore (16,000 million) ₹500 banknotes in circulation (white).

As on today, only one crore (10 million) new ₹500 banknotes are ready for dispatch. Tells you about the problems we are going to have in next few months. ::)

₹2000 banknotes are available in good numbers but those are effectively useless, as nobody is willing to accept them. People just refuse to accept them most of the times. ₹100 notes (and new ₹500 notes if available) are now being hoarded in large numbers. This week is going to be crucial, as salary will be credited today/tomorrow and people will again rush to ATMs/banks to withdraw money for monthly expenses. If the demand is not met (which looks most likely, looking at the situation), then there's a problem...

Aditya
Title: ₹500 and ₹1000 Banknotes are No More Legal Tender
Post by: Bimat on November 29, 2016, 10:51:59 AM
According to a latest report (https://www.thequint.com/currency-ban/2016/11/28/new-500-note-printing-halted-will-shift-to-rbi-mysore-press-urjit-patel-governor-narendra-modi-1000-demonetisation) in The Quint, printing of new ₹500 notes has been halted in Nasik and Devas press. The operation will be shifted to Mysuru press.

Aditya
Title: ₹500 and ₹1000 Banknotes are No More Legal Tender
Post by: Bimat on November 29, 2016, 11:09:37 AM
RBI has come up with this brilliant (!) idea:

To encourage people to deposit valid currency notes in banks, RBI on Monday said bank customers would be able to withdraw deposits made in current legal tender notes beyond the current limits, a move aimed at increasing currency circulation in system.

For example, if someone deposits valid legal tenders (Rs 2,000, Rs 500, Rs 100, Rs 50, Rs 20, Rs 10, Rs 5) of Rs 4,000, the withdrawal limit for that person would rise by Rs 4,000 over and above weekly withdrawal limit of Rs 24,000.


ATM Withdrawal limit of 2.5k per day stays as it is.

Who the hell is taking such idiotic decisions? Does it make any sense? RBI governor must be sacked!

Aditya
Title: ₹500 and ₹1000 Banknotes are No More Legal Tender
Post by: Bimat on November 29, 2016, 04:30:08 PM
Latest news is that government/RBI have stopped printing ₹2000 banknotes. All the presses have been told to print ₹500 and lower denominations. Printing of ₹2000 notes will start again when there's an adequate supply of ₹500 notes, which means no new ₹2000 notes for next 4-5 months...

Aditya
Title: Re: ₹500 and ₹1000 Banknotes are No More Legal Tender
Post by: quaziright on November 29, 2016, 09:55:15 PM
....
Third week of demonetization: Aim is to make India a cashless (or less cash) society.

Next week: ?

 :D ;)

Aditya

Looks like the indian govt is giving sweden a run for its money in the race to the bottom...a cashless society. Its been popping up on the news over here and I can't but be amused at how some apps are going to solve without any existing ground work. As far as I know, internet connectivity is spotty in most areas and even in urban areas its apparently very slow. I can't get a decent skype audio conversation with my friend in India, let along think of face time. Even still, I haven't heard of rioting in the streets just yet, so it must be that Indians are really fed up notwithstanding such shoddy planning
Title: Re: ₹500 and ₹1000 Banknotes are No More Legal Tender
Post by: dheer on November 30, 2016, 04:29:18 AM
RBI has come up with this brilliant (!) idea:

To encourage people to deposit valid currency notes in banks, RBI on Monday said bank customers would be able to withdraw deposits made in current legal tender notes beyond the current limits, a move aimed at increasing currency circulation in system.

For example, if someone deposits valid legal tenders (Rs 2,000, Rs 500, Rs 100, Rs 50, Rs 20, Rs 10, Rs 5) of Rs 4,000, the withdrawal limit for that person would rise by Rs 4,000 over and above weekly withdrawal limit of Rs 24,000.


ATM Withdrawal limit of 2.5k per day stays as it is.

Who the hell is taking such idiotic decisions? Does it make any sense? RBI governor must be sacked!

Aditya

This is more for business community, generally quite a few deposit cash and few days / weeks later withdraw. However with the limit on withdrawals, the deposits have taken a hit as people are afraid that once deposited they will be limited on withdrawals. So quite a bit of new cash is staying out of bank and is not rotating like it was earlier. This move should ease that out.
Title: Re: ₹500 and ₹1000 Banknotes are No More Legal Tender
Post by: dheer on November 30, 2016, 04:31:40 AM
Looks like the indian govt is giving sweden a run for its money in the race to the bottom...a cashless society. Its been popping up on the news over here and I can't but be amused at how some apps are going to solve without any existing ground work. As far as I know, internet connectivity is spotty in most areas and even in urban areas its apparently very slow. I can't get a decent skype audio conversation with my friend in India, let along think of face time. Even still, I haven't heard of rioting in the streets just yet, so it must be that Indians are really fed up notwithstanding such shoddy planning

Internet connectivity is spotty, however phone connectivity has drastically improved. Thus operating a POS even in remote locations is quite easy. Some of the apps on smart phones take very less bandwidth and can be used in rural areas as well.

If recent elections to Municipal councils are a measure, then vast majority of people are in favour of the move.
Title: ₹500 and ₹1000 Banknotes are No More Legal Tender
Post by: Bimat on November 30, 2016, 04:39:29 AM
If recent elections to Municipal councils are a measure, then vast majority of people are in favour of the move.

Not quite so. Only 10% of total state population voted, plus if you compare the vote% BJP (the winning party) got with last 3 elections, it's the lowest. Number of seats doesn't automatically imply that people are happy with it. ;) (Also, state CM campaigned for it, which is unusual). Results of by-poll in Bengal went totally against BJP, so Mamta Banerjee can claim that people are unhappy with it... :D

By the way, the earlier 200% penalty on undeclared income has been withdrawn. According to the new law, only 50% penalty on undeclared income will be charged. It was introduced in the parliament yesterday.

This Friday, Supreme Court will be hearing the case again. The crucial point is going to be on what basis RBI has not allowed people to withdraw their OWN money from their OWN accounts. There's no rule/law which can enforce such restrictions, so in case SC orders government/RBI to lift the withdrawal limits completely, we might see more chaos outside banks and ATMs.

Aditya

Side Note: Most of the ATMs in my city are still running dry. Absolutely no money.
Title: Re: ₹500 and ₹1000 Banknotes are No More Legal Tender
Post by: Enlil on November 30, 2016, 06:43:30 AM
Close to 60% of the OHD has been received till date. With 4 more weeks to go, it looks like substantial amount of OHD will get recovered at Banks.

This means India did not have any Black Money, or the it was conveniently exchanged to new currency. Goes to show how creative people can be and how ineffective any medicine can become.

Told you they were not stupid enough to keep it as currency. This is just a publicity stunt and the black market would not have been affected much.
Title: Re: ₹500 and ₹1000 Banknotes are No More Legal Tender
Post by: dheer on November 30, 2016, 07:29:16 AM

This Friday, Supreme Court will be hearing the case again. The crucial point is going to be on what basis RBI has not allowed people to withdraw their OWN money from their OWN accounts. There's no rule/law which can enforce such restrictions, so in case SC orders government/RBI to lift the withdrawal limits completely, we might see more chaos outside banks and ATMs.


I don't know if there is any specific law. But I think even without demonetization, RBI does have power to regulate things, if it fears there will be a run on money. I think in past there was something similar where ICICI Bank had run on money, or tons of co-operative banks that are placed under administration where withdrawals are restricted to enable the said banks function smoothly.

Agreed the scale is very much different with demonetization. But RBI can get all vague clauses / powers to justify such action. There maybe very little Supreme Court can do about it.
Title: ₹500 and ₹1000 Banknotes are No More Legal Tender
Post by: Bimat on November 30, 2016, 08:46:11 AM
This has to be joke of the year!

Aditya
Title: Re: ₹500 and ₹1000 Banknotes are No More Legal Tender
Post by: dheer on November 30, 2016, 09:02:59 AM
So as per point 2;

If there was a wedding and the poor father withdrew in cash [because Marriages are not just made in heaven, they are also made in cash  ;)] all his life savings, say Rs 5 lacs around 1st week of November. His balance now is near to zero.

He has deposited the worthless notes back on say 10th Nov. He still can't withdraw Rs 2.5 lacs !!! as this balance before 8 Nov will be close to zero. :(
Title: Re: ₹500 and ₹1000 Banknotes are No More Legal Tender
Post by: dheer on November 30, 2016, 09:06:25 AM
In this entire scheme of things, there are quite a few small time vendors who have made it big; because they were customer focused and adapted to change.

There is a small time tea/pan shop round the corner in my area. There were 4 competing shops. On 10th Nov, the owner started accepting paytm. He quickly managed to get a card swipe machine, he also got hold of Rs 100 notes, few bundles. Result is he is making 5 times the turn over and the other shops have almost closed out. 8)
Title: ₹500 and ₹1000 Banknotes are No More Legal Tender
Post by: Bimat on November 30, 2016, 09:29:27 AM
So as per point 2;

If there was a wedding and the poor father withdrew in cash [because Marriages are not just made in heaven, they are also made in cash  ;)] all his life savings, say Rs 5 lacs around 1st week of November. His balance now is near to zero.

He has deposited the worthless notes back on say 10th Nov. He still can't withdraw Rs 2.5 lacs !!! as this balance before 8 Nov will be close to zero. :(

Apart from what you wrote, they are not even allowed to prematurely liquidate the FD/RD they have made in the bank and take the money out for wedding. Only the balance in your savings account as on November 8 will count, nothing else! >:( This is harassment by RBI. I hope SC points this out.

And if you got to any bank and ask them to give you 24k (which is allowed), not a single bank will give you that amount. They are giving 4k max. Since it's a salary week, they have now reduced it to 2k per person.

Aditya
Title: Re: ₹500 and ₹1000 Banknotes are No More Legal Tender
Post by: EWC on November 30, 2016, 10:31:01 AM
First week of demonetization: Aim was to curb black money.

Second week of demonetization: Aim was to prevent fake banknotes; ready to be sent to India on India-Pakistan border.

Third week of demonetization: Aim is to make India a cashless (or less cash) society.

Next week: ?

I judge a lot of this stuff tracks back to Keynes, who believed the Ancient Egyptians got along perfectly well without coins.

From that premise - logic perhaps suggests - conscription into a pyramid building scheme?

Rob
Title: ₹500 and ₹1000 Banknotes are No More Legal Tender
Post by: Bimat on December 01, 2016, 03:33:25 PM
It started with couple of days, then 10 days and then 50 days. Now finance minister says 'only' one or two QUARTERS. That's SIX months. Does he even know how long a period of six months is for a poor? Or perhaps he means that people will just get used to not having any cash and everyone will stop complaining. That seems to be the strategy?

Just proves how incompetent FM/RBI governor are! Playing with innocent lives! >:(

People's problems only for one or two quarters, says Arun Jaitley

IANS    |  Bhubaneshwar
December 1, 2016   Last Updated at 16:25 IST

Union Finance minister Arun Jaitley on Thursday said the hardships faced by the people after the November 8 demonetisation will last only for one or two quarters but its effect on the Indian economy will be long-term.

"The effect of demonetisation will remain for one or two quarters, but its effect on the economy will be seen in the long term," Jaitley said on the sidelines of the 'Made in Odisha Conclave' here.

The minister thanked Odisha Chief Minister Naveen Patnaik for backing the Centre on demonetisation and the GST (Goods and Services Tax).

Hailing Odisha's high growth rate this year, Jaitley said: "If Odisha's state gross domestic product grows faster than the national GDP, it will help in improving the national GDP."

Odisha registered a State GDP of 9.2%, 2% higher than the national GDP.

Source: Business Standard (http://www.business-standard.com/article/economy-policy/people-s-problems-only-for-one-or-two-quarters-says-arun-jaitley-116120100783_1.html)
Title: ₹500 and ₹1000 Banknotes are No More Legal Tender
Post by: Bimat on December 02, 2016, 07:37:46 AM
Rest of the discussion has been moved to Living Room.

Aditya
Title: ₹500 and ₹1000 Banknotes are No More Legal Tender
Post by: Bimat on December 08, 2016, 05:14:25 AM
No Windfall For Government From Undeposited Old Notes, Says RBI Chief Urjit Patel

Written by Surajit Dasgupta | Last Updated: December 07, 2016 20:00 (IST)

Urjit Patel, Reserve Bank of India Governor, on Wednesday debunked speculation that the central bank will pay a big dividend to the government in terms of old notes that are not deposited into the banking system.

The speculation has been based on the premise that the RBI's liability from notes that do not return to the banking system will be extinguished. And that it could transfer the benefit from that to the government.

Dr Patel however said today that even if the banned notes that do not return are taken out of circulation, "they still carry the liability of the RBI as long as only the legal tender characteristic status is withdrawn."

"Actually, the withdrawal of legal tender characteristic status does not extinguish any of the RBI's balance sheet and therefore there is no implication on the balance sheet as of now. So that question does not arise as of now - not just by withdrawal of legal tender character (of notes)," Dr Patel said at a press conference after RBI kept the repo rate or key lending rate unchanged today.

Madan Sabnavis, chief economist at CARE Ratings, said this basically means that instead of the RBI printing new money in place of the currency not returned and transferring that amount to the government, the central bank could keep it as special reserve to meet a possible future liability. "The notes will be on the RBI balance sheet without the status of legal tender and more likely will reside in the reserves of the central bank," he said.

A deadline for depositing 500 and 1000 notes, banned by the government last month in an attempt to unearth black or untaxed money, ends on December 30.

The RBI today disclosed that banks have so far received roughly Rs 11.5 lakh crore in banned notes as deposits. When the government withdrew legal tender status last month from 500 and 1000 rupee notes, it removed 86 per cent or Rs 15.5 lakh crore of the currency in circulation.

The Economic Research Department of SBI in a note last week estimated that Rs 1.5 lakh crore of old notes might not be deposited in the banking system.

The RBI chief today said the decision to remove old Rs 500 and Rs 1,000 bank notes from the system was not taken in haste. There had to be a high level of secrecy surrounding this decision, he said.

Source: NDTV (http://profit.ndtv.com/news/economy/article-no-windfall-for-government-from-undeposited-old-notes-says-rbi-chief-urjit-patel-1635223?pfrom=home-lateststories)
Title: Re: ₹500 and ₹1000 Banknotes are No More Legal Tender
Post by: dheer on December 08, 2016, 06:44:04 AM
A deadline for depositing 500 and 1000 notes, banned by the government last month in an attempt to unearth black or untaxed money, ends on December 30.

The RBI today disclosed that banks have so far received roughly Rs 11.5 lakh crore in banned notes as deposits. When the government withdrew legal tender status last month from 500 and 1000 rupee notes, it removed 86 per cent or Rs 15.5 lakh crore of the currency in circulation.

The Economic Research Department of SBI in a note last week estimated that Rs 1.5 lakh crore of old notes might not be deposited in the banking system.

11.5 lakh crore and still 3 more weeks to go. All hell will break loose if we get near 14 lakh crore or strangely more than that  ;D

But its a positive to see that there are no plans by RBI to transfer [if any] gains to Govt. I think even DS Subba Rao had mentioned that it would be fool hardy of RBI to indulge in such step.
Title: ₹500 and ₹1000 Banknotes are No More Legal Tender
Post by: Bimat on December 08, 2016, 06:50:00 AM
One estimate is of ₹17 Lakh crores (I'm not kidding, it's an estimate by finance ministry officials). Whatever 'extra' money that is collected, is it in the form of counterfeit currency? If so, does that mean that RBI will take liability of counterfeit notes too?

Initially, it was expected that only ₹10-₹11 Lakh crore would be deposited. So this is indeed a rude shock for them. They are not even recovering the printing cost of new notes (~₹25,000 crores for ₹500 and ₹2000 notes only)!!!

Aditya
Title: Re: ₹500 and ₹1000 Banknotes are No More Legal Tender
Post by: dheer on December 08, 2016, 07:24:22 AM
One estimate is of ₹17 Lakh crores (I'm not kidding, it's an estimate by finance ministry officials). Whatever 'extra' money that is collected, is it in the form of counterfeit currency? If so, does that mean that RBI will take liability of counterfeit notes too?

Initially, it was expected that only ₹10-₹11 Lakh crore would be deposited. So this is indeed a rude shock for them. They are not even recovering the printing cost of new notes (~₹25,000 crores for ₹500 and ₹2000 notes only)!!!

Aditya

RBI technically can't take liability of such notes. In past this liability was with the merchant / holder of the note. However when it was found that quite a few fakes found their way into Banks Vaults and ATM's; RBI instructed that Banks take this liability.

Now in the rush to exchange the notes, they are all deposited into RBI currency chest. So indirectly it seems RBI has taken up the liability of fake notes.

If the number don't tally; I don't think fake notes would be in such a large proportion. It can't be in lakh corers ... it would be more in few thousand crores ...

The other possibility of mismatch is goof-up the RBI book-keeping; over the years they are clueless, poor / shoddy book-keeping.

It also means that all the black money got converted into white via multiple methods.
Title: ₹500 and ₹1000 Banknotes are No More Legal Tender
Post by: Bimat on December 08, 2016, 08:45:22 AM
To promote cashless transactions, government is now proposing that no service tax (currently 15%) will be charged for payments done using credit or debit card upto ₹2000.

I think this is a very risky move, as crooks will now find new ways to evade service tax. Make multiple bills of less than ₹2000, use different debt/credit cards to make these payments and so on. This will also help in generating more black money (Suppose my hotel bill is ₹2200, I ask hotel owner to make bill of ₹1900 and pay ₹1900 using card with no service charge and remaining ₹300 in cash. At the end, we both are happy! :D)

Aditya

Title: Re: ₹500 and ₹1000 Banknotes are No More Legal Tender
Post by: dheer on December 08, 2016, 08:59:12 AM
To promote cashless transactions, government is now proposing that no service tax (currently 15%) will be charged for payments done using credit or debit card upto ₹2000.

I think this is a very risky move, as crooks will now find new ways to evade service tax. Make multiple bills of less than ₹2000, use different debt/credit cards to make these payments and so on. This will also help in generating more black money (Suppose my hotel bill is ₹2200, I ask hotel owner to make bill of ₹1900 and pay ₹1900 using card with no service charge and remaining ₹300 in cash. At the end, we both are happy! :D)

Aditya

Service charge is only on the commission. Generally the commission on the cards is in the range of 2.5%. So this is 15% of 2.5%; i.e. around 0.375% on transaction value.
The main issue of low acceptance of the Credit / Debit Cards is the 2.5% that merchant looses. Plus cash gives him ability not to report this to Govt and hence report lower income and pay less VAT/Sales Tax/Corporate Income Tax etc.

To me this is cosmetic, doesn't really change much.

The Government is trying to promote digital payments that get recorded. So in your example earlier the Hotel would not pay any tax on Rs 2200. This would not show up in his books. This it would be Black Money. Now when you swipe for Rs 1900. This would get recorded as income and leave a trail if there is no corresponding tax in this corporate returns.
Title: ₹500 and ₹1000 Banknotes are No More Legal Tender
Post by: Bimat on December 08, 2016, 09:03:07 AM
Service charge is only on the commission. Generally the commission on the cards is in the range of 2.5%. So this is 15% of 2.5%; i.e. around 0.375% on transaction value.
The main issue of low acceptance of the Credit / Debit Cards is the 2.5% that merchant looses. Plus cash gives him ability not to report this to Govt and hence report lower income and pay less VAT/Sales Tax/Corporate Income Tax etc.

To me this is cosmetic, doesn't really change much.

The Government is trying to promote digital payments that get recorded. So in your example earlier the Hotel would not pay any tax on Rs 2200. This would not show up in his books. This it would be Black Money. Now when you swipe for Rs 1900. This would get recorded as income and leave a trail if there is no corresponding tax in this corporate returns.

That was my understanding too, but all the news reports so far say 'no 15% service tax' and not 'no commission'. That 2% commission is anyway charged only if the amount is high and depends on the seller.

See report (http://www.ndtv.com/india-news/no-service-tax-on-debit-or-credit-card-transactions-upto-rs-2-000-1635440?pfrom=home-lateststories).

Aditya

Edit: Some news papers are reporting that no 2% commission on use of debit/credit card upto ₹2000 which is as per our understanding. Where do find official press release regarding this by the government?
Title: ₹500 and ₹1000 Banknotes are No More Legal Tender
Post by: Bimat on December 08, 2016, 10:50:51 AM
RBI technically can't take liability of such notes. In past this liability was with the merchant / holder of the note. However when it was found that quite a few fakes found their way into Banks Vaults and ATM's; RBI instructed that Banks take this liability.

Now in the rush to exchange the notes, they are all deposited into RBI currency chest. So indirectly it seems RBI has taken up the liability of fake notes.

If the number don't tally; I don't think fake notes would be in such a large proportion. It can't be in lakh corers ... it would be more in few thousand crores ...

The other possibility of mismatch is goof-up the RBI book-keeping; over the years they are clueless, poor / shoddy book-keeping.

It also means that all the black money got converted into white via multiple methods.

Government/RBI's estimate is that there's fake currency worth 400 crore rupees (4000 millions) in circulation. Compare that with our GDP of ~ 125 Lakh crores!

Aditya
Title: Re: ₹500 and ₹1000 Banknotes are No More Legal Tender
Post by: dheer on December 08, 2016, 01:12:55 PM
That was my understanding too, but all the news reports so far say 'no 15% service tax' and not 'no commission'. That 2% commission is anyway charged only if the amount is high and depends on the seller.

See report (http://www.ndtv.com/india-news/no-service-tax-on-debit-or-credit-card-transactions-upto-rs-2-000-1635440?pfrom=home-lateststories).

Aditya

Edit: Some news papers are reporting that no 2% commission on use of debit/credit card upto ₹2000 which is as per our understanding. Where do find official press release regarding this by the government?

Any time you swipe a card there is commission, 2.5% or 2% or whatever. This is what is agreed between the Merchant accepting the card and his bank. Most merchants factor this into the cost and hence do not charge you anything additional. i.e. You swipe 100, merchant only gets 98. Some merchants like Jewellery shops, petrol, etc will swipe 102 for 100 bill and pay merchant 100.

For a short period, PayTM, Card Companies Visa / Master etc to tide over short term had made announcement that they will reduce / waive these charges. This is temporary till Dec 30.

On the other hand the 15% service tax is more permanent in nature.
Title: ₹500 and ₹1000 Banknotes are No More Legal Tender
Post by: Bimat on December 10, 2016, 08:33:44 AM
Post note ban, old coins & notes’ business in tatters

10 December 2016, New Delhi, Zafar Abbas

Delhi’s Khari Bawli market might be famous for dry fruits and spices but a side look at the pavements would bring into your notice men sitting with medium height tables with a red tablecloth over it. They aren’t selling any fruits or spices but have small and large old coins scattered all over. They deal in old coins and tattered notes. The demonetisation has affected them badly.

Mahesh Jain, who runs this small business for 30 years now says: “Our business has been ruined. People will buy necessary food items first and no one will spend on old coin collection. Its been hard to make ends meet now. We dealt in old money and coins but demonetisation has ruined our business.”

At a walking distance from Jain sits Manoj who too is in the same business for several years now. He has his own sorrows to tell. “Business is down by 70 per cent. This decision has been heavy on us.

Earlier on a normal day, I used to make around Rs 500. Now, I hardly get Rs 100-200. At this age do you expect me to do some other business? That isn’t possible.”

They give you old coins for a nominal price of Rs 10 or 20 depending on the size of the coin and the year they were made in. Three of the customers who wished to change their tattered Rs 20 and 10 notes were turned away by these sellers.

When this reporter moved ahead, another man Naresh Jain narrated his ordeal. “We are not changing the tattered old notes, even Rs 10 and 20 notes are not changed now. There is uncertainty, what if the government decides to change these notes as well? So for now, we are too cautious. We have incurred heavy losses.”

As you take a turn from Khari Bawli towards Chandni Chowk, another old man with specs on the pavement will catch your attention. When asked how is the business going he said: “I come here these days to pass time. We are not accepting small tattered currency notes now. We are not having huge sum to invest. I have some other small things to sell and the old coins and notes’ business has flopped.”

Source: Millennium Post (http://millenniumpost.in/NewsContent.aspx?NID=346927#)
Title: Re: ₹500 and ₹1000 Banknotes are No More Legal Tender
Post by: Figleaf on December 10, 2016, 11:44:54 AM
The story sounds true. Since the amounts involved are very small, these people can be helped, but not by the government. Here is a method, based on the micro-credit idea. Let's call it a temporary sale.

Someone with a steady job proposes a small loan to one of these old men, secured by some of his coins. Say the loan is for Rs 2000 (€28). Pick presentable coins with a sales vale of about Rs 2000 and hand over the note. Make a contract in duplicate that says the loan ends in six months at the latest and the coins will be returned when the loan is paid. Interest is zero percent. Both parties sign the contract and you take a selfie with the dealer and the contract.

The risk is minimal. The amount is small, so you can lose Rs 2000 at most, minus whatever the proceeds of the coins. If you have a steady job, that should not be a big problem. These old men have nowhere to go, so they'll not be tempted to run. Experience with micro-loans repayment is pretty good. Meanwhile, you will have kept a coin dealer in business for at least 6 months. They get to eat, you get a friend and a place to go to for buying coins.

Peter
Title: ₹500 and ₹1000 Banknotes are No More Legal Tender
Post by: Bimat on December 17, 2016, 02:45:55 PM
Ads flashing in Marathi newspapers that old ₹500 and ₹1000 banknotes will be exchanged on commission basis. Home delivery also possible. Contact number is also given. Incredible India, truly! :o

Aditya
Title: ₹500 and ₹1000 Banknotes are No More Legal Tender
Post by: Bimat on December 19, 2016, 04:58:05 AM
If you had black money and if you paid a commission of 30-40% to an agent to make it white just after the decision of demonetization, then you have been fooled. Economic Times now reports (http://economictimes.indiatimes.com/news/politics-and-nation/now-get-interest-on-exchange-of-old-notes/articleshow/55949867.cms?from=mdr) that situation has completely reversed now and these agents are offering 6-8% interest on black money, with a lock-in period of 1 year or so. :o

While all this is very hard to digest for me atleast (I'm still trying to find out how can they provide interest on huge sums of black money), it does sound possible. An industrialist last week posted on Twitter that some people are buying old ₹1000 banknotes for a 5% premium. Didn't believe in him then, but since this report has appeared, I'm convinced that he wasn't kidding.

Irrespective of my (or anyone's) views regarding demonetization, this is a VERY bad news for RBI/other banks/government. Interest on black money means direct loss to the banks. Terrible.

Aditya
Title: ₹500 and ₹1000 Banknotes are No More Legal Tender
Post by: Bimat on December 19, 2016, 06:57:51 AM
I think RBI is legally bound to refund the full amount paid in old ₹500 or ₹1000 banknotes, irrespective of when they are returned, as each and every note mentions so ("I promise to pay the bearer the sum of [...] Rupees"). As long as a valid proof is being presented, this should be no problem.

Having said that, this is a complex legal issue and we may see intervention by court at some point of time. Interesting times ahead. ;)

Aditya

Sorry for quoting my own post ;), but I have been told that I'm indeed right regarding exchange of old notes at RBI for an indefinite period. In his own words: RBI can't escape legally from honor "promise to the bearer".

We shall see what RBI notifies as March 31, 2017 comes closer...

Aditya
Title: ₹500 and ₹1000 Banknotes are No More Legal Tender
Post by: Bimat on December 19, 2016, 10:28:09 AM
Latest rule by RBI: You can now deposit an amount over ₹5000 in old notes only once per account till December 30. Credit in such cases will be allowed only after questioning of the tenderer as to why couldn't he/she deposit the amount earlier. A proper record of all these questions shall be kept for audit purpose and an appropriate flag also should be raised in CBS...

https://rbi.org.in/Scripts/NotificationUser.aspx?ID=10784

Minimum government, maximum governance, anyone? On November 12, finance minister had said that there's no need to rush to the bank to deposit your old notes, you have enough time till December 30 to do so. And now this... ::)

Aditya
Title: Re: ₹500 and ₹1000 Banknotes are No More Legal Tender
Post by: dheer on December 19, 2016, 11:50:10 AM
No wonder when I went to deposit OHD today; the lady at the teller sent me to KYC. Surprisingly they didn't ask me any questions. Humm ... and lazy people like me who didn't queue up the Bank will have some answering to do  ;D
Title: Re: ₹500 and ₹1000 Banknotes are No More Legal Tender
Post by: dheer on December 19, 2016, 11:52:36 AM

Minimum government, maximum governance, anyone? On November 12, finance minister had said that there's no need to rush to the bank to deposit your old notes, you have enough time till December 30 to do so. And now this... ::)

Aditya
I guess the time is same till December 30. Earlier the RBI/finance minister has said that one can deposit the OHD multiple times [as many times as one wants]. Now the ruling is only one time. This is bound to create few flutters. However given that almost all the the OHD is back; does it really matter  ;)
Title: ₹500 and ₹1000 Banknotes are No More Legal Tender
Post by: Bimat on December 19, 2016, 12:07:59 PM
I guess the time is same till December 30. Earlier the RBI/finance minister has said that one can deposit the OHD multiple times [as many times as one wants]. Now the ruling is only one time. This is bound to create few flutters. However given that almost all the the OHD is back; does it really matter  ;)

It DOES matter. What PM/FM had said on/after November 8:

You can deposit upto 2.5 Lacs in your account. No questions asked. No tax charged. They didn't say you can deposit entire amount only once or multiple times. It was up to you to decide. I myself visited bank twice to deposit old notes.

The latest notification means that you will be QUESTIONED if your amount exceeds 5k. Yes, 5k! This is Banana Republic!

The restriction has been imposed because RBI now fears that more money than what they had 'put' into circulation will be deposited in the accounts by December 30th. If that happens, then it will give nightmares to RBI for many years to come. They somehow want people not to deposit the money in account.

By the way, according to some reports, government is also planning to impose restrictions on how much cash you can keep at home (Not confirmed yet). The recommendation was made by the SIT on black money, so very much possible in near future. Apart from how to implement it, this is the last mistake this government can do. People don't like unreasonable restrictions. This is dictatorial attitude. Get out of it!

Aditya
Title: Re: ₹500 and ₹1000 Banknotes are No More Legal Tender
Post by: dheer on December 19, 2016, 01:21:41 PM

The restriction has been imposed because RBI now fears that more money than what they had 'put' into circulation will be deposited in the accounts by December 30th. If that happens, then it will give nightmares to RBI for many years to come. They somehow want people not to deposit the money in account.

I guess quite likely. If the amount is more or even near to 14; it is bound to open Pandora's box.>:D
I think anything less than 12.5 / 13 and the Govt would be happy saying it met the objective.

By the way, according to some reports, government is also planning to impose restrictions on how much cash you can keep at home (Not confirmed yet). The recommendation was made by the SIT on black money, so very much possible in near future. Apart from how to implement it, this is the last mistake this government can do. People don't like unreasonable restrictions. This is dictatorial attitude. Get out of it!
I guess Govt needs to look at alternatives. The approach in my view is make it expensive. i.e. print very less of High Denomination notes ... very very less ... take a hit on cost and print more of Rs 100 as much as required ... even the 14 lacs crores. This way for normal people its not an issue ... but then very soon it may become cumbersome to carry this kind of cash ... yes it may give rise to hawala safe deposits, where you keep money and take a slip ... but then it grows in storage and safe keeping costs ... On the other hand stop lower denomination and move to coins ... So end the Rs 10 and Rs 20 notes and replace by as many coins as needed ... ofcourse fake Rs 10 coin can become more serious issue ...

This would make it expensive to carry tons of coins or notes in pockets for ordinary people and they would slowly move to digital ... if I don't have cash in pocket, petty corruption would reduce [I cant bribe the traffic police, etc] ... on the other hand it would become cumbersome for large scale corruption as carrying the quantity of notes becomes an issue.
Title: ₹500 and ₹1000 Banknotes are No More Legal Tender
Post by: Bimat on December 19, 2016, 04:45:38 PM
I guess quite likely. If the amount is more or even near to 14; it is bound to open Pandora's box.>:D
I think anything less than 12.5 / 13 and the Govt would be happy saying it met the objective.

As on today, over 14 Lakh crore have been deposited (According CNBC report, Attorney General informed SC that over 13 Lakh crore are back in banking system which is much higher than what government had expected. This was a week ago, and on an average, 20,000 crores are being deposited). 10 more days to go. No wonder RBI asked banks to recount the banknotes they have collected. RBI Governor must be having sleepless nights. Wohaa! :D

Aditya
Title: ₹500 and ₹1000 Banknotes are No More Legal Tender
Post by: Bimat on December 20, 2016, 11:08:14 AM
Latest rule by RBI: You can now deposit an amount over ₹5000 in old notes only once per account till December 30. Credit in such cases will be allowed only after questioning of the tenderer as to why couldn't he/she deposit the amount earlier. A proper record of all these questions shall be kept for audit purpose and an appropriate flag also should be raised in CBS...

https://rbi.org.in/Scripts/NotificationUser.aspx?ID=10784

Minimum government, maximum governance, anyone? On November 12, finance minister had said that there's no need to rush to the bank to deposit your old notes, you have enough time till December 30 to do so. And now this... ::)

Aditya

A new day, a new rule. ;D Government has withdrawn yesterday's decision to give written explanation for deposits over 5000 after much of criticism. A new notification likely in next couple of hours...

Amendment number 59 on day 42.

Aditya
Title: Re: ₹500 and ₹1000 Banknotes are No More Legal Tender
Post by: dheer on December 20, 2016, 12:53:46 PM
If you had black money and if you paid a commission of 30-40% to an agent to make it white just after the decision of demonetization, then you have been fooled. Economic Times now reports (http://economictimes.indiatimes.com/news/politics-and-nation/now-get-interest-on-exchange-of-old-notes/articleshow/55949867.cms?from=mdr) that situation has completely reversed now and these agents are offering 6-8% interest on black money, with a lock-in period of 1 year or so. :o

While all this is very hard to digest for me atleast (I'm still trying to find out how can they provide interest on huge sums of black money), it does sound possible. An industrialist last week posted on Twitter that some people are buying old ₹1000 banknotes for a 5% premium. Didn't believe in him then, but since this report has appeared, I'm convinced that he wasn't kidding.

Irrespective of my (or anyone's) views regarding demonetization, this is a VERY bad news for RBI/other banks/government. Interest on black money means direct loss to the banks. Terrible.

Aditya

India is strange land indeed ... amazed and disappointed at the same time. ???
Title: ₹500 and ₹1000 Banknotes are No More Legal Tender
Post by: Bimat on December 20, 2016, 03:49:28 PM
India is strange land indeed ... amazed and disappointed at the same time. ???

The story is not over yet, my dear friend! Conversations (SMSs, e-mails and may be more) of a person, who was a key part of demonetization team since beginning, have been leaked and making rounds among journalists etc. for quite some time now. Buzz in Lutyens is that this will be out in public domain soon and will cause major embarrassment for the government. It's said that whatever has been leaked is very explosive. We shall see! 8)

Subramanian Swamy, a senior leader of ruling party, couple of days ago tweeted that he too suspects that the decision of demonetization was leaked to some selected people well in advance and he'll go to court if government doesn't. Fun times ahead! :D

Aditya
Title: ₹500 and ₹1000 Banknotes are No More Legal Tender
Post by: Bimat on December 21, 2016, 04:11:06 AM
This is brilliant. Just brilliant.

Aditya
Title: ₹500 and ₹1000 Banknotes are No More Legal Tender
Post by: Bimat on December 21, 2016, 04:20:12 AM
RBI Adds to Demonetisation Confusion With its Answer to an RTI Query

Tushar Dhara | CNN-News18
First published: December 20, 2016, 4:17 PM IST | Updated: 15 hours ago

New Delhi: The Reserve Bank of India has added to the confusion swirling around the demonetisation numbers with its reply to Mumbai-based RTI activist Anil Galgali.

Anil Galgali asked the RBI a series of questions under the Right to Information Act. Among them was a query about the inventory of new 2000 and 500 rupee notes with the RBI on 8 November, 2016, the day Demonetisation was announced.

The RBI’s answer is that it had Rs 4.94 lakh crore worth of 2000 rupee notes as on that date and none of 500 rupee notes. This is where it gets interesting.

RBI deputy governor R. Gandhi on December 13 said that “The banks have since the start of the programme on November 10, 2016 till December 10, 2016 issued notes valued at Rs 4.61 lakh crore to the public over their counters and through their ATMs.”

The value of notes issued to the public in the month since demonetisation is lower than the stock of 2000 rupee notes that the RBI says it had on the day the move was announced by the Prime Minister.

Does this mean that the new currency notes that have been printed since then haven’t been introduced into the banking system?

Mohan Guruswamy, the head of the Centre for Policy Alternatives said that the remonetisation is not going according to plan because the government and the RBI initially tried to introduce 2000 rupee notes without printing 500 rupee notes. But when they discovered that people couldn’t break the 2000 rupee notes in the market, they changed course and gave priority to distributing 500 rupee notes.

But the matter gets more curious.

The RBI reply contains another number that doesn’t seem to fit in. In reply to a question about the value of “old denomination” 500 and 1000 rupee notes on November 8, the RBI’s reply is thus: The value of 500 rupee notes was Rs 11.38 lakh crore while 1000 rupee notes was Rs 9.13 lakh crore, giving a total value of Rs. 20.5 lakh crore.

But the government has said that the total value of demonetised currency is Rs. 15 lakh crore. An affidavit filed in the Supreme Court by the Central Government states that:

“As per the Weekly Statistical Supplement, the notes in circulation as on November 4, 2016 stood at Rs. 17,74,187 crores. Roughly 86% of this value i.e. Rs 15,25,800 crore comprise of notes of denominations Rs 500 and Rs 1000.”

There is a discrepancy of Rs 5.25 lakh crore in the figures given by the RBI and furnished by the government.

Efforts by News18 to speak to officials in the RBI proved futile. The Public Information Officer of the RBI, P. Vijay Kumar, refused to speak to News18 despite repeated telephone calls and requests. Reserve Bank Spokesperson Alpana Killawala was also unreachable.

Sources with knowledge of the matter said that the discrepancy makes sense if the Rs 5.25 lakh crore was money lying in the RBI’s currency chests. When they are in the chest they are just pieces of paper with no intrinsic value till they are issued to the public, at which point they become liabilities. The RBI also doesn’t need to mention this amount in its annual reports or bulletins.

Source: News18 (http://www.news18.com/news/business/rbi-adds-to-demonetisation-confusion-with-its-answer-to-an-rti-query-1325385.html)
Title: Re: ₹500 and ₹1000 Banknotes are No More Legal Tender
Post by: dheer on December 21, 2016, 09:14:33 AM
I am sure there is a logical explanation. Big numbers are hard to reconcile and our record keeping is definitely not very great. In past there was similar discrepancy between the notes that were printed by printing press and the notes that RBI currency chest had.
Title: ₹500 and ₹1000 Banknotes are No More Legal Tender
Post by: Bimat on December 21, 2016, 09:59:49 AM
Quote
Sources with knowledge of the matter said that the discrepancy makes sense if the Rs 5.25 lakh crore was money lying in the RBI’s currency chests. When they are in the chest they are just pieces of paper with no intrinsic value till they are issued to the public, at which point they become liabilities. The RBI also doesn’t need to mention this amount in its annual reports or bulletins.

What disturbs me that they will now be destroying currency worth ~ ₹5 Lakh crores even without touching it! It's a waste of tax payers' money, logistical/security efforts...They should have planned in a better way I think.

Aditya
Title: Re: ₹500 and ₹1000 Banknotes are No More Legal Tender
Post by: dheer on December 21, 2016, 12:04:49 PM
What disturbs me that they will not be destroying currency worth ~ ₹5 Lakh crores even without touching it! It's a waste of tax payers' money, logistical/security efforts...They should have planned in a better way I think.

Aditya

Don't give the impression of 5 lakh crores being wasted  :). It is worthless paper ... yes the printing cost would be around 1000 crores ... still quite a bit of money ... :(
Title: Re: ₹500 and ₹1000 Banknotes are No More Legal Tender
Post by: Figleaf on December 21, 2016, 01:07:38 PM
Still, the function of a reserve is not being used but being there. If for some reason, a shortage of banknotes would have developed and there had been no reserve, RBI would have been criticised also. You can quibble about the size of the reserve, but not about it being there.

Peter
Title: ₹500 and ₹1000 Banknotes are No More Legal Tender
Post by: Bimat on December 24, 2016, 07:48:11 AM
RBI says ban on Rs 1000, Rs 500 notes proposed hours before telecast of PM’s speech

Updated: Dec 24, 2016 07:24 IST
Aloke Tikku
Hindustan Times, New Delhi

The Reserve Bank of India (RBI) recommended demonetisation of 500- and 1,000-rupee banknotes hours before Prime Minister Narendra Modi announced the surprise move in a televised address to the nation in the evening of November 8.

The government and the RBI have kept the consultation process that led to the decision to demonetise 86% of India’s cash in circulation a closely-guarded secret. Both, however, have insisted that the demonetisation plan had been under discussion for long and consultations were being held.

Economic affairs secretary Shaktikanta Das told reporters on November 8 that there was “no need to go into the process which led to this decision. I think what we should be focusing on is the outcome and the decision itself”.

The government’s shock move has led to a severe cash crunch, forcing millions of people to line up at banks and ATM kiosks for more than a month. Cash withdrawals have been restricted, but most banks are unable to provide even that. The Opposition’s protests over the demonetisation move have washed out the winter session of Parliament.

The Reserve Bank of India Act, 1934, empowers the Union government to demonetise any series of banknotes. The government, however, cannot take this decision on its own, but only on the recommendation of the RBI’s central board.

In response to a right to information request, which Hindustan Times has sought, the RBI said the bank’s central board of directors made the recommendation at its meeting in New Delhi on November 8. Only eight of the 10 board members attended the crucial meet.

Apart from RBI chief Urjit Patel and economic affairs secretary Das, the meeting had RBI deputy governors R Gandhi and SS Mundra, Nachiket M Mor, the country director for the Bill and Melinda Gates Foundation, Bharat Narotam Doshi, former chairman of Mahindra and Mahindra Financial Services Limited, former Gujarat chief secretary Sudhir Mankad, and financial services secretary Anjuly Chib Duggal.

The law provides for a 21-member board, including 14 independent members, but the central bank has been operating with less than half.

Between the RBI board meeting and Modi’s demonetisation announcement, the government just had a couple of hours to process the bank’s formal recommendation.

Prime Minister Modi had convened a meeting of his cabinet later in the day when they were told about the decision. The ministers — who had to leave their mobile phones outside — were told to stay back till his address was telecast.

It isn’t that the RBI or the government hadn’t been making preparations for the mammoth notes recall exercise. The bank had already printed Rs 4.94 lakh crore in Rs 2,000 notes by November 8.

But former RBI officials said this implies that the board’s approval was a formality.

The way the demonetisation decision was taken was “highly irregular”, said a former top RBI official, who didn’t wish to be named. He said he did not believe the government and RBI had taken “adequate steps” to minimise harassment of people.

Another said he was concerned at the large number of vacancies in the central board. Of the 14 independent directors, the board has just four.

“According to the RTI reply, only three of them were present (at the meeting). That is the quorum,” he said.

Source: Hindustan Times (http://www.hindustantimes.com/india-news/rbi-says-ban-on-rs-1000-500-notes-proposed-hours-before-telecast-of-pm-s-speech/story-N5BQMs2RHkYUXMqzcvm44K.html)
Title: ₹500 and ₹1000 Banknotes are No More Legal Tender
Post by: Bimat on December 24, 2016, 02:50:26 PM
Nashik (Nasik) police recently busted a racket where a gang of criminals was printing OLD ₹500 and ₹1000 banknotes! :o They were producing the old banknotes with the same serial number, and the quality of the notes was really high. They even successfully managed to deposit them in the bank accounts through various means. As December 31 gets closer, such attempts would rise IMO.

No wonder RBI has stopped publishing data of how many banknotes have been deposited in the banks so far... ::) (RBI even deleted some of its press releases after discrepancies were pointed out between RBI's own statements/government's statements). I think 15 Lakh+ cores have already been deposited and we still have a week. The process is going to continue even after December 31, till March 31, 2017, only through RBI offices though. Add to that currency held by Nepalese/Bhutanese nationals, as Indian government is yet to decide the mechanism through which these banknotes are going to be exchanged with them.

Aditya

Edit: NITI Aayog head yesterday compared demonetization decision by this government to hurricane Katrina. Deliberate, or just a slip of tongue? ;D >:D
 
Title: ₹500 and ₹1000 Banknotes are No More Legal Tender
Post by: Bimat on December 26, 2016, 04:54:59 PM
As December 30 comes closer, government is now thinking beyond: According to some reports, you can keep old notes of ₹500/₹1000 upto a maximum total value of ₹10,000 (Rupees Ten Thousand) after December 30, 2016. If found with more notes than this allowable limit, a fine of ₹50,000 or 5 times the confiscated amount (whichever is higher) will be charged.

Aditya
Title: ₹500 and ₹1000 Banknotes are No More Legal Tender
Post by: Bimat on December 29, 2016, 09:01:10 AM
Old Notes that the Less Well-Off Sold Short are Now Selling at a Premium

BY M.K. VENU ON 28/12/2016

Prime Minister Narendra Modi’s demonetisation program has hit the various stakeholders of the rural and informal economy in different ways over the last 50 days.

However, one recent phenomenon really takes the cake.

Smaller players in the informal economy – workers, traders, farmers and mom-and-pop shop owners – sold their Rs 500 and Rs 1000 notes in desperation at a discount of 20% to 30% during November. In almost all cases, this was legitimately earned money, and not black money. Shakuntala, who works as a part-time cook in three houses every day, had Rs 4,000 in old 1000 rupee notes when Modi made his demonetisation announcement. After standing in line for three hours to exchange them, she was forced to sell her notes for Rs 3,000 in valid notes, taking a hit of 25%, in order to make it to work on time. These kinds of distress sales were widely reported by the media in the first days of demonetisation.

Now, according to senior government officials, those very 1000 and 500 rupee notes were aggregated by middlemen and sold to businesses at a premium of 20% in December. Thus, the ‘demonetised’ 500 and 1000 rupee note became a commodity much like farm produce, which is picked up cheap by middlemen and sold in urban markets later at a premium. This bizarre commodification of the Indian currency notes happened, according to industry observers, due to the flawed implementation of the demonetisation programme.

While smaller players in the informal sector of the economy were getting rid of their 1000 and 500 rupee notes, as they had limited access to banking services and needed cash to spend urgently, various middlemen and hawala traders were quietly aggregating the notes (at a discount) for future trade (at a premium) with businesses which needed those 1000 and 500 rupee notes desperately.

What kind of businesses would buy old notes, and that too at a premium? Economic intelligence officials in the government confirmed that the demand for 1000 and 500 notes reached its peak in mid December. This is when businesses were willing to pay a premium for the old notes because on their balance sheets, on the asset side, they had “cash in hand” listed without necessarily having actual cash to back it up.

How did this happen?  After demonetisation was announced, many medium-size businesses, which typically have up to 30% of their working capital from the parallel cash economy, needed to push that black cash into some legitimate accounts in the balance sheet. 

So these small businesses started approaching providers of shell companies in money laundering hubs like Kolkata, Jaipur and Surat where ready-made company balance sheets are offered with a “cash-in-hand” component without the physical cash being there.  These balance sheets are legitimate as they are filed with the relevant company law and income tax authorities. Normally the tax authorities do not question or verify higher cash-in-hand shown in the balance  sheet  as they are only suspicious against businesses who show less profits and less cash. Something like Satyam Computers, which showed much higher quantum of bank deposits in the balance sheet  for many years without being detected.

So many small businesses hurriedly got access to fresh quotas of “cash in hand” through shell companies and started pushing their black cash into those balance sheets which were already filed with income tax department. Thus the black money got legitimately pushed into the system, through the “cash-in-hand” quotas provided by numerous shell companies. All of this happened over the past 50 days.

The demand for 1000 and 500 rupee notes peaked in mid-to-late December because of the rush to physically disclose the “cash-in-hand” quotas of thousands of shell companies serving as money laundering vehicles. The tax department along with the cooperation of various banks will have the near-impossible task of identifying these in the next few months.

What this whole process has ended up doing is that it has forced struggling, small traders to sell their notes at a discount in order to legitimise fake “cash-in-hand” accounts held by businesses.

Thus it is evident that the rich have devised ingenious ways to push their cash into the banking system while the poor have been forced to sell their currency at a discount. A chartered accountant, who did not want to be named, said it would be nearly impossible for the tax department to investigate millions of balance sheets of small companies which may have pushed their cash as “legitimate assets” in the balance sheets of shell companies. Indeed,  the poor have totally lost out in this bizarre game when they sold their currency at a discount only to help hawala dealers and middlemen make huge profits.

Source: The Wire (https://thewire.in/90072/rich-poor-selling-rupees-discount/)
Title: ₹500 and ₹1000 Banknotes are No More Legal Tender
Post by: Bimat on January 03, 2017, 07:41:43 AM
Yesterday, RBI refused to exchange/deposit old ₹500 and ₹1000 notes at RBI branches all over the country. According to RBI, only those who were abroad between November 10-December 30 can deposit their old notes at RBI (and they need to submit proof of being in another country*). Those who were in India but could not exchange the old notes, whatever may be the reason, can not exchange them anymore.

*: Pakistan, Bhutan, Nepal and Bangladesh excluded.

Since this is a totally new rule (earlier, it was confirmed by RBI that anyone can deposit old notes at RBI till March 31, 2017), at many RBI offices, there were protests by angry depositors. RBI had to shut counters at many places.

Deposits as on December 29 had reached 14.94 lakh crores according to some unconfirmed reports. Remaining 50,000 crores will also be deposited by March 31, considering cash NRIs have + currency in circulation in Nepal and Bhutan. (Pranab Sen, in an interview to Scroll even said that total deposits have crossed 15.44 Lakh crore and that's the reason why RBI is not publishing the demonetization related data anymore). In short, there was no black money in India. :D

Aditya
Title: ₹500 and ₹1000 Banknotes are No More Legal Tender
Post by: Bimat on January 06, 2017, 04:31:44 PM
A new day...and one more broken promise by RBI!

RBI now says that you can exchange your old notes at RBI only if you were out of India for the whole period between November 10-December 30, 2016. That means, if you arrived in India on say December 20th (or left India on say November 15) but couldn't get your old notes exchanged/deposited, you won't be able to deposit/exchange them anymore now. And the ordinance by government also says that you will be fined if you have more than 10 old notes in possession. What exactly is wrong with RBI? Losing credibility by such foolish decisions! ::)

Aditya
Title: ₹500 and ₹1000 Banknotes are No More Legal Tender
Post by: Bimat on January 12, 2017, 04:57:28 PM
PIOs, NRIs Feel Heat of Demonetisation; Wait in RBI Queues

Press Trust Of India
First published: January 12, 2017, 5:01 PM IST

New Delhi: After residents, NRIs and People of India Origin (PIO) are now braving long queues to exchange the old Rs 500/1000 notes at 5 designated RBI branches across the country but because of stringent conditions several of them have had to return disappointed.

Tempers ran high outside the central bank branches as people coming from long distances were denied entry by guards on the grounds that they were not carrying the requisite documents.

Many NRIs complained that they are not allowed to speak to officials who could at least listen to their grievances.

"Though I have foreign passport, I still have roots in India. Our family comes to India every year. We have few Indian currency notes and we want to exchange them but we are not allowed to enter RBI. Mr Prime Minister are we supposed to burn Indian currency that we have?," said Ritu Diwan, an agitated US national.

This unnecessary harassment simply indicates that PIOs are no more welcome to the country of their birth, she added.

Dharamveer, another US national, said PIOs generally keep some amount of Indian currency as they frequently visit India because there is no point in paying commission on exchange of currency on each visit.

"Any PIO who regularly visits India would easily have Rs 50,000 to Rs 1 lakh worth of Indian currency and I challenge the government to prove this as black money and forfeit this from us", he said, adding that "this money, we don't spent in the country where we live but country of our origin".

"It is by chance that we are here at this time and wanted to exchange few currency but we are not allowed to do so. It is very frustrating," he added.

Many PIOs who were turned away protested that they don't have crores of rupees but only few thousands which the administration should exchange.

Frustrated at the "high-handedness of RBI" and the "government policy", there are reports of NRIs throwing defunct Indian currency at the gate of RBI as a mark of protest.

Besides PIOs, many Indian who failed to deposit junked currency notes during the 50-day demonetisation period are also being turned away after standing in the queue for hours.

Disappointed at the flip-flop of the government on the issue, Ram Kumar said Prime Minister in his November 8 address had said that people would have time till March 31 to exchange their old notes at the RBI.

Hoping against hope some are coming repeatedly thinking that if they were lucky they would be allowed by the security guards to enter RBI office for exchange of scrapped currency notes.

Many people said the government should take taxes, if any, but allow them to exchange the old notes as not everyone standing at the RBI gate has black money.

As only 5 RBI offices-in Mumbai, New Delhi, Chennai, Kolkata, and Nagpur-are authorised to exchange the currency, people are having to travel long distances.

One person, who first went to RBI's Jaipur regional office, was directed to go to RBI Delhi for exchange.

With few a thousand rupees in his hand, he nearly broke down when he was turned away by the guards at Delhi RBI.

Unable to get a few junked currency notes exchanged, a frustrated poor woman, as mark of protest, had become topless in front of RBI regional office in Delhi last week.

As per the conditions imposed by RBI, the Indians who were abroad during the 50-day window provided from November 9 to December 30 to deposit the old currency have been given a 3-month grace period till March 31 and NRIs 6 months till June 30 to deposit the junked notes at RBI's offices.

The Customs officer will strictly count the number of notes and tally the total amount mentioned before stamping the form submitted by the passenger.

While there is no limit on deposit of SBNs by an Indian national who was abroad when the 50-day window was in operation, NRIs can deposit only up to Rs 25,000.

Indians abroad will have to produce a "copy of passport with immigration stamp as proof of the individual's absence from the country during the period November 9, 2016, to December 30, 2016" as also copies of all bank account statements evidencing that no SBNs of 500 and 1,000 rupees were deposited during the 50-day window.

Source: News18 (http://www.news18.com/news/india/pios-nris-feel-heat-of-demonetisation-wait-in-rbi-queues-1334944.html)
Title: ₹500 and ₹1000 Banknotes are No More Legal Tender
Post by: Bimat on January 18, 2017, 05:06:01 AM
More twists in the story...and this could be interesting! A very long but nicely illustrated report, do read carefully!

Silently, India’s supreme court has set off a chain of events that could torpedo Modi’s demonetisation move

WRITTEN BY
Shubhankar Dam

On Dec. 30, 2016, Indian prime minister Narendra Modi cajoled president Pranab Mukherjee into promulgating the Specified Bank Notes (Cessation of Liabilities) Ordinance, 2016. Two days later, on Jan. 02, 2017, the supreme court, in a separate matter, delivered a verdict that changed the law of ordinances in powerful ways. It scrubbed out old meanings, unearthed new ones, and further garrisoned judges’ hold on the constitution. A prohibitive change has swept in. Ordinances now face constitutional fire in ways they never have.

In the immediate crosshairs, perhaps, is Modi’s demonetisation decree. A lawfully-safe ordinance has overnight become constitutionally suspect.

Why? How? What now?

Technocratic legalese

As ordinances go, the demonetisation one was tedious, almost technocratic. Twelve short provisions introduced two key changes.

First, currency notes demonetised on Nov. 08, it was declared, shall no longer be liabilities of the Reserve Bank of India (RBI).

What?

Take a note at random, look closely: “I promise to pay the bearer the sum of X rupees,” the fineprint reads, signed, governor, RBI. All currency notes are promises—they are liabilities. Bring a Rs500 note to any branch of the bank and officials must exchange it for a new one or smaller denominations, say, of five Rs100 notes.

The ordinance has garroted this. Now bring a Rs500 or Rs1,000 note after Dec. 31 to the RBI and it need do nothing. The promissory words, the fineprint, no longer mean what they say. They mean nothing at all. (A limited window of exception applies till Mar. 31, 2017.)

The broken promises help beef up the bank’s books, too. Why?

Imagine a person borrows money. He must repay in, say, two years. The period has elapsed. The loan is still unpaid. But the creditor hasn’t come calling; he doesn’t care. In fact, he has given up on the loan. What, then, of the borrower? He gains; it’s a windfall for him. The borrowed sum isn’t a liability anymore.

The RBI, oddly, is like a borrower. It must recompense its creditors—those in possession of the demonetised currency. But some creditors didn’t care; they didn’t deposit their demonetised hoard. They can no longer do so, the ordinance says. And these are “loans” the RBI needn’t repay—it’s a windfall.

How much windfall? As of March 2016, some 15,707 million pieces of Rs500 notes and 6,326 million pieces of old Rs1,000 notes were in circulation, the RBI revealed. This totalled to nearly Rs14.5 lakh crore, which is the amount of currency by value that Modi demonetised on Nov. 08. Initial estimates of a windfall had a euphoric air. The State Bank of India speculated about Rs6 lakh crore—nearly 40% of the demonetised sum. Government sources were staider: about Rs3 lakh crore, they estimated.

The real numbers are miserly. A Jan. 10, 2017, report in The Indian Express newspaper, citing top officials, said Rs75,000 crore remain unclaimed, which is a measly 5% of the demonetised sum. This, too, is an estimate. The RBI is silent and unusually slow. Official bulletins have dried up. The final amount isn’t known yet.

But two things are known. The RBI will enjoy a windfall, big or small—one created entirely by an ordinance.

That ordinance also ushered in a second change: a new crime.

Knowingly or voluntarily holding, transferring or receiving demonetised notes, the decree instructs, is a felony. This is the three wise monkeys’ law, Modi edition: Do not keep notes. Do not deal in notes. Do not accept notes.

There are exceptions. Up to 10 notes is fine. Up to 25 is fine, too, for those engaged in “study, research, and numismatics.” The moral? It is fine to hold a few notes. Hold too many, and one must pay a fine.

These changes, their collective kismet, now hang in balance. Why?

A constitutional cesspool

Ordinarily, parliament makes laws in India. But the constitution also dignifies the president with lawmaking powers: Article 123.

He may make laws—ordinances—if one or both houses of parliament aren’t in session, and he feels that such laws are immediately needed.

The underlying idea is simple. The legislative chambers are only intermittently in session. Urgencies may happen when they are away. Ordinances will help tide over those moments. When the houses reassemble, ordinances must be presented to them. The chambers must approve them within a specific period. If not, the ordinances fail; they cease to operate. So says the constitution.

Simple? No. Far from it. Often, the constitution doesn’t mean what it says. Often, it isn’t followed either.

Article 123 says: Governments may promulgate ordinances if they are “immediately necessary.” In practice, reasons other than necessity have dominated ordinances. Governments, especially minority ones, invoked them to bypass parliament. They lacked necessary votes, but still wanted laws. The ordinance mechanism was a sly way out.

This abasement of language never attracted judicial vigil. Judges never confronted governments on immediacy or necessity. The words meant what ministers wanted. Predictably, they contorted them to their profit.

Article 123 says: Ordinances must be presented to the houses when they reassemble. But governments often don’t. Why not?

Presenting ordinances to the chambers invites glare: The houses get to vote on them. Governments, especially minority ones, fear the outcomes. They fear parliamentary losses and the loss of face they engender.

Article 123 says: Ordinances cease to operate if the houses do not approve them. That is, without the houses’ nod, they cannot remain law beyond the six-month period.

But what of the official actions already taken? For decades, courts read the words “ceases to operate” faintly. All actions completed, or even initiated, remain forever valid, they intoned.

Governments, their lawless instincts, felt further emboldened. They could issue ordinances, let them fail, and still profit from the official business already transacted.

As the debased meanings and debauched practices swirled around it, Article 123 descended into a cesspool. Ordinances piled up. Almost 70 constitutional years, almost 700 ordinances.

This is how things stood as the sun went down on Dec. 31, 2016. The demonetisation ordinance was law, legal, and legally safe. It was Modi all the way; he decided to bring in the ordinance. He could decide not to present it to parliament. He could let the ordinance fail. Yet, he could secure the windfall for the RBI, and, ultimately, for his government.

Not anymore.

New year magic: old law, new view

Jan. 02, 2017: a tremor. The constitutional ground shook, then shifted. The supreme court, seven judges, guillotined the lax meanings and their libertine possibilities. Instead, they grafted a new, weaponised law of ordinances into place.

The decision has three highlights.

One, governments are no longer the sole purveyors of “immediate necessity.” Ministers may insist an ordinance is necessary.

But like other constitutional claims, this, too, is now vulnerable to legal audit. If assailed, judges will assess if the ordinance was necessary.

Two, at least in parts, Article 123 really means what it says, the unusually strident court clarified. Article 123(2) reads: “An ordinance promulgated under this article… shall be laid before both houses of parliament.” The provision says shall, it means shall. There’s no wriggle room. Governments shall present ordinances to the houses. They must. If they don’t, ordinances will immediately lapse; they shall cease to operate.

Three, if ordinances cease to operate, the can of official acts already taken will be reopened. Past are the days of automatic validity. Instead, judges will quiz: Does public interest demand the official acts be left undisturbed? Is it necessary to let them stand? Or should the actions be reversed?

These precepts, taken together, are a watershed. They have radically reset the rules on ordinances in India, and they portend distress for Modi’s demonetisation decree.

Modi’s moment of reckoning

What happens now?

Parliament will assemble for the budget session, reports indicate, on Jan. 31. When it does, the ordinance must be placed before the houses. The verdict obligates this. The opposition, finally, will get to have its say on demonetisation in parliament. It will get to vote, too. How cogently they make their case, what they say, and how they behave will matter. It will set a new precedent.

The Modi government is in a minority in the upper house. Short of a miracle, it will lose the vote. The ordinance will fail and cease to operate. (They must be approved by both houses to become law.)

A simultaneous plot will unfold a short distance away, in the supreme court. All aspects of demonetisation, the decision, its execution and its aftermath, are already under judicial scanner. Doubts will be tagged with them. Two issues will demand judges’ attention: Was the demonetisation ordinance necessary? In what way has it ceased to exist?

Parliament was in session until Dec. 16, 2016. The need for such a law, one that vaporises the RBI’s liabilities, was already known. There couldn’t be a windfall without it, governor Urjit Patel had already indicated. The necessity of the ordinance, then, is a laboured claim. It stands on weak legs.

And the second question? Recall what the demonetisation ordinance does. It delivers the RBI from liabilities, generates a windfall in its accounts, and makes hoarding of demonetised notes a crime.

Will a catastrophe descend if the liabilities are reinstated? Hardly. Is it ruinous to erase the windfall? Not at all. Indeed, neither public interest nor the constitution demands these changes become permanent. Doing so will undermine the new verdict and the principle of parliamentary supremacy it affirms.

Undoing the demonetisation ordinance will reinstate the promises. The fineprint will again mean what they say. Those in possession of demonetised notes may again demand that their “borrower,” the RBI, pay up.

More importantly, the government may abandon its ordinance binge. With the opposition firmly set against it, and the upper house still beyond reach, it may return to a quaint idea: parliamentary negotiation. Claim some, give up some others, get along. Parley, in other words.

A vapid ordinance, in an ironic twist, will test Modi, the opposition, the supreme court, and much else. It will decide, for now, the vitality of the new verdict. But it may accomplish forever parliament’s role in the play that is Indian democracy.

Source: Quartz (https://qz.com/886094/silently-indias-supreme-court-has-set-off-a-chain-of-events-that-could-torpedo-narendra-modis-demonetisation-move/)
Title: Re: ₹500 and ₹1000 Banknotes are No More Legal Tender
Post by: Figleaf on January 18, 2017, 09:26:02 AM
I am not a lawyer, let alone an Indian lawyer. However, the above arguments seem to me to be based on shaky, but important grounds. The author bristles at the idea that old banknotes can become worthless in spite of the promise to pay. Methinks he bristles too much.

There was a transition period, in which the notes could be exchanged. That, in my eyes, constitutes the fulfilment of the promise. There were restrictions on exchanging, but they were aimed at offenders and criminals.

Take the case of 18th century UK halfpenny tokens. They were issued mostly by private persons and enterprises. Some were issued in good faith, others were imitations. At one point, they were banned. Look at advertisements of those days: they invite holders of tokens to present themselves at the offices of the issuer before a certain date, to be paid in official coin and warn that imitations shall be refused. The promise to pay is kept, but with reasonable restrictions and the issuer takes no responsibility for fraudulent tokens.

Rather than content, challengers may look at form. If the ordinance does not have the required form (e.g. I think it would not be difficult to argue that the necessary secrecy demanded an emergency action, but not getting parliamentary approval afterwards is another matter), it is vulnerable. While I don't know enough about Indian politics to make such easy predictions as the author, I wonder why even opposition parliamentarians would want to aid and abet tax evaders and corruption...

Peter
Title: ₹500 and ₹1000 Banknotes are No More Legal Tender
Post by: Bimat on January 18, 2017, 09:43:19 AM
While I don't know enough about Indian politics to make such easy predictions as the author, I wonder why even opposition parliamentarians would want to aid and abet tax evaders and corruption...

Forget the opposition, at-least 100 MPs of BJP (the ruling party) are said to be upset with the decision of demonetization and they had assured the opposition (in the last parliament session) that they will vote against Demonetization (as it's a secret voting). Some of them have criticized the decision openly before. Their major worry is that only poor have suffered because of the decision and rich are still roaming free. Millions of jobs have already been lost, farmers are dumping their crop as they are unable to recover the basic investment they have made for the crops (to give you an example: traders were buying tomatoes from farmers for ₹1 per kg last week) and most importantly, almost all the money is back in the system. Of course, just depositing the money in bank does not make it white, but the IT department neither has the mechanism nor the manpower to scrutinize each and every account and filter out white and black deposits.

You will be surprised to know that RBI now says that it will take 600(!) days for RBI to count all the old notes as it has only 60 machines which are capable of doing so (it checks fake currency as well and doesn't count it) and these machines are working 12 hours a day. 600 Days means close to 2 years. So by June 2018, people will actually know how much money was deposited due to demonetization. ::) This is obviously foolish, RBI very much knows how much has been deposited, it's no rocket science. The real problem is that more than what was in circulation has been deposited, hence they have ordered recounting of notes. But since a large portion of the old notes was destroyed in first few days after demonetization by RBI itself, I don't know how far they can cook such stories.

Aditya
Title: ₹500 and ₹1000 Banknotes are No More Legal Tender
Post by: Bimat on January 28, 2017, 07:39:40 AM
According to some unconfirmed reports, government is considering introduction of redesigned (and resized) ₹1000 banknote as people are finding it almost impossible to find change of the ₹2000 note. ₹2000 note will NOT be discontinued but will be printed in smaller quantities.

Also, RBI may give another chance to exchange old ₹500 and ₹1000 banknotes at selected locations in every city to those who couldn't do so until December 30th. The exchange limit is likely to be very small (up to ₹2000 per person) and he/she will be required to give a valid reason for not depositing old notes earlier. This decision is likely to be taken very soon.

Aditya
Title: ₹500 and ₹1000 Banknotes are No More Legal Tender
Post by: Bimat on February 21, 2017, 04:11:01 AM
Rs 1,000 note to be back in new avatar, not clear when

Written by Sunny Verma | New Delhi | Updated: February 21, 2017 8:00 am

The RBI and the government have firmed up plans to launch a new series of Rs 1,000 notes shortly to replace the earlier note of similar denomination that was withdrawn from circulation following the November 8 demonetisation announcement, a senior government official has told The Indian Express.

The RBI, the official said, has already started production of the new Rs 1,000 note. According to the official, the initial plan was to introduce the new Rs 1,000 note in January but “it has been delayed due to the pressing need to supply Rs 500 notes”.

It is not clear when the new note of Rs 1,000 will be officially introduced into the market. To replace old notes of Rs 500 and Rs 1,000 during demonetisation, the RBI had issued new notes of Rs 500 and Rs 2,000 which carried new designs, better security features and the picture of Mangalyaan on the back of the notes. The new notes are being issued to replace Rs 15.44 lakh crore worth of demonetised currency notes.

As on January 27, notes in circulation, comprising all denominations including Rs 2,000 and Rs 500, were Rs 9.92 lakh crore, RBI Deputy Governor R Gandhi said on February 8. The central bank has not shared information of the total value of Rs 500 and Rs 2,000 notes that have been issued.

February 20 onward, the limit on cash withdrawals from savings bank accounts are being raised to Rs 50,000 per week from the earlier limit of Rs 24,000 per week. Effective March 13, all limits on cash withdrawal from savings bank accounts will be removed.

Transactions in Rs 2,000 notes are expected to become easier with the introduction of Rs 1,000 denomination notes. While a bulk of the currency that was demonetised has been deposited into banks, the RBI is yet to provide the exact data. The RBI has given Indians who were abroad between November 9 and December 30, a three-month grace period until March 31 to deposit the old notes. For NRIs, this deposit window is open until June 30.

On February 11, when he was asked when would the RBI release data on the old notes of Rs 500 and Rs 1,000 deposited in banks, RBI Governor Urjit Patel said that the central bank will provide a number which is verifiable and not merely an estimate.

“Given that the window is open until March 31 and then at a lower level until June 30, we need to be careful and try as hard as possible that this is a number that is not a mere estimate but a verifiable number, both physically and in accounting stance,” Patel said.

An email sent to the RBI and finance ministry for comments on the re-introduction of Rs 1,000 notes did not elicit any response.

Source: Indian Express (http://indianexpress.com/article/business/economy/demonetisation-money-ban-rs1000-note-to-be-back-in-new-avatar-not-clear-when-4535314/)
Title: Re: ₹500 and ₹1000 Banknotes are No More Legal Tender
Post by: velind on February 22, 2017, 07:32:15 AM
Is this true ---

No new Rs 1000 notes, govt rubbishes reports

So the reports were unfounded.

The government says it has no plans to reintroduce Rs 1000 notes.

Shaktikanta Das, Secretary Economic Affairs, Government of India, tweeted, "No plans to introduce Rs 1000 notes. Focus is on production and supply of ₹500 and lower denomination notes. Complaints of cash out in  ATMs being addressed. Request  everyone to draw the cash they actually require. Overdrawal by some deprives others."


Yesterday, reports said that the RBI and the government had firmed up plans to launch a new series of Rs 1,000 notes  to replace the earlier note of similar denomination that was withdrawn from circulation following the November 8 demonetisation announcement, a senior government official told the Indian Express reported.

The RBI, the official said, has already started production of the new Rs 1,000 note. According to the official, the initial plan was to introduce the new Rs 1,000 note in January but "it has been delayed due to the pressing need to supply Rs 500 notes".

Source: http://news.rediff.com/commentary/2017/feb/22/no-new-rs-1000-notes-govt-rubbishes-reports/741db5e47ce2af3f4d4ffe5b55c58f4f
Title: ₹500 and ₹1000 Banknotes are No More Legal Tender
Post by: Bimat on February 22, 2017, 07:49:06 AM
Yes, I read Das' tweet too. But Indian Express says that printing of ₹1000 has already started. Interesting to note that just after November 8, Das had said in a press conference that a new ₹1000 note will be issued, which Jaitley later denied. I guess nobody is really having a clue what's happening. ;D

Ideally, they should issue a ₹1000 note if they are also printing ₹2000 notes (government has already said that they won't discontinue ₹2000 note as being speculated), as majority of the 10 trillion rupees remonetised after demonetization are in the form of ₹2000 notes. The gap between 500 and 2000 is huge and given the unpopularity of the ₹2000 note, even if they issue notes worth 15 trillion, majority of which are in ₹2000 notes, the shortage of cash will continue (my friends from Delhi tell me that many of the ATMs in Delhi have started running dry again, same is the case in Punjab and Haryana. Mumbai seems to be lucky).

If they don't want ₹1000 notes, then don't issue ₹2000 note either, but in that case they will have to issue so many ₹500 notes that it will take more than a year to fill the gap. ::)

Aditya
Title: Re: ₹500 and ₹1000 Banknotes are No More Legal Tender
Post by: dheer on February 22, 2017, 09:16:02 AM
The best way to discourage cash is slowly stop / reduce Rs 2000 and Rs 500 notes ... print as many as Rs 100 ... while the cost will be high initially ... it will be offset by move to digital and taxation ...
Title: ₹500 and ₹1000 Banknotes are No More Legal Tender
Post by: Bimat on February 28, 2017, 07:54:13 AM
ATM dispenses Rs 500 notes without serial numbers in Madhya Pradesh's Damoh

Desh Deep | TNN | Updated: Feb 27, 2017, 10.38 PM IST

BHOPAL: A schoolteacher in Damoh was shocked to see an ATM dispensing new Rs 500 notes without any serial number. Narayan Ahirwal had withdrawn Rs 1,000 from his account through an ATM on Monday.

The two notes of Rs 500 denomination did not bear any serial number. "How's it possible?", he showed the notes to others while stepping out from the SBI ATM near government hospital in Damoh.

Sanjay Asati, another Damoh resident, was the next in queue. He too withdrew two Rs 500 currency notes and they too did not bear the serial number. Soon, there was an uproar among the people.

Someone called the police and the ATM was sealed for some time.

"I went to the nearest SBI branch, about a km away from ATM, and showed the notes to the officials but they refused to exchange them," Narayan told the media.

Though the bank manager did not talk, branch employees told us to give them in writing about issue, Asati said.

This has not happened for the first time in Damoh, In the last one week, four such cases have happened including the two on Monday.

Three days ago, two similar incidents took place at the Ghantaghar ATM of Damoh. However, no police complaint was filed.

Talking to TOI, Damoh superintendent of police, Tilak Singh said, "I had come to know about the incident but have not yet received any complaint. Neither, the bank personnel nor the people who got the currency notes have lodged any FIR. In case we receive any complaint, we will definitely investigate."

Bank sources said pleading anonymity such issues do come up and we advise the victim to submit the complaint in writing for investigations.

"It is not possible to exchange the note immediately", bank sources said.

Source: Times of India (http://timesofindia.indiatimes.com/city/bhopal/atm-dispenses-rs-500-notes-without-serial-numbers-in-madhya-pradesh-damoh/articleshow/57379593.cms?utm_source=facebook.com&utm_medium=referral&utm_campaign=TOI)
Title: Re: ₹500 and ₹1000 Banknotes are No More Legal Tender
Post by: Figleaf on February 28, 2017, 10:27:16 AM
A shocking lack of service that the bank reverts to bureaucracy, rather than helping people out of a problem that is the responsibility of the bank. However, there must be some collector around who'd happily pay extra for what are probably error notes.

Peter
Title: ₹500 and ₹1000 Banknotes are No More Legal Tender
Post by: Bimat on March 01, 2017, 04:28:30 AM
Why don't we (collectors) receive such error notes/coins in change, I wonder? ;)

According to some unconfirmed reports, those ₹500 notes without serial number are fake :o. Further investigation is going on.

Aditya
Title: ₹500 and ₹1000 Banknotes are No More Legal Tender
Post by: Bimat on July 06, 2017, 04:56:19 PM
Supreme Court of India has asked the government if it's still possible to give people one more chance to exchange their old notes. Court has added that such people should have a genuine reason for not exchanging them during the deadline. Center has asked two weeks' time to respond, which court has agreed.

The court is hearing several cases where petitioners have challenged government's decision not to allow exchange their old notes after December 31st. One such case is by a farmer, who was returning after selling his crop for some half million rupees. The police caught him and they suspected that this money is being used to influence the voters as some local elections were going on. He was jailed for nearly two months and police could not find any evidence against him, so he was later released. By that time, the deadline was already over, and he was left with half million 'useless' cash.

Meanwhile, RBI is STILL counting the old notes. ??? Finance minister was recently asked why there is so much of delay in this process, he replied that RBI has to count close to 14-15 trillion banknotes (in value), which itself is the admission of the fact that all the money returned to the banking system (before demonetization, the total value of ₹500 and ₹1000 notes was ₹15.4 Trillion). Nepal Rashtra Bank is still fighting with RBI over exchange of demonetized currency in it's/Nepalese people's possession and no solution has been found yet.

Aditya
Title: ₹500 and ₹1000 Banknotes are No More Legal Tender
Post by: Bimat on August 27, 2017, 08:54:26 AM
About 99% ₹1000 banknotes were returned to RBI, says RBI (indirectly). And this is when the counting is not over yet. So by the time they finish counting, the number may exceed 100%! ;)

99 per cent demonetised Rs 1,000 notes returned to RBI

Written By: Vicky Nanjappa Published: Sunday, August 27, 2017, 9:49 [IST]

Almost 99 per cent of the demonetised currency notes has returned to the banking system. This was an indication given by the RBI which put out data on its website.

According to the data on the Rs 1,000 notes, almost 99 per cent of the currency in circulation came back into the banking system.

The data suggests at the end of March 2017, there were Rs 8,925 crore worth of Rs 1,000 notes still in 'circulation'. According to the RBI, "notes in circulation" are all notes held outside Reserve Bank - that is by the public, banks treasuries and so on. Thus, this figure represents the total of all Rs 1,000 notes that were not deposited with the banks after note-bandi starting November 8 last year.

This goes on to suggest that just 1.3 per cent of the notes were not returned. The data has however not been provided for the Rs 500 notes which were also demonetised.

Source: One India (http://www.oneindia.com/india/99-per-cent-demonetised-rs-1000-notes-returned-to-rbi-2530712.html)


Title: Re: ₹500 and ₹1000 Banknotes are No More Legal Tender
Post by: dheer on August 28, 2017, 08:17:24 AM
It would tell how much FCIN is held by RBI  >:D
Title: ₹500 and ₹1000 Banknotes are No More Legal Tender
Post by: Bimat on August 28, 2017, 08:30:38 AM
It would tell how much FCIN is held by RBI  >:D

 >:D >:D

Jokes apart, but I really feel bad for RBI. It appears that RBI will not even recover the printing and logistical cost of new banknotes from all this exercise... ::)

Aditya
Title: Re: ₹500 and ₹1000 Banknotes are No More Legal Tender
Post by: dheer on August 28, 2017, 01:01:44 PM
RBI is not a profit institution. They have already halved the dividend paid to Govt, reflecting this cost. So its Govt's loss.
Title: Re: ₹500 and ₹1000 Banknotes are No More Legal Tender
Post by: Bimat on August 30, 2017, 03:56:44 PM
RBI annual report: 99% of demonetised currency back with central bank

Of the Rs 15.44 lakh cr withdrawn with scrapping of Rs 500, Rs 1,000 notes, Rs 15.28 lakh cr are back

BS Web Team    |  New Delhi
Last Updated at August 30, 2017 17:51 IST

The Reserve Bank of India on Wednesday revealed in its annual report that Rs 15.28 lakh crore, or 99 per cent of the Rs 15.44-lakh-crore scrapped currency notes, had come back to the central bank between the government’s demonetisation decision and June 30, 2017.
 
However, in what came as a surprise to many, the RBI report said that about 89 million units of the demonetised Rs 1,000 notes, worth Rs 8,900 crore, had not come back into the system.

The share of the newly introduced Rs 2,000 notes in the total value of banknotes in circulation as at March-end was a little more than 50 per cent, the RBI annual report added.
 
Mentioning that the central bank spent Rs 7,965 crore on printing new currency notes in 2016-17, it said the overall currency in circulation into the system had come down by 20.2 per cent on a year-on-year basis as at the end of March.
 
In the biggest-ever demonetisation exercise India had seen, Prime Minister Narendra Modi on 8 November 2016 announced high-value currency notes of Rs 500 and Rs 1,000 would cease to be public tender. The move, to stem the circulation of black money and fake currency, and to choke terror funding and corruption, was to take effect within hours of the announcement.
 
The next few days saw serpentine queues at bank branches to deposit and exchange the demonetised banknotes. With people facing inconvenience, the government’s decision to ban old currency notes and handling of the whole process came under scrutiny. Reserve Bank of India (RBI) Governor Urjit Patel appeared before a probing parliamentary panel several times, but the total number of demonetised currency notes deposited in banks remained elusive for long. It was only in the Reserve
 
While there were several estimates and statements, the official numbers were not revealed until the RBI released its annual report on August 30. Here is a timeline of events since the announcement of the demonetisation decision:

[...]

Source: Business Standard (http://www.business-standard.com/article/economy-policy/rbi-annual-report-99-of-demonetised-currency-back-into-the-system-117083000891_1.html)
Title: ₹500 and ₹1000 Banknotes are No More Legal Tender
Post by: Bimat on August 30, 2017, 03:58:40 PM
If I am not wrong, these figures do not include the old ₹500 and ₹1000 notes held by Nepalese and Bhutanese people (which are not even exchanged yet), so to be very strict, 100% notes came back to RBI.

Aditya
Title: ₹500 and ₹1000 Banknotes are No More Legal Tender
Post by: Bimat on August 30, 2017, 05:16:50 PM
Demonetization exercise explained in two sentences:

Demonetization was carried out because people were corrupt. Demonetization failed because people are corrupt.  :-\

Aditya
Title: ₹500 and ₹1000 Banknotes are No More Legal Tender
Post by: Bimat on September 01, 2017, 10:29:51 AM
Confirmed: The returned amount mentioned in RBI's annual report (₹15.28 Trillion) does NOT include: Demonetized currency held by Nepalese nationals even today (expected to be around ~ ₹5000 crores) and amount deposited in old currency in district co-operative banks during first four days of demonetization (which is around ₹8000-₹10000 Crores). So effectively 100% money came back. Government was expecting a windfall gain of ₹3 - ₹4 Trillion when demonetization was annouced!

RBI report talks only about non returned ₹1000 notes but no word about non returned ₹500 notes. Probably all the ₹500 notes came back (or even more than what RBI had issued!)

RBI is expected to finalize a plan with Central Bank of Nepal to collect old Indian currency with them.

Aditya
Title: Re: ₹500 and ₹1000 Banknotes are No More Legal Tender
Post by: Figleaf on September 01, 2017, 10:48:35 AM
It's fine (and fun) to criticise the government and it's quite correct to identify corruption as the core problem and an important break on India's economic development.

Now, apart from the botched exchange operation - itself a consequence of secrecy out of fear of corruption - while you are enjoying your delightful freedom to speak out unafraid of the government, can you come up with a better way to fight corruption?

Peter
Title: ₹500 and ₹1000 Banknotes are No More Legal Tender
Post by: Bimat on September 01, 2017, 11:21:44 AM
I'm not against any measure against corruption, however several loopholes were kept in this Demonetization exercise which ultimately helped black money hoarders. Political parties were allowed to deposit any amount of money they had in cash, no questions were asked to them, nor was any tax charged for it. So if someone has good relation with a big political leader, he could get hie money returned (white!) easily, with some part of that money paid to that party as party fund. And this happened. Demonetization rather helped people to convert black into white.

Government now says main aim of demonetization was to digitize the economy...That's a good intention but where in the world you see demonetization happening just because you want to digitize it? RBI report also says that the cash in circulation today is now almost back to November 2016 level before demonetization and use of digital payments has also thus decreased. People opted for digital payments because there was no other option. They were forced to do it. It's also a daydream to expect a cashless society where half of the Indian population (which is not small) earns less than a dollar a day. It's a rude thought.

India's GDP today stands at 5.7% (numbers released yesterday). This is when crude oil is at ~$50. We import 95%+ oil that we need. It was 7.9% in July 2016. 2% decrease in GDP means loss of ~ ₹3 Trillion with millions of jobs lost. It's a fact that millions of jobs were lost in informal sector after demonetization. Visit any industry which heavily depends on cash. It's destroyed today. Bank NPAs have increased as companies are unable to repay the loans. Now imagine oil at $100 (which is not going to happen any time soon, fortunately) and we are doomed!

In recent budget, government introduced electoral bonds, saying that it will bring transparency in political funding. They however allowed anonymous purchase of these bonds, making it futile. BJP, the ruling party, received around ₹8000 million in political donations last year which have no source i.e. without any PAN or Aadhar number (the Indian equivalent of social security number).

I therefore believe that no political party in India is serious to tackle corruption. Only talks but no action!

Aditya
Title: ₹500 and ₹1000 Banknotes are No More Legal Tender
Post by: Bimat on September 01, 2017, 11:28:42 AM
High quality fakes of new ₹2000 seized from a nearby locality just yesterday, valued at around ₹7 lakhs. We were told that new ₹2000 and ₹500 are so secure that it will take forgers at least 3-4 years to fake it. Didn't happen. Fakes being caught every other day from various parts. :-\

Aditya
Title: Re: ₹500 and ₹1000 Banknotes are No More Legal Tender
Post by: dheer on September 04, 2017, 05:06:57 AM
With todays printing technology, it is becoming very easy to print near look alikes very easily. There needs to be something else that is easy to identify fakes.
Title: ₹500 and ₹1000 Banknotes are No More Legal Tender
Post by: Bimat on September 06, 2017, 06:05:07 AM
Printing presses have now asked RBI to pay them ₹577 Crores (₹5770 Million) for the loss they faced due to note ban (Complete report here (http://indianexpress.com/article/business/economy/printing-presses-to-rbi-pay-us-rs-577-cr-for-note-ban-loss-4830541/)).

I wonder how many such requests RBI would face in future, as the list is growing each day. Banks are asking RBI to pay for re-calibration work done (which amounts to few thousand crores), presses asking for ₹5770 million... ::)

Aditya
Title: ₹500 and ₹1000 Banknotes are No More Legal Tender
Post by: Bimat on October 28, 2017, 03:24:37 PM
The Demonetization saga is not yet over... ;)

Did RBI have authority to issue Rs 2,000 and Rs 200 currency notes?

October 28, 2017

Mumbai, October 28 (IANS) In what could be a bizarre situation, the Reserve Bank Of India (RBI) does not seem to have any official records to prove that it had authorised the issue of new currency notes in denominations of Rs 2,000 and Rs 200, after demonetisation, according to documents available through RTI.
 
“As per RTI replies provided by the RBI, the country’s central bank has apparently not published any Government Resolution (GR) or a circular till date to issue the new Rs 2,000 and recently, the Rs 200 currency notes,” says Mumbai-based RTI activist M.S. Roy.

A May 19, 2016 document — roughly around six months before demonetisation — shows that the RBI’s Central Board of Directors approved a proposal put forth by its Executive Director on May 18, 2016.

This (proposal) pertained to the new designs, dimensions and denominations of future Indian bank notes, and the Board resolved to forward it to the central government for approval, as per extracts of the minutes of that Board meeting.

Essentially, this was carrying forward an earlier such proposal made on July 08, 1993 to introduce a new family of Indian bank notes of Rs 10, Rs 20, Rs 50, Rs 100 and Rs 500 of reduced sizes.

This old proposal (July 08, 1993) was approved at an RBI Central Board Of Directors meeting on July 15, 1993 as per a memorandum dated August 3, 1993 sent from RBI’s Central Office, Mumbai, to the Chief Officer, Department Of Currency Manager (RBI Mumbai), which was signed by the then Executive Director, A P Aiyer.

As per that proposal (of July 8, 1993), these new Indian currency notes of reduced size were to incorporate several fresh and enhanced security features in order to check counterfeiting, according to the same August 3, 1993 memorandum (quoted above).

Roy had also filed a separate RTI query on February 27, 2017, asking for documentation about photographs of Mahatma Gandhi which are not being printed on the Re 1 notes, but were being printed on all currency notes of denominations ranging from Rs 5 to Rs 2,000.

In reply to this particular query, the RBI provided resolutions of its board meetings held on July 15, 1993, July 13, 1994 and May 19, 2016.

However, these resolutions talk about design features merely for Rs 10, Rs 20, Rs 50, Rs 100 and Rs 500, all of which bear the photographs of the Father of the Nation.

None of these RBI board resolutions make any references about design features or Mahatma Gandhi photographs for denominations of Rs 1,000, Rs 2,000 and now, the latest entrant to the Indian bank notes family, the Rs 200 currency note.

Hence, Roy said that if the RBI board resolutions never even discussed design features or Mahatma Gandhi photographs to be incorporated in Rs 1,000 notes (discontinued after demonetisation), Rs 2,000 denomination notes (introduced on November 8, 2016) and the subsequent Rs 200 notes (introduced in mid-2017), it clearly indicates that no official approval was granted.

He questioned that if no approval was granted for issuing these denominations, who authorised these denominations, their design, printing and distribution.

“If there has been no approval by the RBI Board, no supporting GR or any other known documentation in the public domain, then there is a big question mark about the legal validity and official (monetary) status of these notes — namely Rs.200 and Rs.2,000. The matter merits an independent investigation,” Roy said.

However, if such approvals do indeed exist, then the RBI and government must explain why these documents were not made available despite an RTI query or why they were not in the public domain.

Source (http://morungexpress.com/rbi-authority-issue-rs-2000-rs-200-currency-notes/)
Title: ₹500 and ₹1000 Banknotes are No More Legal Tender
Post by: Bimat on December 21, 2017, 03:37:43 PM
According to a recent report by SBI, RBI/government have stopped printing and distribution of ₹2000 notes. The focus is now entirely on ₹500 notes and ₹2000 notes will probably be taken out of circulation eventually (but not demonetized).

Aditya
Title: Re: ₹500 and ₹1000 Banknotes are No More Legal Tender
Post by: redlock on December 22, 2017, 08:09:51 PM
According to a recent report by SBI, RBI/government have stopped printing and distribution of ₹2000 notes. The focus is now entirely on ₹500 notes and ₹2000 notes will probably be taken out of circulation eventually (but not demonetized).

Aditya

Are there any plans to re-introduce a ₹1000 note?

Is the introduction of the ₹2000 note now seen as a ''mistake'' in government circles?
Title: ₹500 and ₹1000 Banknotes are No More Legal Tender
Post by: Bimat on December 23, 2017, 06:29:44 AM
Are there any plans to re-introduce a ₹1000 note?

Is the introduction of the ₹2000 note now seen as a ''mistake'' in government circles?

It is rumored that ₹1000 notes will be issued in 2018...let's see.

Yes, introducing a ₹2000 note was not a wise decision but government did not have any other options as remonetization was to be carried out within shortest possible time. Major headache the government now has is that forgers have got the formula to make the fakes of ₹2000 notes. So they have to take some measures before the damage is done...

Aditya