Demonetisation ~ serpentine Queues ~ are you among the affected ?

India was hit by a storm on the night of 8^th Nov 2016 ~ people first rumoured and then heard in disbelief – PM Shri Narendra Modi’s announcement that the currencies in the denominations of Rs 500 and Rs 1,000 would become invalid by night.   People in cities were glued to TVs and news channels following US Presidential polls, when something trembled under their carpet.  The major unprecedented step  to check black money,  did cause panic.

People were given long time [from 10^th Nov to 31^st Dec 2016] to deposit whatever they legally had with them [in 500s & 1000s] in their bank accounts and a small portion was allowed to be changed instantaneously.  There have been serpentine queues in front of ATMs and bank branches and many have been making negative criticisms too ! Before we read further, how many of us had lakhs of Rupees [in 500s & 1000s] and did anyone of us have had any difficulty in depositing the same in Bank account .. .. [personally, I  waited for a fortnight before walking to my friendly bank to deposit, had only 3 persons standing before ~ the transaction took less than 15 minutes ! ]

Economic affairs secretary Shaktikanta Das today said initially the focus was on printing Rs 2,000 notes and now the focus has been shifted to Rs 500 as there is enough of former now. He also estimated that in another 10 days about 50 percent of the value of notes demonetised will be replaced. He added that  the enforcement agencies are conducting surgical action of cash hoarders referring to the increasing income tax raids on various individuals and bank branches.

Now to the serpentine queues in front of banks and ATMs – there appears problem – common men  are spending long hours and put to difficulty – what defies understanding is –the ATM dispenses one single note Rs.2000 [limit is 2400 !] – one teasing Q is how many of salaried people like us withdraw every month – is that ever in lakhs ? ~ [for many there would be nothing to withdraw after taking 30000 or so in a month] – then Rs.24000/- a week [when available] should not be presenting any problem at all !! – also sections of 10 / 20 / 50 / 100 would have been hoarded in some households and such money should last for a couple of months. 

While there is no denying the fact that common man is put to hardship – is the media hype real ? are people really dying standing in queues.  In Tamil TV channels, in Discussion Forums, you could see and hear comrades ask typically :

o   Are Adanis & Ambanis standing in the Queue for exchange ?

o   Can such people conduct marriage at the stipulated withdrawal limit of Rs.2,50,000/-  - how utopian

~ nothing can be misleading and farther than the truth than their contentions !! Without thinking of Adani & Ambani – think of any Rich person you know – how many persons he has working ? – have you ever seen them standing in any queue ?

The much touted speech on 2.50 lakh limit is cash withdrawal for marriage and not the limit of expenditure.  In a typical way, the South Indian marriages are conducted – you fix marriage hall; arrange famous caterer; another contractor for miscellaneous; buy dress for relatives …. and the like – now all these can be done by swipe of card / cheque / other payments – where is the trouble ?

Bank officials / Unions are protesting .. yes, many of them did work hard – again in some ways, dispensing only Rs.10000/- per individual, that too in 2000 currency could have been done with much easier aplomb – may be in more counters also (they would have had their share of trouble and stress) – but the following news are disturbing…. !!!

In a fresh raid conducted at the Axis Bank's Noida branch, Income tax department  unearthed deposits worth Rs 60 crore from twenty fake accounts. A TOI report said these deposits were found in the accounts belonging to low-income workers and labourers. The I-T department found these fake accounts after a jeweller sold gold of Rs 600 crore post the 8 November demonetisation announcement, and later deposited the money at the Noida branch, the TOI report added.  This came after the I-T department conducted a raid at the bank's Chandni Chowk branch in New Delhi last week where they uncovered Rs 100 crore deposited in 44 fake accounts.

Another report states that Chief Executive Officer of a Jaipur co-operative bank went missing after officials of the Income-Tax department swooped down on several of its branches.  Before some cry foul on Private banks, IT officials unearthed nearly Rs 10 crore of unaccounted money from lockers of a Bank of Maharashtra branch in Pune. Authorities are probing the involvement of bank officials in the illegal stashing of black money.  The system is not to be blamed but there are some blacksheep derailing the good move. 

Now read this report in today’s Economic Times :  Long queues in front of the ATMs (Automatic Teller Machines) are not necessarily due to lack of currency supply alone, but banks, which get the supplies from the Reserve Bank, are hoarding the cash themselves to service their own customers instead of putting them in the vending machine, say executives.  Companies which manage the ATM network of the country and transport cash say that they are receiving less than 10% of the currency that is being supplied into the system by the Reserve Bank of India. That hoarding at the bank level is holding back ATMs getting replenished even though most of the 2.2 lakh ATMs have been recalibrated to dispense new currency notes.

While the RBI may be deliberately reducing the cash availability to boost digital payments, banks are helping their preferred, priority customers with cash.  “Initially we were not getting cash because there was a serious shortage of supply, but now supply has gone up significantly but the ATM network of the country is still running dry, because banks are keeping the cash with their branches and not giving to us,” said an official from a company which manage a major ATM network, but who did not want to be identified.  Industry sources say that the larger banks in the country are keeping 90% of the cash that they are receiving in their branches to be distributed only to their customers, with wealthier ones getting preference.  “If they put money in the ATMs they fear that smaller bank customers will take away the cash, hence they are keeping it in their branches so that they can service their own customers,” said the person quoted above.  

As per data released by the Reserve Bank of India currency worth Rs 4.6 lakh crore has been released to the public through bank counters and ATMs between November 10 and December 10, which shows that around Rs 15,000 crore was pumped in every day. “Now the number has gone up beyond Rs 20,000 crore, still we are not getting our share to replenish the ATM network,” said an official with a cash logistics company. “This is causing the ATMs to remain empty,” he added.  Further they said that instead of filling up ATMs with Rs 50 lakh which was the norm previously, now banks are not putting more than Rs 5 lakh per ATM. “This is causing most of the ATMs to get empty within few hours of starting service,” said one of the officials quoted above.

There is confusion !!!

With regards – S. Sampathkumar

16^th Dec 2o16.