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Modi speech full text: Indians showed resolute honesty can defeat dishonesty

Following is the full text of Prime Minister Narendra Modi‘s address to the nation on the eve of New Year 2017:

My fellow citizens,

In a few hours, we will be ushering in the new year of 2017. 125 crore Indians will join the rest of the world, in welcoming it with new hope, new energy and new dreams.

Since Diwali, our nation has been witness to a historic rite of purification. The patience, discipline, and resolve displayed by 125 crore Indians, will play a critical role in shaping the future of the nation for years to come.

In God’s creation, humans are endowed with fundamental goodness.

Screenshot of PM Modi during his New Year's Eve addressScreenshot of PM Modi during his New Year's Eve address

Screenshot of PM Modi during his New Year’s Eve address

With time, the distortions of badness creep in. People feel suffocated in a bad environment, and struggle to come out of it. Corruption, black money, and counterfeit notes had become so rampant in India’s social fabric, that even honest people were brought to their knees.

People were forced by circumstances, in defiance of their inherent goodness. It seemed at times, that the evils and corruptions of society, knowingly or unknowingly, intentionally or unintentionally, had become a part of our daily lives. Developments post-Diwali have shown, that crores of Indians were looking for an escape from this suffocation.

We have, during the external aggressions, of 1962, 1965, 1971 and Kargil; witnessed the intrinsic strength of our citizens. Such collective energy and patriotism is understandable, in the face of external threats. However, when crores of Indians unite to fight a war against internal evils, it is unparalleled.

Indians have, with firm resolve and infinite patience, faced difficulties with a smile, re-defining the concept of sacrifice. We have lived these ideals. 125 crore Indians have shown, in their fortitude, the importance we place in truth and goodness. This has been written on the sands of time.

Indians have displayed the strength of people power, utmost discipline, and the ability to discern the truth in a storm of disinformation. They have shown that resolute honesty, can defeat dishonesty.

They have shown how much, even people trapped in poverty, are willing to do, to build a glorious India. The people, through persistence, sweat and toil, have demonstrated to the world, an unparalleled example of citizen sacrifice, for the brighter future of a nation.

Usually, when people’s movements have arisen, the people and the government have been at loggerheads.

It is historic, that both the people and the government are on the same side in this battle against evil. The Government is well aware, that in this period, you had to queue up, and face difficulty in withdrawing your own money. I received letters from many people. They have shared their pain and sorrow with me, but also emphasized their support. You have talked to me as one of your own. In this fight against corruption and black money, it is clear that you wish to walk shoulder to shoulder with us. For us in Government, this is a blessing.

My effort is to take the banking system to normalcy as fast as possible in the new year. I have asked all concerned officers in the Government to focus their attention to this task. They have especially been told to proactively resolve the problems in rural and remote areas.


There is no precedent globally, to what India has done. Nations similar to us do not have the amount of currency that we had. Over the last ten to twelve years, 500 and 1000 rupee currency notes were used less for legitimate transactions, and more for a parallel economy. The excess of cash was fuelling inflation and black-marketing. It was denying the poor, their due. Lack of cash causes difficulty, but excess of cash is even more troublesome. Our aim is to achieve a balance. Economists agree that when cash is outside the formal economy, it is a cause of worry. When it joins the mainstream, it is an opportunity for development.

I am sure, if great sons of India like Jayaprakash Narayan, Lal Bahadur Shastri, Ram Manohar Lohia, and Kamaraj had been present today, they would have applauded the patience, discipline and resolve of our countrymen.

In the past few weeks, there have been many gratifying instances – it would take weeks to list them.

It is a healthy trend for any nation, when the people wish to join the mainstream abiding by the law, and helping the Government in serving the poor.


How long will we overlook facts that stare us in the face? I wish to share some information with you, which will either make you laugh, or make you angry. According to information with the Government, there are only 24 lakh people in India who accept that their annual income is more than 10 lakh rupees. Can we digest this? Look at the big bungalows and big cars around you.

If we look at any big city, it would have lakhs of people with annual income of more than 10 lakh. Do you not feel, that for the good of the country, this movement for honesty, needs to be further strengthened?

In this fight against corruption and black money, it is natural to debate the fate of the dishonest. What punishment will they get? The Law will take its own course, with its full force. But the priority of the Government now is how to help the honest, protect them, and ease their difficulty.How can honesty gain more prestige?

This Government is a friend of good people. And it aims to build an enabling environment for the dishonest to return to the path of goodness.

It is also a bitter truth, that people have complaints of bad experiences at the hands of Government machinery, and some government officers.

This reality cannot be wished away. No one can deny that Government officers have a greater responsibility than common citizens.

Therefore, it is the responsibility of all of us in Government, at central, state and local levels, to protect the common man, help the honest, and isolate the dishonest.

Friends, It is accepted the world over, that terrorism, Naxalism, Maoism, counterfeit currency trade, drug trade, human trafficking – all of these depend on black money.

These evils have become a festering sore on society and Governments.

Demonetistion has dealt a severe blow to these trades.

Today, youth who had turned to the wrong path, are returning to the mainstream in large numbers. If we remain vigilant, we can now save our children from returning to those evil ways of violence and cruelty. The fact that so much of the cash in circulation has been deposited in the banking system indicates the success of this mission.

Events of the last few days indicate that escape routes for the dishonest have all been sealed. Technology has played a big role. The habitual offenders will be forced to abandon their misdeeds and join the mainstream.

Friends, This also represents a golden opportunity for the country’s banking system. During this period, bank employees have worked day and night.

Female employees too, worked till late hours as part of this mission.

Post office staff, banking correspondents- all did exceptional work.

Amid this herculean effort, some grave crimes by some officers in some banks have come to light. Some Government officers have also committed serious offences, and tried to take advantage of the situation. They will not be spared.

At this historic juncture, I wish to make an appeal to the banks.

History is witness that the Indian banking system has never received such a large amount of money, in such a short time.

While respecting the autonomy of the banks, I appeal to them to move beyond their traditional priorities, and keep the poor, the lower middle class, and the middle class at the focus of their activities.

India is celebrating the centenary of Pandit Deendayal Upadhyay as Garib Kalyan Varsh. Banks should also not let this opportunity slip. They should take appropriate decisions in public interest promptly.

When policies and programmes are made with clear objectives in mind, not only are beneficiaries empowered, but both short term, and long term benefits are achieved. Spending is carefully scrutinized, and chances of good results are maximized.

The more the villages, the poor, the farmers, the dalits, the tribals, the marginalized, the oppressed, the deprived and women are empowered, and financially enabled to stand on their own feet, the stronger the country will become, and the faster will be the pace of development.

Friends, to further the principle of Sabka Saath – Sabka Vikaas, on the eve of the new year, Government is bringing some new programmes for the people.

Even so many years after independence, millions of poor do not have their own home. When black money increased in our economy, houses became out of reach of even the middle class. The Government has taken some major decisions to ensure homes for the poor, the neo middle class and the middle class.

Two new middle income categories have been created under the Pradhan Mantri Awaas Yojana in urban areas. Loans of up to 9 lakh rupees taken in 2017, will receive interest subvention of 4 per cent. Loans of up to 12 lakh rupees taken in 2017, will receive interest subvention of 3 per cent.

The number of houses being built for the poor, under the Pradhan Mantri Awaas Yojana in rural areas, is being increased by 33 per cent.

In addition to this, another scheme is being put in place for the neo middle and middle class in rural areas. Loans of up to 2 lakh rupees taken in 2017, for new housing, or extension of housing in rural areas, will receive an interest subvention of 3 per cent.

Friends in the last few weeks, an impression was sought to be created that the agriculture sector has been destroyed. Farmers themselves have given a fitting reply to those who were doing so. Rabi sowing is up by 6 per cent compared to last year. Fertilizer offtake is up by 9 per cent. During this period, the Government has taken care to ensure that farmers do not suffer for want of access to seeds, fertilisers and credit. Now, we have taken some more decisions in the interest of farmers.

Farmers who have taken loans for the Rabi crop from District Cooperative Central Banks and Primary Societies, will not have to pay interest on such loans for a period of 60 days. Farmers who have paid interest during the last two months, will receive these amounts back, directly into their bank accounts.

Arrangements are being made to provide farmers even better access to loans from cooperative banks and societies. NABARD created a fund of 21,000 crore rupees last month. Now, Government is adding 20,000 crore rupees more to this. The loss that NABARD suffers by giving loans to cooperative banks and societies at low interest rates, shall be borne by the Government of India.

The Government has decided, that 3 crore farmers who have Kisan Credit Cards, will be given RuPay debit cards within three months. Kisan Credit Cards were launched in 1998, but so far, it was essential to go to a bank, to use them. Now, farmers will have RuPay Debit Cards, which they can use anywhere.

Just as agriculture is vital for the economy, so are the medium and small scale enterprises also called the MSME sector. Government has taken some decisions in the interest of small and medium businesses, which will also boost employment.

Government of India underwrites loans given by banks to small businesses through a trust. So far, loans were covered upto one crore rupees. This limit is now being enhanced to 2 crore rupees. Earlier the scheme only covered bank loans. Hereafter it will cover loans given by NBFCs as well. This decision will enable better access to credit for small shop-owners and small enterprises. Banks and NBFCs will not levy high interest on these loans, as Government of India is bearing the cost of underwriting them.

Government has also asked banks to raise the credit limit for small industry from 20 per cent of turnover to 25 percent.

Banks have also been asked to increase working capital loans from 20 per cent of turnover to 30 per cent, for enterprises that transact digitally.
Many people connected with this sector have made cash deposits in the last few weeks. Banks have been asked to take this into account when deciding on working capital.

A few days back, Government announced a major tax relief for small businesses. Income of businesses with turnover of up to Rs 2 crores was calculated at 8% of the turnover. Now, for such businesses income from digital transactions will be calculated at 6%. This will effectively reduce their tax liability by 25%.


The progress of the MUDRA Yojana has been very encouraging. Last year, nearly 3 and a half crore people have benefited from this. The Government now aims to double this, giving priority to Dalits, Tribals, Backward Classes and Women. A new scheme is being launched for pregnant women.
We are introducing a nation-wide scheme for financial assistance to pregnant women. 6000 rupees will be transferred directly to the bank accounts of pregnant women who undergo institutional delivery and vaccinate their children. This scheme will help reduce the maternal mortality rate, in a big way. This will help ensure nutrition before and after delivery, and improve the health of mother and child. So far, pregnant women in 53 districts were being given financial assistance of 4000 rupees, under a pilot project.

We are initiating a scheme for senior citizens. Banks often reduce their deposit rates, when they receive a large volume of money. This should not adversely impact senior citizens. Under the scheme, senior citizens will receive a fixed interest rate of 8 per cent for a period of 10 years, on deposits upto 7.5 lakh rupees. The interest will be paid monthly.


Political parties, political leaders and electoral funding, figure prominently in any debate on corruption and black money.

The time has now come that all political leaders and parties respect the feelings of the nation’s honest citizens, and understand the anger of the people.

It is true that from time to time, political parties have made constructive efforts to improve the system.

I urge all parties and leaders to move away from a “holier than thou approach,” to come together in prioritising transparency, and take firm steps to free politics of black money and corruption.

In our country, people ranging from the common man to the President, have at some point or another, advocated simultaneous conduct of state and national elections.

This is to break the endless cycle of elections, reduce election expenditure, and minimize pressure on the administrative machinery.

The time has come for this to be seriously considered and debated.

Positive change has always found space in our country.

We can now see a positive momentum towards digital transactions in India.

More and more people are transacting digitally.

Yesterday, Government has launched a new, swadeshi platform for digital transactions – named BHIM after Babasaheb Bhimrao Ambedkar.

BHIM stands for Bharat Interface for Money. I call upon the youth, the trading community, and farmers to connect with BHIM as much as possible. Friends, the developments, decisions, and policies that were put in place after Diwali, will of course be evaluated by economists.

It will be good if social scientists also do the same.

As a nation, India’s villages, poor, farmers, youth, educated and uneducated men and women, have all displayed infinite patience and people power. In a short time, the new year of 2017 will begin. Exactly 100 years ago, in 1917, Mahatma Gandhi initiated a Satyagraha in Champaran. Now, a century later, we witness that the people of India continue to share that feeling towards truth and goodness.

Today, Mahatma Gandhi is not among us. But the path towards truth that he showed us, is still most appropriate. As we begin the centenary year of the Satyagraha, let us recall the Mahatma and resolve to follow his message of truth and goodness.

We cannot allow this fight against black money and corruption to stop or slow down. Firmness in truth is a guarantee for success. A country of 125 crore, with 65 per cent below the age of 35, having the means, the resources, and the capability, has no reason to stay behind.

The new dawn of the New Year, comes with the resolve of new success.

Let us all come together, to move ahead overcoming obstacles and constraints.

Happy New Year

Jai Hind !!!

First Published On : Dec 31, 2016 21:28 IST

From sops for senior citizens to affordable housing schemes: Top announcements by PM Modi on New Year’s Eve

<!– /11440465/Dna_Article_Middle_300x250_BTF –>Addressing the nation on New Year’s Eve on the impact of demonetisztion and the roadmap ahead for the economy, Prime Minister Narendra Modi on Saturday said India has gone through a massive cleansing process and purification drive (Shuddhi Yatra). In a 43-minute-long address to the nation, he said the citizens of the country were desperate to break free of corruption, but had never been given a chance to do so earlier, and had in fact gotten used to the idea of offering extra money to get their jobs done.Prime Minister Modi said India has set a new example for the world through this 50-day-long demonetisation exercise, adding that their commitment and discipline to tackle the cash crunch would be a living example for generations to come. ‘This is the first instance in India’s history when the government and the people have fought shoulder to shoulder. I got thousands of letters from the people who shared their pain, but they reaffirmed their resolve to stick with the process to root out corruption and black money,’ he said.He further stated that “125 crore Indians have proved that they are willing to wait in line at banks, but do not wish to be even one step behind in the drive against corruption.” He said that what would me most surprising to a majority of the citizens would be that, “Just 24 lakh Indians had admitted to having an income of more than Rs.10 lakhs,’, which was indicative of the very high level of tax eva sion being perpetrated by those not abiding by the law. Expressing confidence that the New Year would see lesser queues outside banks and things returning to normal, Prime Minister Modi said, ‘Banks have never before seen this sort of influx of cash’, and he would like to see personnel of these institutions focusing on helping the middle class and the poor.Here are the top highlights of speech: 8% interest rate will be guaranteed on deposits of up to Rs 7.5 lakh for 10 years for senior citizens; interest will be paid monthlyRs 6,000 to be put into accounts of pregnant women in 650 districts for vaccination and other medical useTwo new schemes under Pradhan Mantri Awas Yojana to provide 4% interest waiver on loan of up to Rs 9 lakh and of 3% on loan up to Rs 12 lakh.Banks have been asked to raise cash credit limit to small business to 25% from 20%Government to stand guarantee for loans up to Rs 2 crore from current Rs 1 crore, to small businesses3% interest waiver on loan up to Rs 2 lakh for construction of houses in rural India.Government to pay interest for 60 days on loans taken by farmers for rabi season from district cooperative banks and primary societies

Demonetisation Day 50: Deadline to deposit old Rs 500, Rs 1,000 notes ends today; crunch to continue

New Delhi: The 50-day deadline to deposit the old Rs 500/1,000 notes in banks comes to an end today but the cash crunch and queues before ATMs are likely to continue for some more time as currency printing presses have failed to meet the huge demand for new bills.

People, however, will still have time to exchange the currency notes at designated RBI counters till March 31 after giving valid reasons for not depositing defunct notes in their accounts by December 30.

The government is also planning to come out with an Ordinance making possession of old Rs 500/1,000 notes beyond a specified limit for numismatic purposes illegal and punishable.



Prime Minister Narendra Modi in a surprise announcement on 8 November declared the old Rs 500 and 1,000 notes invalid.

The banks started accepting deposits in scrapped notes from November 10. However, very few ATMs opened on 11 November, as most of the machines had to be recalibrated for people
to get cash which was available in Rs 2,000 denomination.

Saddled with cash crunch, banks resorted to rationing of valid currency notes and fixed a withdrawal limit of Rs 24,000 per account in a week. Although the overall situation at banks has improved, ATMs still have to do some catching up. Many cash vending machines are still out of cash even after 50 days since demonetisation.

The government move was sharply criticised by the Opposition parties led by Congress and TMC.

With every passing day, the number of circulars from the government or the Reserve Bank kept on rising that led to confusion among bankers as well as the public. Bankers believe that restrictions on withdrawal of cash from banks and ATMs are likely to continue beyond December 30.

After the demonetisation, the government had fixed a limit of Rs 24,000 per week on withdrawal from bank accounts and Rs 2,500 per day from ATMs in view of the currency crunch.
The government and the RBI has not specified when the restrictions will be withdrawn. Finance Secretary Ashok Lavasa had said the withdrawal cap would be reviewed after December

First Published On : Dec 30, 2016 09:01 IST

Demonetization breathes life into ‘zombie’ accounts

<!– /11440465/Dna_Article_Middle_300x250_BTF –>About 72,000 dormant accounts in public and private banks came to life in the first 17 days of demonetization with more than Rs 2,000 crore cash deposited in them. Topping the list was India’s largest public sector bank State Bank of India (SBI) with deposits of Rs 586 crore, reveals official data.The average deposit in the 72,000 accounts is Rs 2.79 lakh, a notch above the Rs 2.5 lakh limit specified by the government, according to the Financial Intelligence Unit, a specialised agency that works under the Finance ministry.Tasked with monitoring suspicious bank transactions, FIU had closely scrutinised accounts in the period between November 8-25 and found that dead accounts—those that had not been active for the last two years—had suddenly sprung to life after the government withdrew high currency notes.Almost every bank, public and private, had accepted such deposits, reveals the data accessed by DNA.While SBI heads the list, Punjab National Bank (PNB) follows second with Rs 230 crore being accepted in dormant accounts. UCO Bank (Rs 154 crore), Bank of Baroda (Rs 116 crore) and Bank of India (Rs 105 crore) are the others in the top five. Amongst the private banks, ICICI is at the top with Rs 51 crore followed by Axis Bank (Rs 36 crore) and HDFC (Rs 9 crore).The largest dormant deposit was found to be in Surat where one individual deposited Rs 3 crore in HDFC. Amongst the other stand-out transactions that have come to light is that of a garment trader depositing Rs 1 crore without quoting a PAN number in the Tirupur branch of PNB.The main intent behind declaring an account dormant or dead is to reduce the risk of frauds. Segregating these accounts leads to bank staff getting alerted to the risks involved and the due diligence needed.But after demonetization, some people are allegedly depositing unexplained cash in these zombie accounts, an expert explained.Recently, in a high profile meeting of tax officials, the Central Board of Direct Taxes (CBDT) took note of 500 suspicious accounts where more than Rs 15 lakh cash was deposited.The government has started analysing where the higher-than-expected deposits came from and how they got into the system. Banks and their staff could face intense scrutiny, and possible penalties if irregularities are found, an official said.The banks did not respond to emails and repeated messages.

Baba Ramdev, stop making oblique suggestions about PM Modi; either spill all the beans or zip it up

You know the country is hurting when even the prime minister’s best friend turns against him. Actually, let me rephrase that — the best friend is hurting, and so friendship be damned, hang it out to dry.

Baba Ramdev has spoken out against Prime Minister Narendra Modi‘s note ban, by hinting at a sinister conspiracy involving the banking sector, and even the Reserve Bank of India (RBI), saying that as much as Rs 3-5 lakh crores can be involved in this scandal.

Baba Ramdev. PTI file imageBaba Ramdev. PTI file image

Baba Ramdev. PTI file image

Ramdev has clearly shrugged off his long-time support for Modi, as he adds economic insight to his quiver of authoritative arrows. The yogi-turned businessman and ayurveda champion, as adept at being spiritual guru as he is selling edible oil, but is having a rough time with sales of his consumer products probably dropping. To add to his dismay is the Rs 11 lakh fine levied on him for misrepresentation in manufacture of his products in the Hardwar factories where the ingredients are falsely marked.

Good reasons, don’t you think, for Ramdev to get a bit teed off; so this man for all seasons now decides to interpret the downside of the demonetisation process.

But, according to him, it isn’t the prime minister who’s the bad guy — it’s the banks, and they misled Modi with their chicanery and gave him the wrong idea of what could happen. They did not tell him, for example, that Patanjali branded items would not fly off the shelf, and if they don’t do that with alacrity, then surely something is wrong with the killing of currency notes.

But, whoa, wait just a minute. Why has it taken Ramdev all of 38 days to figure it all out and share his incandescent genius with us? How quickly people change when their bottom line is adversely affected.

There is also another reason for this economic epiphany. Ramdev has probably been feeling left out of the loop at not getting his quota of media attention this past month or so. That anonymity irks, so why not make some outlandish announcement in the manner of a teaser trailer and say a lot without saying anything concrete.

In one shot, he indicts Modi, then absolves Modi, then blames the banks, and finally tells us there is a seamier undisclosed dimension, even venturing to place a huge figure on it, although he doesn’t tell us what exactly is going on.

Now, is that fair? If Ramdev knows what this Rs 3-5 lakh crore hanky panky is all about, then why be cute about it? Come out and tell us the details, so we can decide if the banking sector plotted this grand larceny on the Indian people and took Modi for a ride. Yes, we know the banks are flush with cash. Where else would the money go. But that is not an indication of their being corrupt or in on the scheming.

To play mind games and make provocative statements is not only uncharitable, it is also a cheap shot. You can certainly criticise the fallout from the ban on currency notes and have an opinion, but if you point your flinty little fingers in accusations and suggest more than obliquely that the underbelly is dirtier than we know, then you are duty bound to show us the dirt.

Till you are ready to spill the beans, it’s time to use your own toothpaste because you are just being foulmouthed.

First Published On : Dec 16, 2016 15:35 IST

Demonetization: Chidambaram dubs it as ‘worst assault’ on poor, Rahul says measure will injure country

<!– /11440465/Dna_Article_Middle_300x250_BTF –>Congress today unleashed a dual attack on Prime Minister Narendra Modi over note ban woes with Rahul Gandhi accusing him of “waging a war” against the poor by rendering them “cashless” and P Chidambaram calling it a “biggest scam” of the year that needed to be probed.Flagging the impact of demonetization on the ground, Chidambaram dubbed it as a “thoughtless move”, “the worst assault” on the poor and worse than natural calamity for them while Gandhi said Modi’s vision of a cashless economy has rendered the poor “cashless”, robbing them of their hard- earned money.Before banning high-value notes, Chidambaram said Modi should at least have consulted his “own man” Yashwant Sinha so the “monumental mismanagement” could have been avoided. Taking a vox-pop-style referendum on demonetization among people standing in a bank queue in Dadri in Uttar Pradesh, Gandhi charged that the announcement by Modi on November 8 has enabled the conversion of black money into white.The Congress Vice President alleged that the NDA government has “blocked” the money of the poor through currency ban to favour a “handful of industrialists” and to liquidate banks that have extended loans worth “Rs 8 lakh crore” to them. Addressing a gathering at a wholesale market, Gandhi said, “The Prime Minister has brought honest people on the streets while the rich and the corrupt are taking money through the backdoor of banks.”It was done to ensure that the poor deposit their money in the banks, which will be used to repay the debt of around Rs 8 lakh crore owed by these industrialists to the banks.Modiji wants the money of the poor to remain in the banks for the next six to eight months,” he said.Gandhi said the measure will “injure” the country. He also accused the Prime Minister of shifting goalposts over the issue by listing the objective of the measures ranging from unearthing black money to curbing counterfeit currency. “Only 2 paise out of Rs 100 is counterfeit. Two days after Modiji made the announcement, terrorists, after they were slain, were found having new currency. Then he says he will make the economy cashless. He has made it cashless indeed, with the poor having no cash,” he said. Chidambaram while terming the exercise as “absurd” and “thoughtless” in a scathing attack on the Modi government sought to know how many economies in the world are cashless.”This is the worst assault on the poor in the country. demonetization has broken the back of 45 crore people. It is punishing the poor. I see no rich man affected by the ban,” the Congress leader told a press meet in Nagpur.”Daily wagers are out of work. Village markets and mandis have been shut for the last 30 days ” Chidambaram said.”World over small transactions are done in cash not by cards. To assume that India will go from 3 per cent to 100 per cent cashless in a matter of a few months, is an outlandish expectation,” he said.It was an illusion that demonetization was created to hurt the rich and help the poor, he said.Highlighting the woes of the people in remote areas, he said, “The pain in rural areas is indescribable.” The Congress leader while seeking a thorough probe by the SIT on the matter said that recent cash seizures in Rs 2,000 notes across the country point to the “biggest scam” arising out of the note ban.

Modi’s vision of cashless economy left the poor ‘cashless’: Rahul Gandhi on demonetization

<!– /11440465/Dna_Article_Middle_300x250_BTF –>Congress Vice President Rahul Gandhi on Tuesday stepped up attack on Prime Minister Narendra Modi on demonetization, saying his vision of a cashless economy has rendered the poor “cashless”, robbing them of their hard-earned money.Gandhi accused Modi of “waging a war” against the poor of the country through his announcement on the night of November 8. The measure has enabled the conversion of black money into white, he charged.Gandhi alleged that the BJP government has “blocked” the money of the poor through currency ban to favour a “handful of industrialists” and to liquidate banks that have extended loans worth “Rs 8 lakh crore” to them.Addressing a gathering at a wholesale market in Dadri, he said, “The Prime Minister has brought honest people on the streets while the rich and the corrupt are taking money through the backdoor of banks.”It was done to ensure that the poor deposit their money in the banks, which will be used to repay the debt of around Rs 8 lakh crore owed by these industrialists to the banks.Modiji’s wants the money of the poor to remain in the banks for the next six to eight months,” he said.Rahul said the measure will “injure” the country. He also accused the Prime Minister of shifting goalposts over the issue by listing the objective of the measures ranging from unearthing black money to curbing counterfeit currency.”Only 2 paise out of Rs 100 is counterfeit. Two days after Modiji made the announcement, terrorists, after they were slain, were found having new currency. Then he says he will make the economy cashless. He has made it cashless indeed, with the poor having no cash,” he said.

Demonetisation will not put an end to black money-generation, says economist Arun Kumar

Weeks after the government startled all with the demonetisation move, black money continues to be the biggest talking point in the country. However, much of the discussion on the subject is less than informed and it confuses more than it enlightens the lay person.

In an exclusive interview with Firstpost‘s, Debobrat Ghose, Prof Arun Kumar, noted economist and author — The Black Economy in India, , who is an authority on the subject of black money said that the government’s move would not be a sledgehammer blow to generation of black money. Instead, he believes that it would leave the economy in trouble and people harassed.

Here are the five major takeaways from the interview:

Professor Arun Kumar, Centre for Economic Studies, Jawaharlal Nehru University.Professor Arun Kumar, Centre for Economic Studies, Jawaharlal Nehru University.

Professor Arun Kumar, Centre for Economic Studies, Jawaharlal Nehru University.

Hoarded money is not necessarily black money
The demonetisation move may demobilize only a small part of the stock of black wealth held in the form of cash, but it won’t stop the flow. The need is to stop black income generation which results in generation of black wealth. Income needs to be distinguished from wealth, and so black money should be distinguished from black income. Black money is only a tiny part of the black wealth that has been accumulated. Black income generation will continue due to the existence of a large large number of mechanisms by which it is generated, such as businesses resorting to under and over invoicing; manufacture of spurious drugs; charging of capitation fee for admission in school and colleges; adulteration of food, etc.

Black money is largely circulating in businesses. It’s black wealth that is parked. First, we need to understand the difference between black money, black income and black wealth. It’s not the same. Black money is possibly less than 1 percent of the black wealth.

The demonetisation move won’t put an end to generation of black wealth. The actual people behind black wealth are not being targeted. The misnomer is that black economy means cash. That is where the understanding of the government is lacking. They are thinking that if they demobilize the cash, the black economy will collapse. It won’t.

Demonetisation is no silver bullet against fake currency
Demonetisation won’t end fake currency problem either. According to the RBI, fake currency amounts to only Rs 400 crore of the total currency in circulation of Rs 17.5 lakh crore—which is a minuscule amount. Fresh printing and import of counterfeit currency will not stop with demonetisation. Counterfeit currency is used to finance terrorist activities and those involved in it ensure that it is constantly generated. The printing of fake currency has to be stopped. If the old notes could be counterfeited, so can the new ones too, despite having advanced features. So, extinguishing fake currency one time is not going to help.

Move will leave the economy hobbling
The Rs 1,000 and Rs 500 denomination currency notes constituted 86 percent of the currency and it has been sucked out of the system. It’s like taking out 86 percent of blood from a person’s body. Imagine, what will be the effect! He will die. Same is with the economy. New currency is only slowly trickling in, which is inadequate to restore the flow of incomes. There’s a decline in footfalls in malls; small traders are unable to sell goods; circulation of income is slowing down; the farmers, households, small producers, transport sector – all are hurt due to fall in demand. The poor, the daily wage earners in the unorganized sector are the worst sufferers. If the situation continues for a longer period, it’ll have a cascading effect on the economy. The cash shortage will not be sorted out early because of inadequate printing capacity. So, demand will be affected for much longer than 50 days. This can result in irreversible changes setting in like increase in NPA, unemployment and decline in investment, so that India may head into a recession and not just a decline of GDP by 2 percent.

The circulation of money is like blood flow in the body. If there is a shortage of that, then there is a problem. In the coming months, newer problems will crop us as a result of demonetisation.

Scale of operation is the problem; may not be the intent
Prime Minister Narendra Modi has rightly said that black money menace is the source of poverty, flight of capital and corruption. But, it needs to be clarified why such a drastic step like demonetisation is not the solution, but will jeopardise the economy instead. It’s a wrong move.

In 1978 when Rs 10,000 and Rs 5,000 notes were banned, it didn’t make any noise. The common man wasn’t affected because these high-value currency notes were not used by them. It was with the super rich and it constituted a very small portion of the currency. What was being circulated then were Rs 10 and Rs 100 denomination notes. So, it didn’t touch the day-to-day lives of people. In contrast, at present the common man, including lower middle classes had been using Rs 1,000 and Rs 500 notes. The Rs 1,000 and Rs 500 denomination notes constituted 86 percent of the currency—worth Rs 14.5 lakh crore. The government, in a single stroke has scrapped such a large volume of currency, which was in circulation, without having an alternative arrangement in place. It has created chaos and panic.

Due to lack of advance preparation, almost every day there is a change in policy related to exchange of old notes. The banks and the ATMs are still not equipped to dispense the volume of cash needed by the people. Even today, almost after 30 days, there are long queues at bank branches and outside the ATMs. The salaried class and pensioners are facing a tough time to withdraw their salaries and pensions.

Lingering cash pain
With liquidity sucked out of the system, even if temporarily, money supply has become a problem. Replacing 86 percent of the currency may take many months. You have to replace quickly the Rs 500 and Rs 1,000 notes worth Rs 14.5 lakh crore printed over the years. If you are printing Rs 100 notes, you need to print 10 times more notes than for a Rs 1,000 note and that will take a lot more time. Had the government prepared properly and managed to create enough supply of cash, this pain would have been less. But given the hoarding of currency and printing of small denomination currency notes and shortage of ink and paper, it can take even a year for the supply of currency to become normal.

First Published On : Dec 7, 2016 13:03 IST

DNA Morning Must Reads: Mamata protests army deployment in state; use your Aadhaar card as a debit card; and more

<!– /11440465/Dna_Article_Middle_300x250_BTF –>1. This is a military coup’: Mamata protests army deployment in stateThe BJP has responded by calling the chief minister ‘mentally distressed’. Read more.2. You can use your Aadhaar card as a debit card nowNITI Aayog-led move part of govt’s plan to encourage cashless transactions. Read more.3. Relief to Tamil Nadu, Puducherry as cyclone Nada passes peacefully over KaraikalThis brings relief to the authorities who put the state machinery on high alert. Read more.4. Banks rise to the occasion on salary dayBanks said they are rationing cash so that it can be equitably distributed to locations where there is an increased demand. Read more.5. BSF’s new mantra: Less men, more tech”We decided to implement CIBMS as humans, howsoever alert they are, cannot make the border leak-proof. There are limits to human alertness and they cannot see and hear the way sensitive gadgets can,” said a senior BSF official. Read more.

Demonetisation: If banks don’t have money, what’s the point?

Banks without money are redundant. In Delhi these past 48 hours have been a telling experience. We are an incredible people that despite the fiscal architecture being compelled to collapse like a condemned building, life goes on with very little change. The cab driver is stoic. The traffic is no less than it was in October, somehow, the social fabric is holding on.

A fellow passenger coming in from the US is carrying a few thousand one dollar bills. Says, it helps him avoid hassles and queues and everyone takes dollars as tips and payments and he will pay his hotel bill by card and he doesn’t need a single rupee in the capital of the country.

I tell him it is illegal to give people foreign exchange. He laughs at me. He has brought in below the legal limit and he will take back the rest. And no one rejects his bills.

Imagine if you will, thousands of NRIs swarming in to India with one dollar bills…we could be like Zimbabwe, kill the local currency and use dollars. I jest but the kernel of possibility is a thought.

Representational image. PTIRepresentational image. PTI

Representational image. PTI

I go to the bank and I am told the money for the day has not arrived. It finally does and is greeted with cheers like one of those UN Relief convoys. This is a decent branch where they are not rude — they just cannot give you Rs 24000 because they divvy up the Rs 10 lakhs allotted to them for the day into maximums of Rs 10,000. This is a fortunate bank. Many others have got zilch.

Ironically, the right hand man of a BJP politician tries to cash his cheque and then moans about the limit and the bank manager tells him it is his Sarkar and there is nothing she can do. Good for her.

The crisis thickens as people complain they cannot pay their staff and that new cheque books will take ten days to get delivered.

One man has lost his father and has to feed the ‘baradri’ for three days. He is seeking loans from neighbours. History is kicking in. The collective spirit of helping each other and giving and taking to put it simply is what is keeping this nation’s morale at least at half-mast. Everyone is giving him a little…that is our magic potion Getafix.

Yes, indeed, the patience is impressive. There is still this over-riding belief that something magical will happen and this sacrifice will not be in vain.There has to be a pot of gold at the end of the rainbow or moral rectitude. The rich have been unseated and poor will inherit the earth. This sentiment permeates the average man who firmly believes that the comeuppance of the wealthy is a wonderful thing.

Then why are the wealthy not unhappy. I know of people whose lifestyle stank of ill-gotten gains. Over seventy years of half open desk drawers and shady premium payoffs surely there have been several thousand colossal ‘victims’ of this cleaning up. None of them seem perturbed. Hasn’t anyone lost a fortune, aren’t there folks out there who had cupboards full of now pointless high denomination notes who should be in agony and writhing on the floor. Nto one of the few you would suspect had illegal hoards is batting an eyelid.

Either they are damn fine actors or they know something I don’t.

First Published On : Dec 1, 2016 13:33 IST

Pay-day rush: Staff shortage, angry customers – unions fear for employees’ security

The long queues outside banks since November 10 is expected get lengthier today. The lines comprise of pensioners, senior citizens, retirees and also employees who are waiting to draw their monthly emoluments due to them. So alongside the depositors of annulled notes, there is this queue outside most banks which will only get longer as the day goes. Millions of central and state government staff and private sector employees’ salaries are credited into their bank accounts and a large majority is usually withdrawn in the first and second weeks of a month.

Given the fear that banks are running short on cash, a number of panic-stricken citizens are expected to approach bank branches for their money instead of opting for cashless payments.

Representational image. ReutersRepresentational image. Reuters

Representational image. Reuters

Most ATMs, despite the government’s and many banks’ claims, are out of service or are not running dry too soon.

The huge crowds outside banks are hoping that they get the cash that has been deposited into their accounts. But will they, is the question.

As customers cry hoarse for their money, how are bank staffers equipping themselves to meet with the cash shortage, currency denomination shortage and their customers?

“The banks do not have the money to dispense to the large hordes of their customers,” says CH Venkatachalam, general secretary of the All India Bank Employees’ Association (AIBEA). Banks do not have enough currencies in Rs 100 denominations. The new Rs 500 are trickling in slowly into ATMs and banks. In fact, the RBI has started supplying Rs 500 denomination currency notes yesterday but they are not in adequate supply to meet with the expected need of the large customers expected to enter the bank when it opens for transactions today.

Before the Modi government’s demonetisation announcement on late evening of 8 November, over 1,660 crore pieces of Rs 500 notes were in circulation, representing nearly Rs 8.3 lakh crore of total currency in circulation. According to a ToI report, bankers say that now less than Rs 2,000 crore in new Rs 500 notes has come in.

The currencies are printed in government presses besides that of the Reserve Bank of India. Sources told the TOI that the currency presses owned by the government at Nashik and Dewas are printing Rs 500 while the RBI’s currency presses in Salboni (West Bengal) and Mysuru are printing Rs 2,000 and Rs 100 notes.

“We have limited Rs 100 notes and have Rs 2,000 notes which we can dispense but not as much as the customer is mandated to as per government notification of Rs 24,000 weekly. Customers do not want Rs 2000 notes and we do not have enough Rs 100 currency notes. We end up being abused and shouted at by customers. I am dreading what I will have to hear today at the bank while sitting in the counter,” said a bank employee to Firstpost.

Venkitachalm says that Rs 100 notes that are soiled are being pushed back into circulation. These are unhygienic and bank staffers are falling ill handling these notes what with the bad smell it gives off, he alleged. “It is not helping our cause as staffers have to bear customers’ ire when they are given these notes,” he said.

Not all 2.2 lakh ATMs across the country have been calibrated to accept the changed size of the new Rs 2000 and Rs 500 notes with the result that the queues in banks are unmanageable. With more bank branches opened in the last five years with small spaces along with the ATM and e-lobby, bank premises have becomes restrictive. Given the huge rush expected with salary withdrawals in the first week of December, bank staff will have to bear the brunt of the large number of customers and suffocation due to space crunch, pointed out Venkatachalam.

There is not enough staff to manage the situation that has erupted in the country post demonetisation. Temporary staff cannot be hired as banks deal with money and the last thing they want on their hands in the fragile situation is for security breaches. There are limited computer terminals within banks to operate daily business. “Even if the government allows us to hire temporary staff, where are the terminals,” asks Venkitachalam.

Customers who are furious at the continued daily ration of Rs 2,500 from ATMs (most of which are not functional) with which they are barely able to meet their needs have resorted to bizarre methods of locking up bank staffers in a bid to get money after banking transactions are over. Staffers are constrained having had to work longer hours and dealing with annoyed customers. “We understand their agony but what can we do,” asks a bank staffer in a government bank.

The need of the hour is for the government to print more currency notes in government presses and for the RBI and the government to coordinate well so that the currency supply meets with the legitimate demands of the customers.

“Banks are doing all the work the government mandates from exchange of notes, pension, Jan Dhan accounts and yet government banks are facing cash crunch but not private banks,” says Venkatachalam, adding that banks are not chit fund companies but repositories of faith. “We are concerned how things will turn out,” he said.

First Published On : Dec 1, 2016 10:22 IST

Pay day cash crunch: Painful queues, chaos return and it’s just the beginning

Queues returned to banks and ATMs on Wednesday as people rushed to withdraw cash after monthly salaries got credited in their bank accounts — the first since the high value currency was scrapped — signalling more pain as the crowd is likely to get bigger in from today (1 December).

A PTI report said queues at most of the ATMs and banks across the city on Wednesday were shorter than expected though there were complaints that cash dispensing machines were either dry or shut and customers could not draw the maximum permissible amount.

Most private companies in India credit salaries to their employees on the last day of a month even as labour laws allow wages to be disbursed on any day before the 10th of the next month.



As soon as the salaries were credited, millions of employees began queuing up outside banks and ATMs across the country to withdraw cash to meet their monthly needs and pay their domestic helps, drivers and clear their monthly grocery and other bills.

Since the supply of notes from currency chests has failed to keep pace with the demand for cash after 86 percent of currency in circulation was declared illegal on 8 November, the chaos worsened on the payday as more households needed cash than earlier.

People were seen in bigger numbers waiting to withdraw money. Many were annoyed by the rush and the arbitrary withdrawal limits set by banks. And the situation could get worse in the coming days as more number of people will receive salaries.

What are the customers saying?

“I have to pay my maid and grocery bills in cash. I somehow managed to convince my landlord to accept the rent in cheque but I am bound to visit the bank for other payments,” said Vishakha Sharma from west Delhi.

The 27-year-old waited outside a bank for two hours. “It is so humiliating that we have to stand in long queues and beg for our own money.”

An MNC employee, Yogesh Yadav, said he had come to withdraw Rs 24,000 from his bank account but was given only Rs 10,000. “It’s the end of the month and I am supposed to pay bills. How will I manage?” Yadav asked.

A resident of Krishna Nagar in Delhi, Rahul Chauhan got his salary credited on Tuesday but could not withdraw even after standing in a queue at 3 a.m. on Wednesday.

“By the time my chance to enter the bank came, it ran out of cash.”

The case was not different in other parts of the country.

In Kolkata, in apprehension of a mad rush, people started queuing up outside banks and ATMs since morning.

“I am in the queue since 8.30 a.m.,” said Sougata Mitra, an employee of a private firm outside a Bank of India branch in central Kolkata.

It was 10.45 a.m. when IANS caught up with Mitra, and already 50-60 customers had lined up.

The first salary day after demonetization proved haranguing for the maximum city Mumbai where most ATMs ran dry. Desperate men and women drove from one place to another, halting wherever they saw an ATM alive, albeit with long queues.

Though many Mumbaikars have shifted to making certain payments online or by debit/credit cards, there are many bills which need to be paid in cash. Many feared that the situation could worsen on Thursday.

“Everything has come to a standstill. Worse, many online payments systems are jammed due to the sudden heavy traffic and payments are pending,” fumed a pharmaceutical consultant P. Venkataraman from Kandivali, a Mumbai suburb.

“I managed to get only Rs 4,000 this morning against the withdrawl limit of Rs 24,000 as I was told that there was hardly any cash supply to the banks in the last few days. I will have to wait and try my luck later in the day,” a South Mumbai resident has been quoted in a PTI report.

What are the banks saying?

Several banks ran out of cash within hours of opening on Wednesday. Some bank officials complained that they were getting cash much below what they need.

Various media reports put the cash situation at banks at about one-fifth of the demand. A report in The Times of India cites a bank official as saying that his branch received 15-20 percent of the required amount. Due to this, bankers were rationing withdrawals so that more customers were catered to.

“RBI is currently supplying cash based on a variety of calculations including how much a bank branch got the previous day. That will continue. We will continue to ration cash,” one banker has been quoted as saying in a report in The Economic Times.

However, bankers are not ready to be quoted and remain unnamed in the reports, probably for the fear of attracting the government’s wrath. Those who were named said the situation is all fine.

When asked about the cash crunch situation, Central Bank Executive Director R C Lodha told PTI, “We have made adequate arrangements to meet the higher demand for cash as salaries would be credited into customers account (as the month turns). In our bank there would be no shortage of cash.”

“At SBI we have enough currency supply. At some pockets there was shortage, but there also funds are being made available,” State Bank of India’s deputy managing director Manju Agarwal has also been quoted as saying in another PTI report.

It is to be noted that Indian Banks’ Association, the body of the bank management, has not come out with any statement regarding the demonetisation yet.

However, unnamed bank managers are painting a grim picture of the situation. They say the bank branches are not getting enough Rs 500 and Rs 100 notes to cater to the customers. Since these smaller denominations are in short supply, Rs 2,000 that are available now is not in demand since customers find it difficult get change.

A PTI report said nearly 70 percent of ATMs are now recalibrated, but they do not have cash. While people are struggling with the problem of change as the operational ones dispense mostly high denomination Rs 2,000 notes.

The rationing and short supply of smaller denomination notes are adding to the distress of the customers who are waiting in the queues for long time.

Many banks have made ‘SOS calls’ to the Reserve Bank for additional cash for the first few days of December to meet the initial rush of people, already fatigued standing in unending queues.

According to reports, they have started seeking security deployment at branches to manage the angry crowd.

Many banks are contemplating to set up additional counters for withdrawal to meet the rush.

What is the RBI and government saying?

Reports say they are taking steps to improve the situation. A report in The Times of India citing sources said the four printing presses that produce currency notes are now working in three shifts against the earlier two shifts. The aim to is increase the supply of Rs 500 and Rs 100 notes.

It further says citing sources that the RBI has increased the cash supply to banks by four times and the situation will be better today (Thursday).

However, there has not been any official update on the evolving situation from neither the RBI nor the finance ministry in the last two-three days.

Given the lack of information from the authorities, customers are likely to hoard cash anticipating further tightening. And if they do it will just put further pressure on the cash situation. The blame squarely rests on the government and the RBI.

What lies ahead?

As of now, expect more uncertainty and chaos. Even if the government and the RBI have put pressure to produce more Rs 500 and Rs 1,000 notes, this is unlikely to ease the crunch easily. A government official has told the PTI that that there is a lag of 21 days for printed notes to reach markets.

The PTI report notes that 1 December, today, is the pay day and banks are gearing up to face a huge rush as people. The queues at branches across the country are likely to get lengthier.

What has made matter worse is the fact that a large number of ATMs are still dry even 23 days after the government scrapped Rs 500 and Rs 1,000 notes.

And with pay day just dawning, it seems to be the beginning of the pain.

With IANS and PTI

First Published On : Dec 1, 2016 08:46 IST

Demonetisation: Unable to get cash, villagers block traffic in UP

Greater Noida: Upset over the lack of money at banks even after 22 days of demonetisation, villagers at Bilaspur in Greater Noida on Wednesday blocked the Noida-Sikandrabad road, affecting traffic for more than an hour.

Representational image. AP

Representational image. AP

Reportedly the banks at Mandi Shyam Nagar in Dankaur displayed a ‘no cash’ notice and when the villagers reached there they were left agitated.

Locals said the villagers then closed the banks’ gates from outside and held protest even as some of them blocked traffic on the Noida-Sikandrabad road.

For one and half hour traffic was affected. Senior police officers reached site and pacified the villagers after which the blockade was lifted.

“For the last three days I have been visiting the bank to withdraw Rs 2,000 but am unable to get the money. Banks claim they are not getting cash. The ATMs too are without cash,” said one of the villagers, Dharam Bhati.

Another villager, Raje, alleged, “Bank officials give money to their known persons out of turn while the common man after standing in queue for hours was told there was no cash and was sent back.”

At Udyog Bandhu meeting held on Wednesday at DM camp office in Noida, some industrialists raised the problems emerging due to demonetisation before the district magistrate NP Singh.

“Small industries’ production was affected. Though the government has allowed withdrawal of Rs 50,000 from current accounts but bank officials are refusing such withdrawals, saying there was no cash at banks,” they claimed.

First Published On : Dec 1, 2016 07:51 IST

Salary day amid note ban: Banks start rationing to combat cash crunch; pressure to escalate

Snehalata Awasthi, a 35-year-old content writer working in a multinational content providing company in New Delhi, reached Citibank branch at Connaught Place in New Delhi at 8 am on Wednesday, to stand in a long queue. Finally, she managed to get Rs 10,000 against her requisition of Rs 24,000.

It’s not just Snehalata Awasthi; there are thousands of customers who have received less cash against their requisitions. Also there are customers, who have failed to withdraw money from smaller neighbourhood branches.

Facing shortage of cash supply vis-à-vis huge demand for withdrawal of cash from customers, the banks have resorted to rationing of cash dispensation. Based on their status of cash in hand, the public sector and private banks have set cash disbursal limits for customers.

Heavy rush outside Bank of India, Delhi. Firstpost/Naresh Sharma

Heavy rush outside Bank of India, Delhi. Firstpost/Naresh Sharma

Internal rationing system

According to the latest Reserve Bank of India (RBI) guidelines — a customer can withdraw up to Rs 24,000 from a bank branch in a week. However, due short supply of cash from the RBI, the banks have developed individual rationing mechanism.

“Though my salary will be deposited in my account on Wednesday evening, but it is going to be difficult tomorrow to withdraw cash. As large number of customers will be there to withdraw salary tomorrow, I came to withdraw money from my account. The bank told me that I can withdraw maximum Rs 10,000,” said Awasthi.

Besides, rationing of cash disbursal, the banks have also set limits on withdrawal of cash through cheque and cash withdrawal form. In the case of the latter, withdrawal limit has been set less than the cheque.

“Our maximum thrust is to give cash to as many customers as possible. Due to short supply of cash, we can’t give Rs 24,000 to all. So, we’ve set a temporary limit like Rs 10,000 in a day,” a Citibank official told Firstpost.

Large number of ATMs in Delhi, especially those of private banks had no cash on Wednesday. It is the account-holders of public sector banks (PSBs) who are the satisfied customers.

“I failed to withdraw cash both from my bank branch and ATM. It’s a private new generation bank. But my wife, who has an account in a government bank, got money from there,” Chattarpur-based businessman Rajesh Sharma said.

“Though we’re not getting the amount that we have requested the RBI, yet we’re trying our best to manage it by lowering the withdrawal limit and also ensuring that the ATMs are replenished. We’ve deployed additional staff to deal with the swelling number of customers. After all, it’s salary time and everyone should get money,” said a Central Bank of India official.

A branch and ATM of ICICI bank in Delhi bear a deserted look due to no cash. Firstpost/Naresh Sharma

A branch and ATM of ICICI bank in Delhi bear a deserted look due to no cash. Firstpost/Naresh Sharma

Mad rush

In anticipation of acute cash crunch in banks and ATMs due to the beginning of salary week, a large number of citizens in the national capital pushed off from home quite early on Wednesday to withdraw cash from the respective bank branches.

The branches of PSBs in Delhi have witnessed more rush than the private ones.

The bank branches and ATMs will face immense pressure during the first week of December, which is going to be the real test of the demonetisation move.

Non-availability of Rs 500 notes

Though Rs 500 denomination notes have been released, the banks disbursed only Rs 2,000 and Rs 100 denomination notes.

Surprisingly, many customers have also received Rs 50, Rs 20 and Rs 10 denomination notes. Even customers have complained of having received soiled small denomination notes.

“I received cash in Rs 50, Rs 20 and Rs 10 denomination notes. Many of those notes were old and soiled, which will again be difficult for me to use. I was told by my bank branch that they too have received the same from RBI,” said Akash Chowdhary, a resident of Jabalpur in Madhya Pradesh.

According to banking sources, anticipating mad rush at bank branches from 1 December as salaried-class and pensioners will go to collect their salaries and pensions, 20-30 percent extra cash has been provided to those branches with salary accounts.

First Published On : Nov 30, 2016 20:16 IST

Demonetization: Queues at banks and ATMs become shorter, cash crunch bothers people

<!– /11440465/Dna_Article_Middle_300x250_BTF –>After three weeks since the Centre announced the demonetization decision and two days after the banks reopened after the weekend holidays, queues outside banks and ATMs in the suburbs were found to be shorter on Monday though citizens complained of not getting the desired amount withdrawn.Many citizens expressed concern that they may have to continue to face the hardships owing to the cash crunch for some more days. Archita Mishra, a resident of Thane, said she felt short-changed by her bank as she could get only Rs 2,500 withdrawn over the counter. “I went to the bank to withdraw Rs 24,000 and I was quite hopeful to get it as there was no rush at all today. But my hope faded away as the bank executive told me that I could get only Rs 2,500 as the bank didn’t have sufficient currency in its coffers,” she said, adding that the banks should put up a notice informing the people of the scenario.OP Sharma, a resident of suburban Bhandup, said though the queues had shrunken substantially, the banks needed to adopt a supportive attitude towards the senior citizens. “While a few banks are making separate queues for senior citizens, State Bank of India is not mending its ways as a result of which, the elderly people are forced to stand in the line under the scorching sun. This should be corrected immediately,” said the retired Central Railway officer. He said the rush at the banks had reduced substantially since the exchange of scrapped Rs 500 and Rs 1,000 currency notes was halted.Neelam Trivedi, a Ghatkopar-based homemaker, claimed that the banks on Monday sent the people away citing liquidity crunch. “It’s good that the huge rush and serpentine queues are reducing with the passage of days, but this is also a harsh reality that the people are returning empty-handed as the banks are unable to give them sufficient money due to the liquidity problem,” she said.Recalling how people were queuing up outside banks since the wee hours to either get their old currency notes exchanged or deposited till a few days back, Trivedi said the situation had changed now.
ALSO READ PM Modi blinded by arrogance of numbers, can’t fathom people’s pain and anger: Congress on demonetization Goregaon resident Vinayak Sawant said, “I joined the queue at an ATM at 4 PM after seeing only six-seven people ahead of me. But, we could not withdraw more than Rs 2,000. I hope the situation will improve very soon.” As per the Reserve Bank of India, one can withdraw up to Rs 24,000 per week from their bank accounts, including withdrawals from ATMs.

Jan dhan accounts flush with cash in Odisha, officials smell foul play

Kendrapara: The hitherto dormant Pradhan Mantri Jan Dhan Yojana (PMJDY) accounts in nationalised banks have now sprung to life and are flush with cash in several parts of Odisha, thanks to demonetisation drive.

The post offices are also witnessing sudden upsurge of deposits of scrapped notes with inoperative accounts being made operational by account holders in a hurry.

Demonetisation has seemingly provided a lease of life to these accounts which were literally dead. Kendrapara and Jagatsinghpur districts account for 3.75 lakh Jan dhan accounts, officials said.

In Odisha, the highest percentage of 59.50 per cent of the households in Kendrapara avail banking facilities followed by Jagatsinghpur with 58 per cent, they said.

Representational image. ReutersRepresentational image. Reuters

Representational image. Reuters

With PMJDY account holders virtually making beeline at bank counters to deposit money and activate the accounts, there has been rapid spurt in the quantum of deposits in several of these zero-balance balance accounts. While bank personnel acknowledge activation of such dormant accounts in large numbers and the rise in deposits, they preferred to remain tight-lipped on reports of huge cash flowing into such accounts.

An official of a nationalised bank said, “There has been impressive growth in cash deposits in Jan dhan accounts. We obviously smell foul-play. Though a ceiling of Rs 50,000 deposit has been fixed in these accounts, we have come across accounts exceeding maximum deposit limits. The accounts with excess deposit would lose PMJDY classification. These would be converted into general savings accounts.”

Deposits in the accounts are largely in demonetised high-value currency notes, giving suspicion that unscrupulous elements might be using the accounts of poor and gullible to convert black money into white. We are reparing detailed list of such accounts which were inactive since day of operation. However, cash flowed into it after demonetisation. The list of ‘suspicious’ accounts would be submitted to the competent authorities, the official said.

These accounts occupied less than one per cent of the total deposit base. However, it has shot up to 3 to 4 percent since cash began flowing into them.

Post the Centre’s demonetisation step on November 8, most Jan Dhan accounts are subjected to their first-ever transactions ever since they were opened. There are instances of these accounts being switched to general savings accounts. Some account-holders have also resorted to tactics depositing Rs 49,000 to avoid PAN card submission, the officials said.

Several deposits of Rs 49,000 were found out to have been made in such replenished accounts, said the head of a nationalised bank in Paradip.

Like Jan dhan, misuse of mini-accounts, which could be opened in banks without furnishing KYC and the deposit limit of which should not exceed Rs 50,000 at any point of time, looms large. The aggregate of all withdrawals and transfers in a month should not exceed Rs 10,000 from such accounts, said officials.

The customer service points of nationalised banks are entrusted with opening mini-accounts. Of late, applications for conversion of these accounts into general savings accounts are being received. Deposit of demonetised notes appears to be the sole cause for upgrading such accounts. The bankers are also keeping a tab on these accounts, they said.

There is every possibility that account-holders are being lured on monetary consideration by agents of rich people to lend their accounts to stash their ill-gotten cash. In all likelihood, those working in Paradip industrial belt as labourers and contractual labourers are becoming the soft target of these agents and middlemen. Most of these working classes have their Jan dhan accounts in banks in Paradip, said a banker requesting not to be quoted.

The post offices from both the district are also overflowing with cash in savings accounts. Dormant postal accounts, not subjected to monetary transaction since past three years, have been made operational by the account holders. Demonetised notes have also sneaked into such accounts, said an official of department of post in Kendrapara.

Three days ago, over 57 deposits amounting to Rs 75,000, all in demonetized Rs 1,000 scrapped notes were made in the head post office, said an official of Kendrapara head post office Kendrapara.

First Published On : Nov 27, 2016 15:19 IST

Demonetisation: Modi asks youth, traders to help create a ‘less-cash society’

Prime Minister Narendra Modi on Sunday talked about the demonetisation of Rs 500 and Rs 1,000 notes on the radio programme ‘Mann Ki Baat’ and appealed to the people of India to help him create a “less-cash society”.

“A lot of people have asked me to talk more about the currency ban,” said the Prime Minister, as he began talking about demonetisation.

Prime Minister Narendra Modi asked people to help create a 'less-cash society'. PTI

Prime Minister Narendra Modi asked people to help create a ‘less-cash society’. PTI

“When I had taken this decision, I had said that this is full of difficulties. And the implementation of this decision was also bound to be difficult. I knew about the kind of difficulties people would have to face,” Modi said. “I knew that it will definitely take 50 days to come out of the effect [of demonetisation],” he added.

“But for 70 years, we have been tolerating the disease of corruption and black money. The cure to that disease cannot be simple,” he said.

“But I see your support. Despite so many attempts to dissuade you, you have understood this move for the welfare of this nation,” said the Prime Minister. “The entire world is watching this move. Every economist is analysing this move. The world is watching whether 1.25 crore Indians, despite difficulties, will achieve success.”

He then said that India trusts its citizens who will make the country emerge successful after “this test of fire”.

“Bank branches and officials are involved in this process. It is because of their efforts that India will succeed,” he said. “I have seen that banks and post office officials are working. And when it comes to humanity, they are two steps ahead of everyone else. I remember when the Jan Dhan Yojana was announced, the way the bank officials worked showed that they did something which had not been done in 70 years,” he added.

“There are still some people who have a bad habit of trying to find loopholes. They are trying to find other means to save their black money and benaami money,” Modi said.

“They are trying to influence and oppress the poor people to do this. I want to tell these people: Following laws or not is up to you. But please do not play with the lives of the poor. Don’t do anything because of which the poor suffer because of your actions,” he said.

Modi also said that demonetisation was changing rural lives too. He said that because of demonetisation, in one week, Rs 13,000 crore was deposited in many municipalities this year, which was much greater than last year.

“I want to thank the farmers. Compared to last year, the sowing by farmers has increased. Despite difficulties, the farmers have found solutions. The farmers always stand resilient,” he said.

“Small traders also faced difficulties. But they are achieving a lot through technology,” Modi said. He also asked small traders and businessmen to use bank apps on their mobile phones and “learn how to participate in trade through cashless transactions.”

“I also want to thanks labourers,” Modi said. “They are forced to give a cut to many people after getting their wages. Through mobile phones and e-wallets, you can avoid giving these cuts,” he added.

“I took this decision for the poor and the needy,” he said.

The prime minister then appealed to the youth to help teach others about technology and online transactions.

“I want to talk to the youth. I know that you have liked and supported this decision. You are my real soldiers. This is a golden opportunity to help India,” he said.

“Many elders in your family will not know what an app is. You know how to conduct transactions online,” he said.

“Our dream is a cashless society. But why can’t India move towards a ‘less-cash society’. I know you will not disappoint me,” said the prime minister.

“There are many opportunities for mobile and e-banking. Every bank offers online transactions. Through Jan Dhan Yojana, crores of people have RuPay card. Many have started using that,” he said.

He also talked about the benefits of Unified Payments Interface (UPI), which he said was “very simple, like sending a Whatsapp message. Even an illiterate person knows how to send a Whatsapp message. You don’t even need a smartphone to do this.”

“There is an entire generation which does not know about online transactions,” Modi said. “Make a promise that you will be a part of a cashless society. Every day, educate at least ten families about technology and online transactions,” he said, asking support from the youth.

“I invite you to not only support the government but also become soldiers of this change. There are many countries where the youth changed the country. Revolution is done by the youth,” Modi said.

Before his radio address, Modi had also tweeted, asking citizens to “embrace e-banking, mobile banking & more such technology”.

The prime minister, in his Mann Ki Baat address, also talked about how Amitabh Bachchan talked about the importance of cleanliness on the occasion of the birth anniversary of hi father Harivansh Rai Bachchan.

He also talked about celebrating Diwali with the soldiers of the army and asked people to always support the jawans of the nation.

Lastly, he also talked about how the participation of the students of Jammu and Kashmir in their examinations showed that “the children of Jammu and Kashmir want to touch new heights of development through education”.

First Published On : Nov 27, 2016 12:09 IST

Note ban: Manmohan Singh made polemical points, but his criticism won’t carry weight

When Manmohan Singh speaks, which he seldom does, it is worth listening. But his speech in Rajya Sabha on Thursday on the demonetisation issue was a let-down. Not because he is known for great speeches, but because what he said made only partial sense.

If his purpose was to highlight the government’s failure in handling the fallout of demonetisation, that is par for the course. It is possible to accept his criticism (with some qualifications) that there has been “monumental mismanagement” of the process of demonetisation. The persistent queues before some bank counters seems to justify his hyperbole, if nothing else.

Former Prime Minister Manmohan Singh. PTIFormer Prime Minister Manmohan Singh. PTI

Former Prime Minister Manmohan Singh. PTI

So far, so good. But after calling on the Prime Minister to “find practical, pragmatic ways and means to provide relief to the suffering people of this country”, he goes overboard by calling demonetisation “organised loot and legalised plunder.”

This is bunkum, and pure politics. If there was “organised loot and legalised plunder”, that happened right under Manmohan Singh’s nose, with the 2G, Coalgate and Commonwealth Games scams being exactly that. The former PM was directly linked to those instances of “organised loot” since A Raja pulled off the scam by forcing Singh to look the other way, and Coalgate happened in a ministry Singh was himself in charge of for a while.

Another point he made was that demonetisation would reduce the GDP by two percentage points, but we won’t know if this is right till the year is over. But the best estimates of professional forecasters are far below what Manmohan Singh’s crystal-ball has indicated. Goldman Sachs sees a 1.1 percent fall, Care Ratings 0.5-0.3 percent, Emkay Global 0.9 percent, Icra 0.4 percent, and ICICI Securities by 0.4 percent. Barring Ambit Capital, which adopted a faulty methodology to come up with an unbelievable GDP drop of 3.3 percent from earlier estimates, not one projection comes anywhere near what Manmohan Singh’s claims.

The third point Singh made was that demonetisation would “erode our people’s confidence in the currency system and in the banking system.” For good measure, he added: “I would like to know from the prime minister the names of any countries he may think of where people have deposited their money in the banks but they are not allowed to withdraw their money. This alone, I think, is enough to condemn what has been done in the name of (demonetisation…”.

Whether demonetisation and the replacement of old notes with new ones are enough to damage confidence in the banking system is questionable. One would have thought that prolonged inflationary policies through unabated money printing — which was what happened during UPA 2, when the fiscal deficit crossed 6 percent — would have done more to debase the currency than a demonetisation to replace currency notes. And just to refresh his memory, the first major bank scam happened during his watch in 1992, when Harshad Mehta actually looted bank cash to make hay in the stock markets. And as for restrictions on people drawing their own cash, any banking system can — at times — place such restrictions. Banks even now place restrictions on daily cash withdrawals from ATMs. When banks fail, then too restrictions happen.

Singh also seems to have forgotten the Indira Gandhi emergency, when the government froze a big chunk of citizens’ earnings in compulsory deposits in order to contain inflation. If that did not bother Singh, one wonders why the orderly withdrawal of deposits is a great curtailment of citizens’ rights.

While Singh is right to say that such restrictions do not happen except at times of crises or bank failures, surely temporary restrictions at a time of policy change can be justified?

Perhaps the best point Singh made was the one where he pointed out that while 50 days to restore normalcy is reasonable, for the poor 50 days of financial denial could be “torture”. For good effect, he quoted Keynes to say that in the long run, we are all dead. So the short-term does matter – at least in politics.

The former prime minister had some good lines to offer in a polemical sense, but one doubts if this was a former Reserve Bank Governor and finance minister talking. He did not make the kind of heavy-duty points that one expected from him. He delivered some below-the-belt punches without realising his own midriff is vulnerable.

First Published On : Nov 24, 2016 17:31 IST

Demonetisation: How black money conversion is driving commission, dollar and pound rates

In a move aimed at keeping a tight leash on the growing menace of black money and fake currencies, the government two weeks back took a decision to withdraw high currency denominations of Rs 500 and Rs 1,000 from the system.

Along with it, the government also said any cash deposit made into the bank account should tally with the source of income declared as per the individual’s return filings, failing which the person will have pay to tax and a 200 percent penalty on the same.

Representational image. PTIRepresentational image. PTI

Representational image. PTI

Although, people in general are happy with the government’s move to keep a check on black money, hoarders of excess cash are looking at ways to turn their money into white. This has turned out to be a lucrative business opportunity for several agents who are exchanging the demonetised notes in return for a fat commission.

According to a Business Standard report, commission charged for exchanging money has gone up to 40-50 percent as against 15-20 percent charged in the initial days of demonetisation move. The report says higher the amount lower is the commission, but rates might go up further as the deadline of 30 December draws nears.

In fact, some people are willing to pay agents commission as high as 50 percent to get new cash upfront in return for exchanging their black money to white, the report added.

Not just that, money changers are reported to be using zero balance ‘Jan Dhan’ accounts, mostly held by BPL families, as a vehicle to convert old currency by depositing Rs 500 and Rs 1,000 notes up to Rs 2.5 lakhs in these accounts.

Reportedly, money changers are taking 20 to 30 percent of the cut for the entire transaction of changing old banned currency with new notes. There are more than 25 crore Jan Dhan accounts and the money changers and entry operators are tapping this segment to convert black money to legal currency.

Several people with unaccounted cash in old high currency notes are also resorting to convert their money into dollars. This has led to the dollar exchange rate almost doubling to Rs 128 in the grey market, a Times of India report said. Not just dollars, people are also buying pounds, which has touched Rs 130 and dirham at Rs 30.

“For the last 10 days there is a shortage of foreign currencies, particularly US dollars, pounds, euros and dirhams. People are buying foreign currencies at any rate, the only condition is that we should accept banned denominations,” a TOI report said quoting a trader from Bohra Bazaar, Fort.

With PTI inputs

First Published On : Nov 22, 2016 17:32 IST

Demonetisation: To hell with cashless society, who’s going to pay the bai on 1 December?

This might antagonise the geniuses out there who find it simple to resolve their financial quandaries, I am tired of all the reports about the money being fed into banks and the money that has been recovered. Instead of all these zeroes being flung like snowballs, I need to know plain, basic things that many of us foolish ones need to juggle with to keep things going.

These numbers are too cosmic for me and have no relevance whatsoever to my daily life.

Some of the questions that beg answers and also receive a fair amount of ridicule if you ask them are actually quite relevant when you have to pay your bills. The smart people you know (all smarter than you) treat you with scorn because they think you have a two-digit financial IQ and they have all the answers.

How will you pay the salaries of your staff next week? Especially domestic staff, part-timers, and the group of people you are responsible for if you run a tiny company and have a payroll of six or seven. All of which was always cash.

Go ahead, transfer it their accounts, easy peasy, don’t be so dense.

Maybe your banker is one sweetheart of a person but have you tried getting through the queue and asking a banker to make the transfer while eleven other people are screaming themselves hoarse.

Then asking him to make another one and then another one and then another one. Smack. Have you even tried to locate the forms to fill for such a slew of transfers? And do you know how many people do not want a transfer into their accounts.

You think the part-time cleaning lady wants a cheque? Go ask her, see what she says.

People pay their monthly rent for housing by cash, contrary to the current happy little myth that all of India is tech savvy and on the fast track to a cashless society. For sheer tommyrot this one is hard to beat.

Just because you and a couple of well off buddies are into these new fiscal buzzwords does not indicate a sea-change. E-cash, cashless wallets, e-commerce, digital economy, online purchasing, yes sure, awesome, but the bai wants her thousand bucks in hundred rupee notes mate and she is knocking on the door. And the dhobi says we are behind in our payments.

That is life. Not these esoteric numbers and labels. The landlords probably do not ever show the true rental on their taxes. So what if they insist on the payment to be done in cash because suddenly where did this ‘income’ come from, Oh! rent on the house but you were showing much less all these years?

Okay, let’s say they agree to take a cheque. At the best of times getting a fresh cheque book is like climbing Mt Everest without oxygen. It takes days unless, of course you have a banker who is a teddy bear and darling and all my advisors clearly know people like him so they can sneer at my ineptitude. But I do not so I have to indent for one and wait.

How many cheques are we going to dish out?

Tried giving a Rs 2000 note to a shop to purchase cough syrup and somebody has very successfully managed to poison the mind over the ‘suspicious’ genesis of the Rs 2000 note and a whole surgical examination is done by putting it to the light and rubbing it and showing it to two other assistants then nodding sadly and returning it. There is a marked antipathy to the note and most folks do not want it.

If I take out Rs 24000 which I am told is the maximum and pay cash for the nursing staff we have, medicines, the cook and the laundry, electricity, water, the TV connection, the society conservancy and the running account with the grocery and the rental assuming that they do take a cheque we will be swimming in the red on the first of the month.

How do we then pay for milk, vegetables, medicines, in city travel, repairs, maintenance, and the string of ‘little’ expenses that all mount up like paying the newspaper vendor.

Think of it, every doctor I have met in a clinic takes cash. Will he accept my cheque or my Rs 2000 note. How I envy all the people in the cashless society who are so above these silly problems.

First Published On : Nov 22, 2016 15:45 IST

Demonetisation: ATMs of Mumbai cooperative banks shut due to scanty supply of notes

Mumbai is no different from other towns and cities in India when it comes to facing a severe cash crunch, with most of the banks struggling to meet people’s requirement of notes. This is even as a significant number of ATMs have remained in operation since PM Narendra Modi announced the demonetisation exercise on 8 November.

All ATMs of cooperative banks, including the multi-state ones have not been functioning for the last 10 days. Of the remaining ATMs run by private and government banks, only half are working, according to a senior official from the finance department.

In the last 10 days, people have been spotted in long queues in front of banks from two to six hours a day.

Queue outside a SBI branch on Wednesday. PTIQueue outside a SBI branch on Wednesday. PTI

Queue outside a SBI branch on Wednesday. PTI

According to an Additional Chief Secretary of the Mantralaya, there are 3,900 ATMs and 2,100 of banks, including cooperative, government, private and foreign banks in Mumbai, of which 40 percent of the banks belong to multi-state cooperative scheduled banks and District Central Cooperative (DCC) banks. All scheduled bank and DCC bank ATMs have been forced to close since 8 November’s demonetisation move. The remaining 60 percent of ATMs belong to private, national and foreign banks, he added, on the condition of anonymity.

Firstpost has checked ATMs in Mumbai and found that those belonging to multi-state scheduled banks, including The Saraswat Co-operative Bank Ltd, Abhyudaya Co-operative Bank Ltd , TJSB Sahakari Bank Ltd, Janta Sahkari Bank Ltd, Cosmos Bank, Apna Sahkari Bank, Shamrao Vithal Cooperative Scheduled Bank, Punjab & Maharashtra Co-operative Bank, Janakalyan Sahakari Bank Ltd, Mumbai District Central Co-operative Bank Ltd, Jaoli Sahakari Bank Ltd, The Greater Bombay Co-operative Bank Ltd and many others have been closed.

Talking to Firstpost, Punjab & Maharashtra Co-operative Bank’s (PMC) Manager Madhavi Gholkar confirmed that all the ATMs across Mumbai have been closed due to the inadequate supply of currency notes. “We have 122 branches in Maharashtra. Andheri is old branch of PMC and more than 50,000 customers are with us. But till yesterday, hardly 20 percent of customers withdrew money as per RBI guidelines,” she said.

Saraswat Bank has also been sending text messages to customers saying, “There is an inadequate supply of currency notes. Hence we may not be able to allow withdrawals in part or full, depending on the availability of cash at a particular branch. The situation is likely to improve soon. We request your kind co-operation.”

The chairman of the Mumbai District Central Co-operative Bank Pravin Darekar told Firstpost that they have more than 20 ATMs in the city but in the last 10 days all hold insufficient amounts of money. “So we closed them to avoid facing customers’ anger.” Darekar also mentioned that they will file a PIL against the ban that DCC banks cannot accept old currency notes.

“The DCC Banks in Maharashtra are in a bad situation when RBI decided not to accept Rs 500 and 1,000 notes after demonetisation. There are 31 districts banks with 4,500 branches all over the state. Rs 65,000 crore money was deposited and Rs 45,000 crore worth of loan money given to customers,” added Darekar. “In the first three days, DCC banks received Rs 3,000 crore worth old currency notes in denominations of 500 and 1,000. So we have serious questions about this amount,” he said.

Mumbai Congress President Sanjay Nirupam said that they require 2300 crore worth of currency notes to fulfill the country’s demand. But right now only Indian government mint can only produce 300 crore pieces of currency notes a month. This means the serious crunch of currency notes in the country will take next seven months minimum, Nirupam said. “From Sunday onwards, we will tell people that demonetisation is fraud and implemented without preparation,” he claimed.

First Published On : Nov 19, 2016 11:21 IST

Demonetisation: No exchange of notes for customers of other banks on Saturday

Mumbai: Indian Banks’ Association on Friday said all banks will serve only their respective customers on Saturday and will not exchange the old Rs 500 and Rs 1,000 notes from customers of other banks.

Serving its customers. ReutersServing its customers. Reuters

Serving its customers. Reuters

“All these days our own customers have suffered because we have not been able to do their work. So, we have seen a lot of pending work at branches especially for our existing customers. We, from IBA, have taken a view that tomorrow, that is, on Saturday we shall be exclusively doing work for our own customers. And tomorrow we will not be doing exchange of notes (for outside customers),” IBA chairman Rajeev Rishi told reporters in Mumbai.

He, however, said senior citizens are exempted and they can go to any bank branch to exchange notes on Saturday.

The IBA decision is only for Saturday and from Monday onwards all customers will be allowed to exchange notes at a branch of any bank.

Rishi said after the banks started using indelible ink to mark fingers of customers who have exchanged notes, the queues decreased.

“For the last one week, we have been seeing huge rush but for the last two-three days after we introduced the inking of a finger we have seen a visible reduction in the rush at branches. The queues have shortened,” Rishi said.

The government announced the scrapping of Rs 500 and Rs 1,000 notes on 8 November. Banks were opened for transactions from 10 November but were closed on November 14 on account of Gurunanak Jayanti in major parts of the country.

First Published On : Nov 18, 2016 22:01 IST

Demonetization responsible for 55 deaths, PM Modi has imposed ‘tax terrorism’: Congress

<!– /11440465/Dna_Article_Middle_300x250_BTF –> Stepping up its attack on Prime Minister Narendra Modi, Congress held his “draconian decision” on demonetisation responsible for the death of 55 people and asked him to apologise to their families and the country.Congress chief spokesperson Randeep Surjewala released a list of 55 persons who lost their lives while standing in queues at banks and ATMs in the wake of demonetisation and demanded compensation to their families besides probe into their death.”The draconian decision of a dictatorial Prime Minister has led to 55 deaths. Who is responsible for this? The PM should apologize to the familes of those who lost their lives and also to the country. His whimsical decision has led to this,” he told reporters.He also said, “Government must pay adequate compensation to these 55 families who lost their near and dear ones. Their deaths must be investigated and consequent action taken.” He also accused the Prime Minister of “acting first and thinking later”, alleging that no proper planning was made by his government before implementing the decision which has thrown the country into “financial anarchy and chaos”.Surjewala said while the people of the country are facing hardship and harassment because of the “whims and fancies” of the Prime Minister bent upon “image building”. He alleged the Prime Minister was now dubbing all those questioning his demonetisation exercise as “anti-nationals”.The Congress leader also demanded that the cooperative sector, which includes banks and societies, be allowed to use old currency notes as the rural economy has been “shut” ahead of the Rabi sowing season.He said following the “Tuglaqi farman” (diktat) issued 10 days ago on demonetisation, the entire country has been plunged into “financial emergency and anarchy”, and the “hapless and helpless” people of India are languishing in long queues amid utter chaos and confusion.”All this has been done on account of obduracy of one individual and for his image building. India has a Prime Minister who decides first, thinks later and listens to no one. When glaring mistakes and bungling are caught, anyone asking questions is branded as ‘anti-National’,” Surjewala said. Surjewala alleged the Modi government has imposed “tax terrorism” across the country. The Income Tax department has “shut” the markets and it is creating “fear psychosis” among the traders and businessmen, with the small and medium sector industry being “shattered”. “Modiji has become the new architect and symbol of tax terrorism in the country,” he said.Surjewala said the government has changed its directions on demonetisation 18 times ever since the announcement was made by Modi 10 days ago which showed its “ill-preparedness” and “ill-planning”.”Despite this mess, anyone asking questions is branded as anti-national. Time has come for people of India to ask as to who has acted against the national interest?” he said.He said the country’s image globally has been dented due to the government’s action and foreign investors have taken out Rs 6,500 crore from the market.”Foreign Institutional Investors and Foreign Portfolio Investors have lost confidence in the government. In first five days, FIIs and FTIs have withdrawn one billion USD from the economy or nearly Rs 6500 crore,” he said.Criticising government’s decision to ink the fingers of those coming to change currency to which the Election Commission of India has raised objections, he said, “The truth is that the government’s right hand does not know as to what is being done by the left hand. Confusion confounds Modi government completely.”Quoting experts, he said demonetisation had led to withdrawal of 86 per cent of currency in circulation and, as a result, 1,658 crore notes of Rs 500 and 668 crore bills of Rs 1000, totalling 2,327 crore notes valued at about Rs 15 lakh crore have been withdrawn.He said the Rs 1000 rupee notes were printed by ‘Bhartiya Reserve Bank Note Mudran Private Limited’ which has the capacity to print 133 crore notes per month working in two shifts and even if it were to work for three shifts it can print 200 crore notes per month and the entire operation would take 3.5 months to complete if it prints the new Rs 2000 notes.Similarly, Rs 500 notes are printed by ‘Security Printing and Minting Corporation of India Limited’ which has a capacity to print 100 crore notes per month and even if its capacity is doubled overnight, it will still take nearly eight months or more to print 1658 crore notes of Rs 500.”It is thus clear that the claims of government to print new notes are hollow, deceptive and a bundle of lies,”he said.The Congress leader said the farm sector has been worst hit by demonetisation after the government decided to unilaterally put an embargo on all Cooperative Banks, Rural Development Banks, Primary Land Development Banks and Cooperative Credit Societies from either changing old currencies or dispensing new notes.”In one stroke, Modiji has broken the back of the entire agricultural sector. Shockingly, Modi government summarily rejected the recommendations of its own Agriculture Ministry, which wanted that farmers should be permitted to purchase seeds and fertilizers with old notes. Prime Minister Modi has paralyzed the entire agricultural economy,” he said.

Demonetisation: Currency withdrawal and exchange limits explained in graphics

The demonetisation exercise has been on for more than a week now and the move has resulted in acute cash crunch in the system, thereby putting not just the commom man but even bank staff in greater trouble.

People queued outside an ATM. PTIPeople queued outside an ATM. PTI

People queued outside an ATM. PTI

Following the decision to ban high value currency notes of Rs 500 and Rs 1,000 came into effect starting 8 November mid-night, the government has changed its withdrawal and exchange limits multltiple times.

The frequent changes made to the guidelines is adding to the confusion of the customers. The new guidelines and the banks’ own limits, apart from increasing the friction between the consumer and the banks, will only inconvenience the customer. The friction between the customer and the bank staff will only heighten.

The government’s flip-flops also reinforces the public perception that the process was initiated with no preparation whatsoever. The government has been saying that no large-scale preparation could have been done as any such move would have resulted in spilling the beans. Even if, for argument sake one believes this, it cannot justify the messy implementation, resulting in nearly 50 deaths.

Below is the graphical representation made to highlight the date and changes to withdrawal and exchange limits announced by the government.






First Published On : Nov 18, 2016 19:14 IST

Demonetisation: Currency withdrawal and exchange rules explained in five graphs

The demonetisation exercise has been on for more than a week now and the move has resulted in acute cash crunch in the system, thereby putting not just the commom man but even bank staff in greater trouble.

People queued outside an ATM. PTIPeople queued outside an ATM. PTI

People queued outside an ATM. PTI

Following the decision to ban high value currency notes of Rs 500 and Rs 1,000 came into effect starting 8 November mid-night, the government has changed its withdrawal and exchange limits multltiple times.

The frequent changes made to the guidelines is adding to the confusion of the customers. The new guidelines and the banks’ own limits, apart from increasing the friction between the consumer and the banks, will only inconvenience the customer. The friction between the customer and the bank staff will only heighten.

The government’s flip-flops also reinforces the public perception that the process was initiated with no preparation whatsoever. The government has been saying that no large-scale preparation could have been done as any such move would have resulted in spilling the beans. Even if, for argument sake one believes this, it cannot justify the messy implementation, resulting in nearly 50 deaths.

Below is the graphical representation made to highlight the date and changes to withdrawal and exchange limits announced by the government.






First Published On : Nov 18, 2016 19:14 IST

Demonetisation: Was Narendra Modi forced to abort RBI plan to calibrate ATMs?

Across the country, ATMs are dead and the lines outside banks are killing. In a few cases, literally and unfortunately so.

An entire population of 1.25 billion is living in misery, craving something they already have: A strange contradiction of shortage in abundance.

People can’t bank the cash in their hand, nor lay their hands on the cash in their bank. As yesteryear screen villain Ajit famously never said, “It’s like living in liquid oxygen… The liquid is choking them and oxygen is not allowing them to choke.”

Representational image. PTI

Representational image. PTI

So, there’s only one question to which the nation really wants the answer: Did Prime Minister Narendra Modi send a country into war against black money without planning?

Also, did he push his troops to the front lines high on emotion and low on ammunition? The scale of the crisis since 11 November when the banks opened for transactions after two shut days suggests so. National Opposition parties and those opposed to Modi’s sudden crackdown are sure this was a Quixotic idea of a destiny-seeking prime minister in a tearing hurry. Even those who are willing to see this as part of their national duty are at a loss to explain the chaos and hardship unleashed by the cash purge.

The government, on the other hand, insists that if it had planned it on the lines the Opposition parties are suggesting — recalibrating the ATMs before announcing the note ban, this massive operation would have delivered a still-born. Any plan to recalibrate ATMs would have lifted the veil of secrecy and black money would have either changed colour or form. There was, the government says, just no other way to do this other than to dive head first into the deep waters of currency replacement with a hope (that people would understand and endure) and a prayer (that it passes off without event).

Representational image. PTI

Representational image. PTI

The Opposition parties are not wrong — this could have been planned better and the government is not giving us all the facts. The truth is the government did have a plan. Not for recalibration — for which it has come under severe attack — but for the preemptive calibration of ATMs. If this plan had run its course, it could have considerably smoothened the currency exchange at ATMs. But the plan ground to a halt even before it took off. But more on that later.

Buried under 44 other notifications of the Reserve Bank of India (RBI) in this month, is the notification of 2 November (see below) that is headlined ‘Dispensation of Rs 100 denomination banknotes through exclusive ATMs’.

   RBI Dispensation of Rs.100 Denomination Banknotes Through Exclusive ATMs by Firstpost on Scribd

The contents of the notification were even more noteworthy, in retrospect of course. Under the cover of a ‘pilot’ project, the RBI asked banks to calibrate 10 pe cent of all ATMs in the country to dispense only Rs 100 notes. To further throw prying eyes off the trail of the brewing demonetisation plan, the RBI slipped this big ticket reform under its pet Clean Notes Policy, running since 2013.

Here’s the operative part of the notification signed by P Vijaya Kumar, chief general manager:

“A review of steps taken by banks for installing ATMs dispensing lower denomination banknotes was conducted and found that very few banks had taken initiatives in setting up ATMs dispensing lower denomination notes including Rs 100 denomination banknotes.

“In keeping with the objectives of Clean Note Policy and to ensure that genuine requirement of members of public for Rs 100 denomination banknotes are met, the banks should increase dispensation of Rs 100 banknotes through ATMs which are widely used for distribution of banknotes for retail use.

“With a view to encourage the banks in that direction, it has been decided to conduct a pilot project wherein 10 percent of the ATMs in the country will be calibrated to dispense Rs 100 banknotes exclusively. You are, therefore, advised to configure/calibrate 10 percent of your ATMs to facilitate this arrangement.”

See the notification below:

   RBI November Notification by Firstpost on Scribd

There are 1,03,282 on-site and 98,579 off-site ATMs in the country. This brings the total to 2,01,861 ATMs in all (as per the RBI’s bank-wise ATM statistics as of July 2016). That means by 17 November, when calibration will have been completed, the government had planned for around 20,000 ATMs to dispense only Rs 100 notes. This would have considerably eased the hardship of citizens who are left stranded with notes they cannot use.

Representational image. PTI

Representational image. PTI

A little detour to understand the difference between calibration and recalibration is necessary here:

Every ATM has three cartridges — also called bins — to keep cash, with one each for notes of the denominations of Rs 100, Rs 500 and Rs 1,000. To ensure that the ATM dispenses notes of only Rs 100, the cartridges carrying the other two denominations would need to be removed and replaced with cartridges of Rs 100 denomination. This change would not have raised any suspicions because Rs 100 notes were already in use. The banks would just need to order more cartridges of Rs 100 denomination.

But distributing the new Rs 500 and Rs 2,000 notes from ATMs would have required changing the cartridges, or recalibrating them as per the size and other parameters of the new notes. Recalibration of nearly 1,80,000 ATMs across the country would certainly have had tongues wagging about the impending currency replacement. So, recalibration, it seems, was not part of the plan and Finance Minister Arun Jaitley spoke the truth.

Two things are obvious from a post-facto reading of this (then) seemingly innocuous notification.

First, the government and the RBI had anticipated that after removing the larger Rs 500 and Rs 1,000 denominations, there would be a mad rush for denomination of Rs 100 for retail use. And they had rolled out what now seems like a graded plan to meet the challenge of the small notes.

Second, the ATMs were supposed to have been ready by 17 November to dispense only Rs 100 notes. A day after that deadline has passed, it is unclear how many of the 20,000 ATMs are fully Rs 100-note-ready. Chances are very few ATMs are, because at 8 pm on 8 November, this plan was blown off the tracks by the prime minister’s sudden announcement of demonetisation.

The notification was issued on Wednesday, 2 November and the prime minister went live on Tuesday, 8 November. That’s a little over three working days between the two dates. It’s hardly likely that the banks could have done much more than just crank up their systems. And after that, they have been left to deal with the deluge.

Representational image. PTI

Representational image. PTI

That raises the bigger question: If the calibration of ATMs was scheduled between 2 November and 17 November, why was the demonetisation bomb detonated midway knowing fully well that banks were still not ready? It is very unlikely that the two moves were disconnected from each other. The RBI could not have been on a Clean Note Policy binge six days prior to the entire banking system of the country being shaken from its roots. Particularly when the new notes that have now been released bear the signature of Urijit Patel.

The RBI’s notification does indicate that the government was working to a plan and a schedule. It suggests that the next big move on demonetisation should have been made after 17 November, although it is impossible to know how soon or how much later. But plans had to be abandoned. What was the provocation? Did the government suspect that the plan was leaked? Images of the Rs 2,000 note were, after all, floating on social media very early this month.

Unless the government is forthcoming with answers, we will have keep wondering if on 8 November, Modi was announcing the demonetisation plan or delivering it prematurely.

First Published On : Nov 18, 2016 13:38 IST

Note crunch: More steps to ease woes

<!– /11440465/Dna_Article_Middle_300x250_BTF –>To ease the burden of demonetization on the common man, the government on Thursday went on an overdrive and brought in more measures, allowing families preparing for marriages to withdraw up to Rs 2.5 lakh, and reducing the existing limit of Rs 4,500 for exchange of old notes to Rs 2,000.The government has also allowed farmers to withdraw up to Rs 25,000 from bank accounts in their names that are compliant with personal data declaration norms. This is meant to ensure that the demonetization does not adversely impact the winter rabi crop and farmers have enough money to take care of their input cost like procuring seeds and fertilisers.It also raised the weekly limit for agricultural traders who will now be allowed to withdraw Rs 50,000 a week so that farmers get the price for their produce and the vegetables reach the big markets in the cities. The time limit for payment of crop insurance premium for farmers is also extended by 15 days.The government also permitted Central staff up to Group C categories to withdraw up to Rs 10,000 against their November salary. Stressing that the account has to be KYC compliant, Economic Affairs Secretary Shaktikanta Das said the amount of Rs 2.5 lakh can be withdrawn from only one account.From Friday, the limit of the one-time exchange of the now-scrapped Rs 1,000 and Rs 500 notes is fixed at Rs 2,000. If you hold funds in old currencies, it will have to be deposited in your account. This move is to bar people from exchanging their huge reserves of cash into new currencies and ease the milling crowds outside banks.The reduction in the daily limit, the government said, will help as banks are still facing inadequate supply of smaller denomination currencies.To withdraw Rs 2.5 lakh from bank account, you will have to sign a self-declaration saying the money was drawn against only one account – father, mother, groom or bride.Finance minister Arun Jaitley said, “There is absolutely no shortage of cash and about 22,500 ATMs will be recalibrated from Friday to dispense the new Rs 500 and Rs 2,000 notes.”Rajnish Kumar, deputy managing director, SBI, said, “The situation was by and large under control and the queues had eased in many cities as Rs 2,000 and also Rs 500 notes were available. Whatever cash we are getting is being distributed in rural areas and the report from the 40 circles said that situation is improving. The queues may get longer with the exchange limit reduced but then we will be able to dispense off the customers also faster so that should take care of the situation.”Now if the combined deposits into an account exceeds of Rs 2.5 lakh during the currency exchange period, a PAN card becomes mandatory. Earlier, all deposits up to Rs 49,000 was exempt from the use of PAN card. Banks and post offices have to report all deposits of over Rs 2.5 lakh into savings account and those in excess of Rs 12.5 lakh in current accounts during this period. Banks and post offices will have to file statement of financial transactions on or before January 31, 2017, according to the IT notification.Earlier, banking correspondents (BCs), an informal network of 1,30,000 personnel in rural areas, were allowed multiple withdrawals a day, with an individual transaction limit of Rs 50,000. Businesses with current accounts active for three months were also permitted to withdraw Rs 50,000 every week.

Demonetisation: From the stench of old notes to fights, here’s a banker’s view

On 8 November, Prime Minister Narendra Modi announced the demonetisation of Rs 500 and Rs 1,000 notes, in order to flush out black money. Thus began the mad scramble for cash. Queues outside ATMs and banks grew as frustrated and anxious citizens made a beeline to exchange or deposit the old notes, or get cash. Banks were directed to extend their working hours and meet the demands. A bank employee shares her experience with Humans of Bombay after the currency ban came into effect:

“I’m the manager at a bank. On 8 November, I was working a bit late when my husband called me and said, ‘how did you not tell me that 500 and 1000 Rupee notes are getting scraped’ and I was shell shocked. None of us had any idea what was going on… we just knew it was huge. So we went into work the next day, preparing for the days to come but no amount of preparation could fully prepare us for what was coming.

Image courtesy: Humans of BombayImage courtesy: Humans of Bombay

Image courtesy: Humans of Bombay

People’s view of the whole situation was limited to the lines they saw outside the bank, but what was happening behind closed doors was entirely different. We became a part of the dirty cycle that runs in this country. On one end there were chaiwallas, istriwallas who are queuing up to deposit their hard earned money but on the other end we’re receiving black money that had been stashed away for years possibly and all this cash smells like rotten leather to the point where every one of our branches has ordered masks for the cashiers — that’s how unbearable the stench became! From fights breaking out and the police intervening to educated people storming our offices and violently asking us for money — we’ve dealt with it all.

Just the other day a builder who’s had an account with us for many years, came forward to finally pay us an amount that he had defaulted on a Non Performing Asset. When we had chased him for months to pay up, he had defaulted but all of a sudden he came forward! He has over 300 crores in black money, but before this he claimed to have none at all — that’s how dirty the business is.

Don’t get me wrong, I’m not complaining about what has happened — it’s a revolutionary move that will only strengthen our country and I completely understand what the common man is going through as well, but what can we possibly do? There’s only so much cash we have, and only so many people who can attend to such a large population.

What’s ridiculous is how people are behaving — they’re treating us so badly. Just 4 hours ago I received a call from a man from a place called Nanded who screamed at me non-stop. He went on yelling, blaming me, cursing in Marathi and I’m sitting there just wondering what I could possibly do and we’ve received dozens of such calls each day. Not just that, but the threats have also come. We get calls from people who are politically endowed and threaten to ‘send media to expose us’ or to ‘create a scene’ if we don’t move money — I mean when will we learn? We’re bankers — there’s only so much we can do! We’ve hardly slept these past few days, we’re not taking any weekends off… in fact most of us haven’t even exchanged our own 500 Rupee notes because we’re trying to help others first.

Our banks are losing money on interest and there’s already enough chaos… do we really need to add to it? We’re all in the same situation, we just need to sit tight and understand that steps are being taken to aid the process — this is for the future of our country and the least we can all do at a time like this is have patience and believe that everything will stabilise soon. And for heaven’s sake, stop trying to use more corrupt methods to get out of an already corrupt situation… we don’t need any more of it!”

First Published On : Nov 17, 2016 09:32 IST

Indelible ink to identify those who’ve made withdrawals

<!– /11440465/Dna_Article_Middle_300x250_BTF –>The government will ink fingers of people queuing up to exchange notes, just as in elections, to identify people who exchange notes multiple times, Economic Affairs Secretary Shaktikanta Das told news persons on Tuesday.A ministry official elaborated that plans are afoot to put a small mark of indelible ink on the right hand finger of those exchanging Rs 500 and Rs 1,000 notes for new ones from Wednesday to prevent crowding at banks.”Ideally, the ink mark should have been put on the left hand as is done when a person casts his vote. But with by-elections due in some states, it has been decided to put the ink mark on the right hand,” he said.The government is also closely monitoring the Jan Dhan accounts with deposits above Rs 50,000 following reports that many were using the accounts – opened by mostly the poor – to park illegal incomes. He also rubbished rumours that the pink colour on the Rs 2,000 note was running. He said all genuine currency, including Rs 100 notes, would bleed some colour because of the nature of the ink. “When you rub a piece of cotton with a note, if it doesn’t leave some colour, it is a sign that the note is fake.”In the meantime, the currency shortage continued to hit the common man forcing many to stand in serpentine queues. The government said they are augmenting supplies so that people could get enough cash for their needs. Banks in Mumbai also began dispensing notes in denomination of Rs 500 besides the Rs 2,000. Many ATMs are also expected to be recalibrated by the week-end.

Demonetisation: Why now spread the indelible ink, leave the depositors and withdrawers alone

The idea of smearing one’s finger with indelible ink on the customers making transactions in the bank has been imported from the Election Commission of India. It prevents voting again and again by the same person i.e. it eschews impersonation.

The diehard charlatan of course doesn’t mind the pain inevitable in rubbing off the stubborn ink but he doesn’t go to the extent of doing an Ekalviya act of Mahabarath fame. Ekalviya cut off his finger to please Guru Dhronacharya who wanted to put the upstart archer in his place so that he couldn’t rival his favorite acolytes.

Representational image. ReutersRepresentational image. Reuters

Representational image. Reuters

Banks which have been instructed to smear the same indelible ink on the finger of exchangers/ withdrawers/ depositors lest charlatans have a field day and thumb their nose at the solemnity of the ongoing demonetization scheme. The Rs 500 and Rs 1000 notes are not legal tender from the night of 9 November 2016 but one of the reliefs given by the government is exchange of these disagreeable notes for the ones which are legal tender upto Rs 4,000 initially and now Rs 4,500. This exchange counter was meant to be accessed but once during the fortnight starting 10 November 2016 and ending 25 November 2016 but the intrepid among them have done several such errands both for themselves and for their benefactors and were planning to do more. But they have been stopped in their tracks.

The government has at last read the riot act to them. Hereafter they cannot run amok. The indelible ink hopefully would last till 25 November 2016. It, therefore, must be of good quality lest the intrepid ones do not scrape it off even masochistically. No one of course would do ekalviya act just for laundering Rs 4,500. May be plastic surgeons would rise to the challenge for a right price.

Both in bank withdrawal counters and ATMs there are frequent cash outs. One hopes there are no ink outs, if one may say so. One also hopes CCTV cameras are enabled to catch the inking act lest an intrepid exchanger is tempted to bribe his way out of the inking process. While tightening of the screws on exchangers and their proxies hasn’t come a day too soon, the government is dissipating its amenities nay causing unnecessary trouble to withdrawers and depositors.

Why should a withdrawer who is often fobbed off with Rs 2,000 whereas he was promised Rs 10,000 initially but given freedom to withdraw pretty much she pleased subject to the weekly ceiling of Rs 24,000 be subjected to this ignominy and inconvenience. After all her account would show whether she has crossed the lakshman rekha. What can be controlled through accounts need not be controlled physically.

And likewise why cavil at the depositor of the demonetized notes when she has been given time up to 30 December 2016 to do so without any limit. Like an act of withdrawal, the act of deposit is also going to leave telltale, indelible mark in her accounts. Why inconvenience her needlessly?

It is common knowledge that when you try to catch everyone you end up catching none. Only exchange bristles with problems and possibilities. Ideally, exchange facility shouldn’t have been offered in the first place. But having offered it, it needs to be tightly controlled lest charlatans have a field day and laugh all their ways to as many banks as possible.

The government seems to say it would use different inks (colors) but the moot question is why harass depositors and withdrawers at all. It also says it would smear the ink on depositors in such a way that the one entering the bank the next day is not stopped in her tracks. Is this possible? There could be heated arguments at the withdrawal counters on this score—about the age or vintageof the ink smeared, todays or yesterday’s.

Leave the depositors and withdrawers alone please.

First Published On : Nov 15, 2016 16:59 IST

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

If there is a single state that is falling into a real financial crisis because of the current drive of demoneitsation, it’s Kerala.

The rest of India, despite the injuries, massive damages and impaired lives of millions of poor people, might limp back to normal later than sooner, but Kerala has a deeper problem: the cooperative banking system that holds more than RS 60,000 crore in deposits and has disbursed more than Rs 30,000 crore in loans has been paralysed because both the Reserve Bank of India (RBI) and the Finance Ministry are suspicious of its dealings.

The cooperative banks, with different categories (state, district, primary etc) and hundreds of branches (at least 1,500) have been the lifeline of people in rural areas for decades, but with demonetisation, there is a literal freeze on their functioning because they are neither allowed to receive invalidated Rs 500 and Rs 1,000 rupee notes from their customers nor receive fresh cash from the RBI in exchange of its own reserve to continue daily operations. Unlike in the case of nationalised and private banks, it’s not a question of long queues or hassles, but a total collapse: weddings, funerals, education and even daily survival are affected. Reportedly, some banks are left with only a few thousand rupees in valid currency.

The RBI had initially allowed the cooperative banks to take deposits in old currency after the announcement of demonetisation, but no exchange of old notes. However, after four days, the RBI withdrew the permission because of the suspected risk of counterfeit currency and black money being laundered. The justification for this move was that these banks could create pre-dated fixed deposits and their staff are not trained in detecting counterfeit notes.

Representational image. PTI

Representational image. PTI

Both the fears, which incidentally are also raised by some of the BJP leaders in the state, are genuine because unconfirmed reports showed that immediately after the announcement of demonetisation, many of these banks took large sums of old cash and registered them as pre-dated fixed deposits. Since most of these banks are not computerised, this is indeed a possibility. A senior economist in the state said that at least Rs 2,500 crore could have been laundered in this way. Actual figures notwithstanding, obviously that’s why the RBI asked them to stop. Although both the Chief Minister Pinarayi Vijayan and Finance Minister Dr Thomas Issac personally travelled to Delhi and asked Arun Jaitely for help, the freeze wasn’t lifted. And it’s unlikely to happen.

The quantum of deposits in the cooperative banks has always been baffling because the 2012 credit survey showed a high level of indebtedness by people in rural areas. If the people in rural areas are in such debt, how can the banks, which serve the same areas, have so much in cash? Obviously, the inference is that the deposits are not by poor people, but by those with a lot of cash. Nobody, other than the banks, know the details of these deposits. No source of income is asked, no TDS filed, no PAN required and hence no reporting to the Income Tax Department. The interest that accrues from these accounts are also tax-free. Some, therefore call this the Swiss Banks of Kerala. There is certainly some merit in the argument that it’s a great mechanism for the rural moneybags to evade tax unless they come under the lens of the RBI.

Although the crisis is new, the suspicions are not. As early as 2008, there was a move to bring the cooperative banks under the purview of income tax. In 2013, an RBI money laundering probe found that cooperative banks, not just in Kerala, but across India, were involved in shady deals while in 2015, about 480 urban cooperative banks were under the RBI scanner for money laundering. In fact, in 2013, the then Finance Minister P Chidambaram himself had admitted that urban cooperative banks (UCB) were regularly used for money laundering. If the UCBs, which are governed by stricter RBI rules, can indulge in alleged illegality, the cooperative banks at lower levels can do much worse.

Instead of clearing the suspicions and allegations, the behaviour of the cooperative banks in Kerala has made them more suspicious. In 2009, a group of primary cooperative banks went to the Supreme Court when the the Income Tax Department asked them questions. Later, they, represented by political leaders met the then Finance Minister Pranab Kumar Mukherjee when
I-T Department issued notices asking them to file to returns.

What’s also unmissable in the impasse that both the cooperative banks and their customers face is politics. The cooperative bank system in most parts of Kerala is the lifeline of the CPM, especially in its strongholds such as Kannur. A lot of CPM family members are employed by these banks, hence the loudest protest is from the them. In fact, its leaders are livid and they accuse that this is a “neoliberal” ploy to destroy the age-old system and hand it over to the corporates.

As early as 2008, Sitaram Yechury, the present general secretary of CPM, was unequivocal that his party wouldn’t allow any I-T imposition on cooperative banks. In 2011, President of the State Co-operative Bank in Kerala M Mehaboob, a CPM leader, was more frontal, when he said: “We cannot allow the I-T department to examine the accounts in co-operative banks. The I-T department has been targeting state co-operative sector with a malicious intent.” He also said that the I-T move would “upset” its depositors and that more than 60 percent of deposits are from pensioners.

The Congress and its partner-parties are also minor beneficiaries and hence they also lend support to the CPM on the issue. They also have appealed to the Centre that the present crisis needs to be addressed immediately.

The party that’s trying to cash in during this unfortunate situation is the BJP because of two reasons – one, it has no foothold on the sector and two, it’s a potent proxy attack on the CPM. Their demands, if met, will simply destroy the system and break some of the financial muscle of the party. Unfortunately, in its eagerness to score political points, it’s insensitive to the visible anxiety of about 1.5 crore customers.

The apprehensions of the RBI and the Finance Ministry cannot be glossed over either. It’s indeed true that the cooperative banking system has been an integral life-partner for millions of people in rural Kerala and they were the pioneers of inclusive financing, decades ahead of the Prime Minister Narendra Modi’s Jan Dhan scheme, with the first such bank being set up a 100 years ago. It’s indeed the common man’s friendly neighbourhood bank for their small savings, chit-funds, agricultural loans, microcredit etc. Their growth in the state is certainly an indicator of the failure of the scheduled banks in early years.

However, if the same system is misused for laundering money and tax-evasion, it has to be stopped. By blocking any legal scrutiny, the CPM is helping money launderers to use poor people as human-shield. It has to proactively join hands with the RBI in locating the bad money and protecting the poor, instead of fielding the poor in the frontline to protect the rich. Ultimately, rule of law is applicable to everyone. Under Indian law, cooperative banks cannot be run as “party villages”, particularly when the state government had mooted the grand idea of merging them all into a unique Kerala Bank.

First Published On : Nov 15, 2016 15:07 IST

Demonetisation, ATM chaos: Why should the poor pay to divest the ‘rich’ of their dirty wealth?

When banks reopened on 10 November after a day’s shutdown, following the demonetisation of Rs 500 and Rs 1,000 notes by the Modi government on 8 November, the crowds thronging them were a forbearing lot. It was for a good cause they said – enabling a freeze of counterfeit currency and black money – while waiting for their turn to swap, deposit or withdraw money.

But that public sentiment is now fading. The middle class’ positivity around the demonetisation has all but evaporated for a simple reason – its inefficient implementation. They had collectively exulted in the fact that all bad money was being rendered useless, and that they would benefit from the demonetisation over time. But just a day later, a feeling of despondency took over as the realisation dawned that the common man was the real victim.

The government's plan to curb black money through demonetisation has clearly gone awry, if not haywire. PTIThe government's plan to curb black money through demonetisation has clearly gone awry, if not haywire. PTI

The government’s plan to curb black money has clearly gone awry, if not haywire. PTI

To make matters worse, they heard on the grapevine that the so called black money hoarding ‘big fish’ were in fact already making plans to convert their stash into white, thus legitimising the illegal. Then the analysts began to say that most, if not all, of the black money was either salted away in benami properties or stashed in tax havens overseas.

Reports of touts buying the demonetised Rs 500 and Rs 1,000 notes at a discounted price, to enable black money holders to convert their money into white by December-end, only added to the ire. The plan to curb black money was clearly going awry, if not haywire. Then why conduct such an elaborate exercise at all?

Why should the common man be penalised; forced to stand in long queues to attain the new, crisp currency notes? Especially, since they cannot even spend it, as most stores/outlets have already run out of the smaller denominations needed for change. Even the ATMs have not been stocked with Rs 100 notes, despite the repeated promises by the government.

The common man was pushed into a vortex of confusion and anger. “Why us?” has been the common refrain. The frequent assertions by the Finance Ministry that there wasn’t any reason to worry as there was enough cash, did not find much traction either. As merely printing cash is not the same as putting cash into people’s wallets.

The system, unlike the banks, is not overburdened with the mad rush to attain the new currency. Inefficacies on their end cannot be tied up with the banks’ problems. If the government is unable to supply money to the banks because of a botched operation, then their promise to restore the cash flow is clearly notional.

The banks have been working overtime, including on a second Saturday and a Sunday. The fact that Monday was a public holiday has become another irritant.

Visiting ATMs has not been a pleasant experience either. After standing in long queues, the public has to face the same sorry realisation – that most were not functioning for want of cash refills or were not recalibrated. And the ones that were functioning ran out of cash soon enough.

It is hard to console a person who is left with no money in his/her wallet, as even if it is not spent immediately, it provides for a sense of confidence.

The poor are now being hunted by the so-called elite, as their empty bank accounts work perfectly as a money laundering system – their zero-balance accounts are loaded with Rs 2.5 lakhs and then withdrawn for a commission. Their Rs 500 notes are being traded for as little as Rs 300 to Rs 400. This then leads to a pertinent queston: Why should the poor pay the price to divest the rich of their dirty wealth?

First Published On : Nov 14, 2016 19:12 IST

Demonetisation: Banks disburse Rs 30,000 crore cash, post withdrawal of Rs 500 and Rs 1,000 notes

Mumbai: Post withdrawal of Rs 500 and Rs 1,000 notes, banks have disbursed nearly Rs 30,000 crore cash in bills of lower denominations and the newly-introduced Rs 2,000 currency over the past three days, the apex body for lenders said on Sunday.

The government on 8 November demonetised Rs 500 and Rs 1,000 notes in a step to curb black money. Following the move, banks were closed on 9 November to stock lower value notes and exchange the defunct ones.

Representational image. ReutersRepresentational image. Reuters

Representational image. Reuters

“In the last three days of working, nearly Rs 30,000 crore cash has been disbursed in currency notes of lower denominations and newly introduced Rs 2,000 notes. The ATMs are being recalibrated to handle new Rs 500 and Rs 2,000 notes,” Indian Banks’ Association (IBA) said in a statement.

From 10 November, customers are allowed to exchange Rs up to Rs 4,000 in cash at any bank branch with valid identity proof. They can also withdraw cash against withdrawal slip or cheque, subject to ceiling of Rs 10,000 a day, within an overall limit of Rs 20,000 in a week (including withdrawals from ATMs) up to 24 November, after which these limits shall be reviewed.

IBA said the banks are making all-out efforts to ensure currency requirements of customers are met within the limits prescribed by the Reserve Bank of India.

It, however, appealed to the public to use alternative modes of payments like debit and credit cards.

“In addition, payments could be made through electronic channels like RTGS (real-time gross settlement systems), NEFT (national electronic funds transfer), IMPS (immediate payment service), net banking, UPI (unified payments interface). Electronic wallets provided by banks may also be used extensively for making payments,” it suggested.

First Published On : Nov 13, 2016 17:57 IST

ATM Chaos: When Narendra Modi’s crackdown on black money made me feel like a criminal

Indian banks are supposed to have already received 2 trillion rupees of cash post the government’s 8 November “surgical strike” on high-denomination banknotes to turn the economy squeaky clean.

The State Bank of India alone, the country’s largest bank accounting for 20-25 percent of the nation’s banking system along with its associates, got deposits worth 478.68 billion rupees, or so the Union finance minister Arun Jaitley proudly informed the press on Saturday.

The sudden move to demonetise was doing what it was meant to and had already begun to bear fruit. India, it was implied, was well on its way to being cleansed and purified.

But I, a senior citizen, who have spent what I had thought was a blameless life, working only in jobs where tax was deducted at source, opting to forego holidays rather than buy train tickets “on the black”, forswearing first day first shows rather than enrich scalpers, is feeling soiled and besmirched.

Because an infinitesimal portion of those supposedly ebony-hued trillions waiting for a gigantic bonfire to be lit by the prime minister on some auspicious day, belonged to me. Money earned through sincere labour if not very hard labour (journalism does not demand much sweat of one’s brow, not in the way it is practised in brightly lit, air conditioned offices).

People wait to exchange their old Rs 500 and Rs 1000 notes and deposit cash at a Bank of India branch in New Delhi on Sunday. PTIPeople wait to exchange their old Rs 500 and Rs 1000 notes and deposit cash at a Bank of India branch in New Delhi on Sunday. PTI

People wait to exchange their old Rs 500 and Rs 1000 notes and deposit cash at the banks. PTI

Money that employers had deposited straight into my account and were withdrawn by me as and when and kept in the Godrej almirah in the bedroom because I have an even more elderly mother at home and medical emergencies can come unannounced at unearthly hours and Kolkata’s declining fortunes have driven most family members to greener pastures far away.

Yes, I do have credit cards and debit cards and cheque books (more than one of each in fact), but experience, bitter experience, has taught me not to rely wholly on the digital way of life in India. So, a stash of money for emergencies had seemed like a wise and practical thing to do.

But come 8 November and I found myself the mortified possessor of what in sarkari parlance was deemed “black money”. Overnight, I was no different from those fatcats and filmstars and pols we had looked down upon as “corrupt” and hence reprehensible.

True, my crisis cache was well below the “small amounts” the finance minister promised would be beneath the taxmen’s contempt but still, it did open one up to the prospect of unwelcome brushes with the authorities to “explain away the unaccounted money”.

With one “audacious” and “visionary” announcement (going by bhaktspeak), Narendra Modi had turned me into a criminal or at least made me feel like one. And even if I knew I wasn’t one and the government would not find me to be one, I was furious to be made to feel like one even for a split second.

Yes, the prime minister and his team have reassured me that “the innocents” would not be penalised but why should I even have to prove my innocence to anyone? And would they be convinced? How does one do that? Would I have to provide “documents”? What documents? Not the most organised of persons, I’ve never bothered to save any for such an eventuality.

Those five hundred and thousand rupee notes seemed to acquire a life of their own, wriggling and writhing in my cupboard like some revolting insects. I couldn’t wait to get rid of them, put them into the bank asap and cleanse my home of such polluting, tainted stuff.

I couldn’t bring myself to wait longer, to heed the finance minister’s voice of sweet reason advising us “not to flock the banks rightaway” but “stagger it over the 50-day window provided by the government for the purpose.” Instead, I gamely queued up at my bank branch even though I could see the queue had snaked out of the premises and was winding down an adjacent lane.

The guard at the door took pity on my grey hair and asked me if I was a “customer”. On being told yes, I am, he opened the door a fraction and allowed me to slip inside. Indoors, it was all calm and orderly with a separate queue for “priority customers” of which I happened to be one.

And, wonder of wonders, there were only a handful of people in that queue. The fortunate are always few. The milling crowds were in the two other queues made up of the bank’s non-priority customers or non-customers.

My business was quickly done, I felt lighter, ready again to hold my head high (though a niggling fear remained about unspecified future consequences). But as I walked past the anxious, tired faces of the unfortunate many I felt guilty again, at how easy it all was for me. Even though these men and women, waiting patiently for their turn, did not look enviously at me but were, as always, resigned to their lot in life.

The bhakts blessed with the ability to see the bigger picture may ridicule us (e.g. “onrush of concern among the chattering classes for their maids and maalis,” in the words of one such in today’s Times of India) but they still haven’t explained why men with such foresight couldn’t have managed things better. For us and them.

First Published On : Nov 13, 2016 16:12 IST

Centre warns States on heist attempts for fresh currency

<!– /11440465/Dna_Article_Middle_300x250_BTF –>Fearing a spike in the cases of heist, the union home ministry has issued an express advisory to all the states and UTs to provide full security to vans carrying fresh currency notes of Rs 500 and Rs 1000 denominations, banks, and ATMs.Based on intelligence inputs, there is a strong apprehension in the government that there could be organized attempts of robbery, including armed robbery of banks, ATMs and loot of cash carrying vans, especially by the Mafia cartels who have lost their black money because of sudden demonetisation.Similar apprehensions have also been expressed for Maoist-affected regions and insurgency prone areas of the Northeast, where heists are not uncommon. Moreover, with the introduction of Rs 2000 notes, the temptations of a heist has increased manifold.There are also fears that, affected big fishes, especially strongmen politicians, may incite restive crowds in trouble spots to create unrest and use the opportunity to loot. Sources in the government said, given the colossal task, it can take two weeks or even more to replace old currency with fresh ones in several regions of the country, especially the far flung areas of northeast, central India and hilly regions.”Complete pullout of old currency and its replacement with fresh one may take even more time since there are more than 2,300 crore pieces of Rs 500 and Rs 1000 notes in circulation, worth more than Rs 16 lakh crore, comprising 86.4 per cent of the total value. All this mammoth exchange exercise is fraught with dangers,” an official said.For speedy replenishment of money, the government is mulling relaxing the standard operating procedures (SOPs) for private cash vans that carry and replenish bulk cash everyday in ATMs and banks and even increase their numbers. At present, there are over 8,000 cash vans owned by private operators in the country that ferry close to Rs 15,000 crore cash per day and hold over Rs 5000 crore overnight on behalf of banks in them. The SOPs also spell out clearly secured cash handling and transportation by private security agencies, which sets an 8 pm deadline for replenishing ATMs in urban areas, 5 pm in rural areas and 3 pm in Maoist-infested zones.Officials conceded that seeing the problems faced by public which may lead to an outrage, the present equation cannot be the norm in the existing circumstances and there is a need to increase the number of vans and also relax the norms of timing for replenishing cash. “The present arrangement of replenishing Rs. 15000 crore a day cannot be continued as it would take 106 days. To bring it down we have already augmented the arrangements that will be further improved. The effort is to squeeze the whole exercise in half the time,” said the official.

Rs 1000, Rs 500 notes banned: ATMs go dry soon after opening; queues continue at banks

New Delhi: Long queues were witnessed at banks and ATMs, which opened after two days, as people rushed to get new banknotes in lieu of their old defunct bills. Many ATMs ran out of cash in couple of hours as there were heavy rush to withdraw lower denomination currency. Most of the machines were equipped to tender Rs 100 notes, while some were still not working.

Banks are saying that they are trying to recalibrate their machine for higher denomination notes, it will take some days before they start tendering new high security Rs 500 and 2000 notes which is expected to ease pressure.

People queue up to change their old currency notes. PTIPeople queue up to change their old currency notes. PTI

People queue up to change their old currency notes. PTI

However, to ensure customer convenience, banks have been asked to provide all cash withdrawal transactions at their ATMs free of cost till 30 December. Banks across country are witnessing heavy rush on the second day as people gathered to get new banknotes in exchange of old bills.

After the government scrapped Rs 500 and Rs 1,000 notes, banks were shut on Wednesday, and ATMs were supposed to be out of service for re calibration on Wednesday and Thursday. In the financial capital of the country, shutters of ATMs of State Bank of India, HDFC Bank, Bank of Baroda, Yes Bank, Dena Bank were down in many parts. ATMs of many banks reported running dry.

From Friday onwards, customers are allowed to withdraw up to Rs 2,000 per day from ATMs till 18 November. The withdrawal limit will be raised to Rs 4,000 per day per card from 19 November, 2016.

In the two days when the ATMs were out of service, the banks said they will re-configure their ATMs to dispense Rs 100 and Rs 50 notes.

Rs 500, Rs 1,000 notes banned: Nobody explains it like RBI; 25 points to remember

The NDA government on Tuesday announced that it is banning use of Rs 500 and Rs 1,000 notes, in its fight against the corruption, fake currency and black money. As soon as the the announcement was made, the Reserve Bank of India came out with a ready reckoner on the government’s move.

Here’s how the central bank explained the whole scheme in most simple terms:

1) Why is this scheme?
The incidence of fake Indian currency notes in higher denomination has increased. For ordinary persons, the fake notes look similar to genuine notes, even though no security feature has been copied. The fake notes are used for antinational and illegal activities. High denomination notes have been misused by terrorists and for hoarding black money. India remains a cash based economy hence the circulation of Fake Indian Currency Notes continues to be a menace. In order to contain the rising incidence of fake notes and black money, the scheme to withdraw has been introduced.

The RBI logo. ReutersThe RBI logo. Reuters

The RBI logo. Reuters

2) What is this scheme?

The legal tender character of the notes in denominations of ₹ 500 and ₹ 1000 stands withdrawn. In consequence thereof withdrawn old high denomination (OHD) notes cannot be used for transacting business and/or store of value for future usage. The OHD notes can be exchanged for value at any of the 19 offices of the Reserve Bank of India or at any of the bank branches or at any Head Post Office or Sub-Post Office.

3) How much value will I get?

You will get value for the entire volume of notes tendered at the bank branches / RBI offices.

4) Can I get all in cash?

No. You will get upto ₹4000 per person in cash irrespective of the size of tender and anything over and above that will be receivable by way of credit to bank account.

5) Why I cannot get the entire amount in cash when I have surrendered everything in cash?

The Scheme of withdrawal of old high denomination(OHD) notes does not provide for it, given its objectives.

6) ₹4000 cash is insufficient for my need. What to do?

You can use balances in bank accounts to pay for other requirements by cheque or through electronic means of payments such as Internet banking, mobile wallets, IMPS, credit/debit cards etc.

7) What if I don’t have any bank account?

You can always open a bank account by approaching a bank branch with necessary documents required for fulfilling the KYC requirements.

8) What if, if I have only JDY account?

A JDY account holder can avail the exchange facility subject to the caps and other laid down limits in accord with norms and procedures.

9) Where can I go to exchange the notes?

The exchange facility is available at all Issue Offices of RBI and branches of commercial banks/RRBS/UCBs/State Co-op banks or at any Head Post Office or Sub-Post Office.

10) Need I go to my bank branch only?

For exchange upto 4000 in cash you may go to any bank branch with valid identity proof. For exchange over 4000, which will be accorded through credit to Bank account only, you may go to the branch where you have an account or to any other branch of the same bank.

In case you want to go to a branch of any other bank where you are not maintaining an account, you will have to furnish valid identity proof and bank account details required for electronic fund transfer to your account.

11) Can I go to any branch of my bank?

Yes you can go to any branch of your bank.

12) Can I go to any branch of any other bank?

Yes, you can go to any branch of any other bank. In that case you have to furnish valid identity proof for exchange in cash; both valid identity proof and bank account details will be required for electronic fund transfer in case the amount to be exchanged exceeds ₹4000.

13) I have no account but my relative / friend has an account, can I get my notes exchanged into that account?

Yes, you can do that if the account holder relative/friend etc gives you permission in writing. While exchanging, you should provide to the bank, evidence of permission given by the account holder and your valid identity proof.

14) Should I go to bank personally or can I send the notes through my representative?

Personal visit to the branch is preferable. In case it is not possible for you to visit the branch you may send your representative with an express mandate i.e. a written authorisation. The representative should produce authority letter and his / her valid identity proof while tendering the notes.

15) Can I withdraw from ATM?

It may take a while for the banks to recalibrate their ATMs. Once the ATMs are functional, you can withdraw from ATMs upto a maximum of ₹2,000/- per card per day upto 18th November, 2016. The limit will be raised to ₹4000/- per day per card from 19th November 2016 onwards.

16) Can I withdraw cash against cheque?

Yes, you can withdraw cash against withdrawal slip or cheque subject to ceiling of ₹10,000/- in a day within an overall limit of ₹20,000/- in a week (including withdrawals from ATMs) for the first fortnight i.e. upto 24th November 2016.

17) Can I deposit withdrawn notes through ATMs, Cash Deposit Machine or cash Recycler?

Yes, OHD notes can be deposited in Cash Deposits machines / Cash Recyclers.

18) Can I make use of electronic (NEFT/RTGS /IMPS/ Internet Banking / Mobile banking etc.) mode?

You can use NEFT/RTGS/IMPS/Internet Banking/Mobile Banking or any other electronic/ non-cash mode of payment.

19) How much time do I have to exchange the notes?

The scheme closes on 30th December 2016. The OHD banknotes can be exchanged at branches of commercial banks, Regional Rural Banks, Urban Cooperative banks, State Cooperative Banks and RBI till 30th December 2016.

For those who are unable to exchange their Old High Denomination Banknotes on or before December 30, 2016, an opportunity will be given to them to do so at specified offices of the RBI, along with necessary documentation as may be specified by the Reserve Bank of India.

20) I am right now not in India, what should I do?

If you have OHD banknotes in India, you may authorise in writing enabling another person in India to deposit the notes into your bank account. The person so authorised has to come to the bank branch with the OHD banknotes, the authority letter given by you and a valid identity proof (Valid Identity proof is any of the following: Aadhaar Card, Driving License, Voter ID Card, Pass Port, NREGA Card, PAN Card, Identity Card Issued by Government Department, Public Sector Unit to its Staff)

21) I am an NRI and hold NRO account, can the exchange value be deposited in my account?

Yes, you can deposit the OHD banknotes to your NRO account.

22) I am a foreign tourist, I have these notes. What should I do?

You can purchase foreign exchange equivalent to ₹5000 using these OHD notes at airport exchange counters within 72 hours after the notification, provided you present proof of purchasing the OHD notes.

23) I have emergency needs of cash (hospitalisation, travel, life saving medicines) then what I should do?

You can use the OHD notes for paying for your hospitalisation charges at government hospitals, for purchasing bus tickets at government bus stands for travel by state government or state PSU buses, train tickets at railway stations, and air tickets at airports, within 72 hours after the notification.

24) What is proof of identity?

Valid Identity proof is any of the following: Aadhaar Card, Driving License, Voter ID Card, Pass Port, NREGA Card, PAN Card, Identity Card Issued by Government Department, Public Sector Unit to its Staff.

25) Where can I get more information on this scheme?

Further information is available at our website ( and GoI website (

How PM Modi announced the decision to invalidate Rs 500 and Rs 1000 notes

<!– /11440465/Dna_Article_Middle_300x250_BTF –>Taking the nation by surprise, Prime Minister Narendra Modi tonight announced demonetisation of Rs 1000 and Rs 500 notes with effect from midnight, making these notes invalid in a major assault on black money, fake currency and corruption. In his first televised address to the nation, Modi said people holding notes of Rs 500 and Rs 1000 can deposit the same in their bank and post office accounts from November 10 till December 30.In his 40-minute address, first in Hindi and later in English, the Prime Minister said the notes of Rs 500 and Rs 1000 “will not be legal tender from midnight tonight” and these will be “just worthless piece of paper.” However, he said that all notes in lower denomination of Rs 100, Rs 50, Rs 20, Rs 10, Rs 5, Rs 2 and Re 1 and all coins will continue to be valid. He also announced that new notes of Rs 2000 and Rs 500 will be introduced.ATM withdrawals will be restricted to Rs 2000 per day and withdrawals from bank accounts will be limited to Rs 10,000 a day and Rs 20,000 a week. Banks will remain closed tomorrow and ATMs will also not function tomorrow and day after, Modi said. He expressed confidence that the staff of banks and post offices will rise to the occasion to introduce the new order within the available time.He also expressed confidence that political parties, workers, social organisations and the media will go further than the government in making it a success. Besides depositing money in bank accounts, the Rs 500 and Rs 1000 notes can also be exchanged with lower denomination currency notes at designated banks and post offices on production of valid government identity cards like PAN, Aadhaar and Election Card from November 10 to November 24 with a daily limit of Rs 4000.Those unable to deposit Rs 1000 and Rs 500 notes till December 30 this year can do so in designated RBI offices till March 31 next year after filling a declaration form along with proof and reasons, the Prime Minister said.Rs 500 and Rs 1000 notes will be valid for transactions related to booking of air tickets, railway bookings, government bus ticket counters and hospitals till the midnight of November 11 and 12.”Banks will be closed tomorrow. It will cause some hardship to you….Let us ignore these hardships… In country’s history, there comes a moment when people will want to participate in the nation building and reconstruction. Very few such moments come in life,” Modi said. While making the announcement, the Prime Minister saidthe sweeping measures were aimed at curbing the “disease” of corruption and black money which have taken deep root.”There is a need for a decisive war against the menace of corruption, black money and terrorism… Corruption, black money and terrorism are festering wounds which make the country hollow from within,” he said, adding such activities hold back the nation’s progress.Describing illegal financial activities as the “biggest blot”, Modi said that despite several steps taken by his government over the last two-and-a-half years, India’s global ranking on corruption had moved only to 76th position from 100th earlier.”This shows the extent of the web of corruption in the country. The disease of corruption is the domain of some veted people who are flourishing. Some people have misused their positions and benefitted. On the other hand, honest people are suffering,” he said.He linked fake currency to terrorism and questioned how enemies of the countries are using such methods to harm India.”We have to get rid of this termite of corruption,” he said.

Rs 500, Rs 1,000 banned: How banks and ATMs will function in next few days

Taking the nation by surprise, on Tuesday, Prime Minister Narendra Modi announced demonetisation of Rs 1,000 and Rs 500 notes with effect from midnight, making these notes invalid in a major assault on black money, fake currency and corruption.

In his first televised address to the nation, Modi said people holding notes of Rs 500 and Rs 1,000 can deposit the same in their bank and post office accounts from 10 November till 30 December.

In his 40-minute address, PM said the notes of Rs 500 and Rs 1000 “will not be legal tender from midnight tonight” and these will be “just worthless piece of paper.”

PM Modi announced, ATM withdrawals will be restricted to Rs 2,000 per day in the initial days and this limit will be raised to Rs 4,000 later. Withdrawals from bank accounts will be limited to Rs 10,000 a day and Rs 20,000 a week.

Banks will remain closed on Wednesday and some ATMs will also not function on Wednesday and Thursday as RBI stocks banks and ATM machines with lower denomination notes.

Representational image. PTIRepresentational image. PTI

Representational image. PTI

This means that the public will have to visit ATMs which supply currency with lower denomination before Wednesday morning. Online transactions are unaffected as there are no restrictions of any kind on non-cash payments by cheques, demand drafts, debit or credit cards and electronic fund transfer.

Public can exchange their Rs 500 and Rs 1,000 notes with lower denomination currency notes at designated banks and post offices on production of valid government identity cards like PAN, Aadhaar and Election Card from 10 November to 24 November with a daily limit of Rs 4,000.

Those unable to deposit Rs 1,000 and Rs 500 notes till 30 December this year can do so in designated RBI offices till 31 March next year after filling a declaration form along with proof and reasons.

Rs 500 and Rs 1000 notes will be valid for transactions related to booking of air tickets, railway bookings, government bus ticket counters and hospitals till the midnight of 11 and 12 November.

With inputs from agencies

Rs 500 and Rs 1,000 currency notes banned, new Rs 2,000 note to be out on 10 November

In what could be termed as an unprecedented move, Prime Minister Narendra Modi on Tuesday added a lethal edge to India’s fight against black money by announcing that the currencies in the denominations of Rs 500 and Rs 1,000 will be invalid when the clock strikes 12 midnight of 8 November.

Prime Minister Narendra Modi. PTIPrime Minister Narendra Modi. PTI

Prime Minister Narendra Modi. PTI

The move was announced in a sudden address at 8 pm that was televised across all news channels when the frenzy was otherwise with the US presidential polls.

The demonetisation of Rs 1,000 and Rs 500 notes is a major assault on black money hoarders, fake currency, and corruption.

In his 40-minute address, first in Hindi and later in English, the Prime Minister said the notes of Rs 500 and Rs 1,000 “will not be legal tender from midnight tonight” and these will be “just worthless piece of paper.”

However, he said that all notes in lower denomination of Rs 100, Rs 50, Rs 20, Rs 10, Rs 5, Rs 2 and Re 1 and all coins will continue to be valid.

He also announced that new notes of Rs 2000 and Rs 500 will be introduced.

ATM withdrawals will be restricted to Rs 2,000 per day and withdrawals from bank accounts will be limited to Rs 10,000 a day and Rs 20,000 a week.

Banks will remain closed on Thursday and ATMs will also not function tomorrow and day after, Modi said.

He expressed confidence that the staff of banks and post offices will rise to the occasion to introduce the new order within the available time.

He also expressed confidence that political parties, workers, social organisations and the media will go further
than the government in making it a success.

The prime minister said that black money and corruption have not only been affecting the Indian economy but has also helped finance terror activities been helping finance terrorist activities, and the new rule will help bring down both.

Modi, however, clarified that the citizens will be able to deposit old notes of Rs 500 and Rs 1,000 at post offices and banks of their choice.

“The public will have 50 days time between 10 November and 30 December to deposit old notes of Rs 500 and Rs 1,000 after showing a proof of identity,” he said. The accepted POI documents include Pan Card, Aadhaar Card, Voters ID Card, Driver’s License and Passport.

The exchange of old notes, however, will be limited to Rs 2,000 between 10 and 24 November, and it will be increased up to Rs 4,000 between 25 November to 30 December.

However, government hospitals, pharmacies in government hospitals, airline ticket counters, bus ticket counters, railway ticket counters and petrol pumps will accept old notes for the next 72 hours, ie, till midnight 11 November.

Besides depositing money in bank accounts, the Rs 500 and Rs 1,000 notes can also be exchanged with lower denomination currency notes at designated banks and post offices on production of va id government identity cards like PAN, Aadhaar and Election Card from 10 to 24 November with a daily limit of Rs 4000.

Those unable to deposit Rs 1,000 and Rs 500 notes till December 30 this year can do so in designated RBI offices till 31 March next year after filling a declaration form along with proof and reasons, the Prime Minister said.

Rs 500 and Rs 1,000 notes will be valid for transactions related to booking of air tickets, railway bookings,
government bus ticket counters and hospitals till the midnight of 11 and 12 November.


“Banks will be closed tomorrow. It will cause some hardship to you….Let us ignore these hardships… In
country’s history, there comes a moment when people will want to participate in the nation building and reconstruction. Very few such moments come in life,” Modi said.

The government has also implemented a daily limit of Rs 2,000 on ATM withdrawals, which will be increased to Rs 4,000 at a later stage.

The Prime Minister emphasised that there is no restriction on any kind of non-cash payments by cheques, demand drafts, debit or credit cards and electronic fund transfer.

In his address, PM Modi shared the insight into how the magnitude of cash in circulation is linked to inflation and how the inflation situation is worsened due to the cash deployed through corrupt means. The Prime Minister added that it adversely affects the poor and the neo-middle class people. He cited the example of the problems being faced by the honest citizens while buying houses.

The very first decision of the Modi-led NDA government was the formation of a SIT on black money.

A law was passed in 2015 on disclosure of foreign bank accounts. In August 2016, strict rules were put in place to curtail benami transactions. During the same period a scheme to declare black money was introduced.

PM Modi in course of his address said that over the past two and a half years, more than Rs 1.25 lakh crore of black money has been brought into the open.

Prime Minister Narendra Modi has time and again raised the issue of black money at the global forum, including at important multilateral summits and in bilateral meetings with leaders.

While focussing on the greener spots on the Indian economy, the Prime Minister said that the efforts of the government have put India as an emerging country to grab a bright spot in the global economy.

Soon after the address by PM Modi, in another press conference the Department of Economic Affairs, secretadry Hasmukh Adhia said, “New notes of Rs 500 and Rs 2,000 with greater security features and design will be circulated from 10 November.”

“Rs 500 notes circulation up 76% from 2011 to 2016 and Rs 1,000 notes by 109 percent as against 40 percent rise in all currency notes,” he said.

With inputs from PTI

ATM security breach reveals cyber world’s big risks, says ex-top cop D Sivanandhan

Cyber security is an issue that is affecting India as it is being attacked by the cyber army led by Pakistan and China and internally we are vulnerable in sectors of finance, oil, energy, power among other vital areas.

In February 2016, cyber thieves have been bold enough to hack into the central bank of Bangladesh and sent fake payment orders to the US Fed. The Fed was tricked into paying out $101 million. This only enthuses and emboldens hackers to go all out and commit such frauds.

D Sivanandhan, formerD Sivanandhan, former

D Sivanandhan, former DGP, Maharashtra Police

There are a lot many bank frauds that are happening in India but the banks don’t want to lodge a police complaint as that would mean their reputation would be at risk and also their customers may lose trust in them. Since they have insurance, they prefer to claim damages rather than come out in the open about the crime.

The future crimes will be largely cyber crimes and people should be careful before using their keyboard and typing out details. More people are taking to cyber capability like fish to water and there are criminals waiting on the banks to eat them up.

The government’s flagship financial inclusion program, Pradhan Mantri Jan Dhan Yojana has resulted in 25.05 crore accounts (as of 12 October, 2016) being opened across the country but most of the beneficiaries are not cyber literate. When money flows into their accounts from the government, it will be fraught with high risks.

It is very easy to clone a card. All it takes is for someone to read the card as the details are being punched and money can be siphoned away from one’s account. People must be aware and cautious of how they manage their accounts, debit/credit cards, password and personal information. Awareness must be created continuously so that customers are alert about the risks involved. Banks need to sweep their computers periodically and look out for Trojans.

In this case of 30 lakh account details being compromised, customers must know that it does not mean money has been siphoned off their accounts. If it was, under RBI rules, the concerned banks would have to pay back their customers.

Accounts being compromised means that the details of the customers, bank card numbers, etc could be hacked into which can be used to take away customer’s money. That is why the banks have had to reissue new cards. It is akin to Samsung withdrawing Note 7.

(As told to Sulekha Nair)

India’s banking outlook stable over next 18 months on slower formation of bad loans: Moody’s

New Delhi: The pace of bad loan formation is going to be slower resulting in a stable outlook for the Indian banking sector over the next 12-18 months, Moody’s Investors Service said Monday.

“While the stock of impaired loans may still increase during the horizon of this outlook, the pace of new impaired loan formation should be lower than what it has been over the last few years,” Moody’s VP and Senior Credit Officer Srikanth Vadlamani said.



India’s banking system is moving past the worst of its asset quality down cycle, supporting its stable outlook for the sector over the next 12-18 months, it said in a report.

“The performance of India’s state-owned and private banks continues to diverge,” Vadlamani said.

“The state-owned banks will require significant capital over the next three years with limited access to the capital markets, while the private banks benefit from solid capitalisation and good profitability,” he said.

Moody’s outlook expresses its expectation of how bank creditworthiness will evolve in the system over the next 12-18 months.

The stable outlook is based on Moody’s assessment of five drivers — stable operating environment, asset risk and capital, funding and liquidity, profitability, and Government Support.

The operating environment for Indian banks is supported by a stabilising economy, it said.

Moody’s baseline scenario assumes headline GDP growth of 7.4 percent over the next two years, compared with 7.3 percent in 2015, with key drivers being a favourable monsoon season, ongoing public investment, and continued growth in foreign direct investment.

Asset quality will remain a negative driver of the credit profiles of most rated Indian banks, but the pace of deterioration should slow.

Moody’s said it expects limited policy rate cuts over the next 12 months, which should help stabilise Net Interest Margin (NIMs). Credit costs will remain high for the sector, but no higher than in recent years for the industry overall.

It also believes that state-owned banks will receive a very high level of systemic support, irrespective of their size.

Moody’s said that besides legacy issues for some banks, the underlying asset trend will be stable because of the generally supportive operating environment.

“Capital levels remain a key credit weakness for state-owned banks, and the announced capital infusion plans of the government fall short of the amount required for their full capitalisation,” it said.

However, a potential way to bridge this capital shortfall would be to slow loan growth to the low single digits over the next three years, it added.

Funding and liquidity remains a bright spot for the system, and will remain supported by Moody’s expectation of relatively subdued loan growth during the outlook.

Profitability for the banks will reflect stabilising net interest margins (NIMs) and credit costs.

For private banks, systemic support will be determined by their systemic importance, and range from high to very high or Moody’s rated universe.

Moody’s rates 15 banks in India that together account for around 70 percent of system assets.

The ratings outlook on 11 of the banks is positive, reflecting the global rating agency’s positive outlook on the sovereign rating and the high degree of government support that could be expected for the banks, if needed.

Indian banking’s ‘weak underbelly’ exposed and the story is not over, says Uday Kotak

New Delhi: Warning of ‘more bad news’ on the stressed loans front in the Indian banking sector, eminent banker Uday Kotak has said its ‘weak underbelly’ has resurfaced strongly and the story is not over yet, though lenders have begun cleaning up their books.

Kotak Mahindra Bank chief Uday KotakKotak Mahindra Bank chief Uday Kotak

Kotak Mahindra Bank chief Uday Kotak

Kotak also questioned whether nationalisation of banks served the purpose of checking disproportionate lending to big businesses, as most of the stress on their books is today due to loans to big corporates.

In his annual message to shareholders, the Kotak Mahindra Bank chief also pitched for an ‘exit mechanism’ for the sector, saying forced mergers, as practiced in past, may not be possible for public sector banks anymore due to their huge NPAs.

Kotak, who is known as one of the most vocal voices within the Indian banking industry including about its own perils, said he sees a “well-settled government” in the country today, but it “could do more to build confidence and trust among businessmen and rekindle animal spirits into the economy”.

“The last financial year saw the Indian economy stretched between two ends of the string, good macro tailwinds but a difficult micro situation,” he said, adding that inflation, current account and fiscal deficit were all under control, but many sectors and individual businesses struggled. “This scenario is likely to change from hereon. With Brent recovering to USD 50 levels, the benefits of lower prices will reduce, and this has the potential to increase our current account deficit and bottoming out of inflation…. It is time for the Indian micro to gear up and get back into the game,” he said.

On banking sector, Kotak said, “The weak underbelly of Indian banking, something which I have been consistently pointing out through the years, has resurfaced strongly. Both public and some private sector banks have revealed stress on their balance sheets.

“The story is not over yet, and we can expect to see more bad news on this front. But it is also a fact that banks have started cleaning up their balance sheets.”

Among the lessons from the problems in banking sector, Kotak said banks should understand they are not private equity investors and recovery of money should be at the heart of lending.

“Return of capital is more important than return on capital. If banks think they cannot recover money, they should not lend in the first place,” he said, while suggesting a serious overhaul of the recovery mechanism in the country. He also blamed the banks for ‘postponing the pain’ for the last many years, saying it has had a ballooning effect on exposures.

Kotak further said, “Banks were nationalised 47 years ago. One of the reasons for this was that private banks were lending disproportionately to big businesses. Access to funds from banks was not easy for the common man. Nationalisation was supposed to change this. Today’s irony is that the biggest losses booked by banks, including public sector banks (PSBs),are on account of lending to big businesses. “Effectively, public policy actions supposedly done ‘in public interest’, are instead going ‘against public interest’.”

Going ahead, Kotak said, the Bankruptcy Code is a good step but it will take at least a year to become fully effective as the entire ecosystem needs to be created. “When I look at our challenges across BIFR, SARFAESI, DRTs, DRATs, and the judicial system, I hope we do better this time. Good intent needs to be backed by good people and execution. Simultaneously, the country needs to rethink the architecture of Indian banking boldly,” he said.

He warned that the economy could face headwinds because of banking capacity constraints, given its dependence on 70-30 mix between public and private sector banking. Kotak also said that technology is changing the contours of banking while at the same time the sector has been opened up and new players will soon open shop. “In a short time, we are likely to see 20 to 30 new banks between payment banks, small finance banks, and new on-tap banks. There will be many more new banks than before, and while this is good for capacity building, it will come with its issues.

“In India we still do not have an exit mechanism for banks. Whenever there was a  problem, the policy makers chose to merge the troubled entity with another bank, in most cases a public sector bank (PSB). Now PSBs are no more in a position to absorb such entities easily because of the high non-performing assets (NPAs) which have put their capital under severe strain. In this context, the banking industry needs a defined framework, where easy entry is accompanied by an exit mechanism.

“The entire banking sector therefore needs to be reconfigured and re-engineered. This requires political will and consensus which is not easy,” Kotak said.

He exuded confidence in growth prospects of his own bank, as also about insurance and mutual fund businesses, and said the integration of ING Vysya Bank would be completed this month. “Another area of focus for us going forward is the area of analytics. We are gearing up the organisation for increased intelligence, speed of response and increased productivity on asset, liability, and services areas,” he said.

Vijay Mallya case: Arun Jaitley says UK has slow extradition process

Finance Minister Arun Jaitley on Friday said BJP does not want to “communalise or polarise” the UP elections, but the state government must address the issue if there is “even some evidence of migration” from Kairana.On why the government has not been able to bring back Vijay Mallya from the UK, Jaitley said, “Britain has one of the highest standards of civility in public life and therefore for Britain to become a heaven for any absconder out of India is something that I cannot fathom. “British government has taken a position that if you enter the Britain with a valid passport, then we are not going to deport a person, you come in by way of extradition. And conventionally they have been very slow and reluctant in extraditing people.<!– /11440465/Dna_Article_Middle_300x250_BTF –>”And I think where you criticise the government of India, we can take all the steps but ultimately we can not physically lift an individual and bring him back. Well I only hope that the British government had realised that absconders in one jurisdiction can’t make a heaven in another jurisdiction. This is not civility. And this is not certainly British civility.” He further said that “a mistake in Mallya case took place years ago when he was given a second round of restructuring, when airline was bleeding, when he was not in position to serve interest…”Probably at that stage, somebody thought may be we give him a new lease of life. They never knew Mallya’s intention that one day he will disappear.” He also said that any agency must go through the entire transactions before filing any FIR or chargesheet and they go through possibility of any siphoning of money. “Create that evidence and then move the chargesheet or FIR, as without evidence they will end up with egg on their face. Therefore, what the agencies are doing is that they are independently investigating the matter, going through the entire records… Banks themselves have been running from pillar to post …””I think at the end of the day, the banking situation overall will retrieve. Mallya is a bad example because I think he has done more injustice to India’s private sector by making banks suspicious of borrowers. Banks should be enthusiastic in lending to borrowers,” he added.Jaitley also took on Delhi Chief Minister Arvind Kejriwal, accusing his Aam Aadmi Party government of giving advertisements to only “friendly” media and not to the media houses that are critical. In an interview to Times Now, the senior BJP leader maintained that ‘Ram Mandir’ will not be made an electoral issue in UP, where assembly elections are due next year, and his party is not looking to polarise the state to win votes. A major controversy has erupted over alleged migration from Kairana in western UP, although the state administration has questioned any religion-specific migration there.”We don’t want in anyway to communalise or polarise the election, but if there is even some evidence of migration taking place from Kairana, it’s an important issue that the state government there must address it,” he said.Asked about the statements being made by some BJP leaders from the region, Jaitley said, “At the end of the day, whatever statements are made in public domain are in public domain. “But, I only tell you ultimately it is the party president who determines the stand of the party and therefore as far as electoral strategy of UP is concerned….”Even in earlier elections, even though BJP stands committed to build a temple in Ayodhya, we have always said that we are not going to make it an election issue. For us its much more than an election issue.” On another controversy surrounding the censor board and on whether its chief Pahlaj Nihalani would be sacked, Jaitley who also holds charge of Information and Broadcasting Ministry said, “I am reasonably certain, that once we are able to announce those new guidelines (for Central Board of Film Certification), the roles of individuals will get diluted.”How to deal with the individuals, I think you should trust the government. The government will deal with them and advise restraint or take whatever appropriate action is required in the matter,” he said. He hinted that the new guidelines would be out in a couple of weeks. Asked about Kejriwal’s allegations that Delhi Lieutenant General Najeeb Jung was interfering in his work, Jaitley said Delhi was not a state but a union territory.”It is the seat of the central government… Can we have a Union Territory which says we will bypass LG? Senior bureaucrats are not willing to serve Delhi…It’s a historic opportunity for AAP to perform and govern…you have do your function through LG,” he said. He said, “There are several non-BJP state governments in the country but “one union territory behaves as if it has absolute power.I think what has happened in Delhi is constitutional monstrosity”.On Subramanian Swamy’s attack on RBI Governor Raghuram Rajan, Jaitley said some people are “outspoken” but it has been more than adequately clarified this was not the party’s position. “Let me make it very clear that when this statement about the RBI Governor was made, I had publicly disagreed, Venkaiah Naidu made a statement publicly disagreeing with it and then the party president Amit Shah made a statement that this is not a party position. Now, some people are more outspoken and therefore speak their mind out. The others remain more conventional about it,” he said.

Mr Mallya, why don’t you return to India if you are not a defaulter?

Vijay Mallya, not definitely the King of Good Times these days, isn’t a happy man with so many recent developments. One such is the ‘media trial’ against him since 2 March—the day when he left the country with seven bags, an unidentified woman, Rs 9,000 crore loan obligation, a wilful defaulter notice and charges on financial irregularities.

Vijay Mallya. AFPVijay Mallya. AFP

Vijay Mallya. AFP

The tycoon, currently at his ‘Ladywalk’ bungalow in the suburbs of UK, tweeted on Tuesday.

“In all humility and not in defiance as they report, I would like Indian media to check and verify facts before calling me a defaulter.”

In another tweet Mallya said, “Agree Kingfisher Air owes money to Banks. I am neither a borrower or a judgement debtor. Why am I a defaulter inspite of a settlement offer ? (sic)”

The arguments Mallya seems to make in both tweets make no sense. Here’s why:

Argument 1 : Check and verify facts before calling me a defaulter/ I am neither a borrower or a judgement debtor.

True, it was not Mallya, but the Kingfisher Airlines that originally borrowed close to Rs 7,000 crore from a clutch of 17-banks. But, as this Firstpost story highlights, Mallya is being chased by banks because he promised personal guarantees against the loan and, for fresh facilities Kingfisher received before the loan turned into a non-performing asset (NPA).

Typically, personal guarantees are not given on specific assets of the promoter but on all his personal assets. If it is against a specific asset, it becomes collateral. In that backdrop, Mallya indeed is a defaulter and is liable to pay back the dues to the 17-banks.

Secondly, banks wouldn’t have extended loans to Kingfisher but for the big name of its promoter—Vijay Mallya. Remember, the airline never made any profit in its eight-year-old life, nor had anything else that offered comfort to its lenders as a liquid collateral. It was only because the man who was seeking money is one of the country’s top industrialists that banks had faith in him. As one banker said “who would have dared to refuse loan to Mallya?”

This is not to argue that banks have done all the right things. Kingfisher is clearly a case of banks’ failure to see what is coming, act early on recovery and their overreliance on the name of the airline’s flamboyant owner. By stating he is not a defaulter, is Mallya trying to distance himself from the airline?

Also, why did three banks (though one of them had to reverse the decision following a court order) tag Kingfisher and Vijay Mallya as a wilful defaulter if it is not a case of default and alleged misuse of funds borrowed from banks? Mallya indeed is the borrower and the defaulter of Rs9000 crore loans to 17-banks.

Argument 2: Not in defiance as they report

Media has no business to accuse any individual for months on end, unless there is a clear case of guarding public interest. As this website has argued for long, the Mallya-Kingfisher case is important since the Rs 9,000 crore lent to Mallya is indirectly public money. Banks run on deposits mobilized from the public. In other words, they are the guardians of public money. If banks lose money on account of defaults, banks’ profitability takes a hit. In the case of state-run banks, the onus to recapitalize banks yet again falls on the taxpayer.

Secondly, the Kingfisher case will set a trend for other similar cases in courts. Kingfisher is only one such case. Hence, media interest in this case is logical.

Mallya has been defiant in this case throughout, evident from his statements in courts and in his interviews. The tycoon said banks’ have no business in seeking his foreign asset details on account of his NRI status. despite the personal guarantee submitted by him. He even warned that government actions, including revoking of his passport, would not get any money to the banks.

More importantly, Mallya was never willing to appear before the court despite the Supreme Court asking him to do so. Aren’t these acts of defiance? If Mallya is indeed not guilty of default and fund diversions, he should have returned to the country and seek justice.

Argument 3: Why am I a defaulter in spite of a settlement offer?

A borrower is tagged as a defaulter when he defaults on his loan and gets rid of that tag only when he repays the outstanding loan amount through a mutually agreed proposal between him and the lenders. In Mallya’s case, the Rs 4,000 crore offer submitted by Mallya was never acceptable for banks for their own reasons. How does one cease to become a defaulter by merely promising repayment? Moreover, Mallya doesn’t agree that he owes Rs 9,000 crore to banks (including the interest accrued on principal). He has always contested the figure as unfair, saying banks have charged compounded interest on the principal amount. What if all borrowers in India say the same and refuse to pay the interest component?

Mallya is an industrialist, who was once the poster boy of Indian aviation and someone who introduced luxury flying experience in the domestic aviation sector. At one point of time, he used to be, certainly, the pride of many Indians and all that represented luxury in life. Why did he let himself fall to where he is now?

If Mallya wants to clear his name, he should return to the country, pay his dues and fight the charges against him in a court of law.

The questions to Mallya are:

  1. If you are not a loan defaulter and not guilty of the charges raised against you, then why are the banks after you?
  2. Why do the courts, the government, and banks find fault in your conduct? Can all of them be wrong?
  3. Why aren’t you returning to your home land with the determination to fight your case in court?

Over to you Mr Mallya.

Vijay Mallya offers Rs 4,000 crore, banks non-committal

Beleaguered businessman Vijay Mallya on Wednesday offered to pay Rs 4,000 crore of his debts, less than half of the Rs 9,091 crore he owes to Indian banks, by September this year. Banks, however, were non-committal, stating that Mallya’s proposal was much less than the principal debt of Rs 6,903 crore.Submitting a joint plan by Mallya and his companies – Kingfisher Airlines Ltd, United Breweries (Holdings) Ltd and Kingfisher Finvest (India) Ltd – before the Supreme Court, Mallya’s counsel CS Vaidyanathan, however, denied any plans by the defunct airlines owner to return to India in the present circumstances.<!– /11440465/Dna_Article_Middle_300x250_BTF –>According to a source privy to the four-page proposal, the proposed Rs 4,000 crore included Rs 2,000 crore, which he claimed to have deposited with the Karnataka High Court, and the rest shares of United Spirits Ltd (USL), still owned by United Breweries (Holdings) Ltd.””In addition, Mallya also proposed to repay Rs 2,000 crore if he wins the litigation pending with the Debt Recovery Tribunal, Bangalore against GE Corp,” the source said.It is unclear whether banks will be open to Mallya’s proposal. Mallya, in past negotiations, had asked for interest waivers or reduction of his debt burden. Banks had rejected the proposals and insisted that Mallya pay the entire principal sum along with nominal interest upfront.The consortium of banks, led by State Bank of India (SBI), have now told the court that they would need a week to consider Mallya’s proposal. The case will be heard next on April 7.A bench headed by Justice Kurian Joseph asked Mallya’s lawyers categorically if the businessman was back in the country as the court had issued a notice to him earlier.”Mallya is back in India or not. Where are you (Mallya)? Are you back in India,” Justice Joseph asked.Mallya’s counsel argued that given the media hostility towards Mallya it was not an appropriate time for him to return. Vaidyanathan added, “There are cases in which media created such a surcharged atmosphere that even beatings have taken place. The less said the better”.However, the bench said “media ultimately stands for the public interest. They just want the money taken from the banks be brought back”.

Pay dues honourably or face coercive action: FM to Mallya

New Delhi: In a stern warning to wilful defaulters like Vijay Mallya, Finance Minister Arun Jaitley said they should settle their dues honourably with the banks or else be ready to face “coercive action” by lenders and investigative agencies.

Vijay Mallya. AFPVijay Mallya. AFP

Vijay Mallya. AFP

“I don’t want to make any comments on individual cases but I think it’s a responsibility of large groups like his (Vijay Mallya‘s) to honourably settle their dues with the banks,” he told PTI in an interview here.

He further said that banks have certain collaterals of group companies of Vijay Mallya and will take legal action to recover dues that are in excess of Rs 9,000 crore.

“Banks have some securities. Banks plus other agencies have also coercive methods available with them through legal enforcement…these are all being investigated by relevant agencies,” he said.

Mallya, promoter of long-grounded Kingfisher Airlines, had left India on March 2, presumably for London, days before the Supreme Court heard a plea of clutch of state-owned banks seeking recovery from his group firms.

Mallya and Kingfisher Airlines owed Rs 7,800 crore to a consortium of 17 lenders led by State Bank, which had an exposure of over Rs 1,600 crore to the now defunct airline. Other banks that have exposure to the airline include Punjab National Bank and IDBI Bank (Rs 800 crore each), Bank of India (Rs 650 crore), Bank of Baroda (Rs 550 crore), Central Bank of India (Rs 410 crore).

UCO Bank has to recover Rs 320 crore, Corporation Bank (Rs 310 crore), State Bank of Mysore, (Rs 150 crore), Indian Overseas Bank (Rs 140 crore), Federal Bank (Rs 90 crore), Punjab & Sind Bank (Rs 60 crore) and Axis Bank (Rs 50 crore). The Finance Minister said the government has been trying to address the problem of NPAs in sectors such as steel, textile, highways and infrastructure, which are on account of economic slowdown.

“I think the NPA resolution process will now begin. The sectors which have caused distress… I have always said that there are two kinds of NPAs. One is because of economic environment, the losses in certain categories of industry. Now those areas we are trying to address,” he said.

Will request Supreme Court to ensure Vijay Mallya’s presence, if needed: AG Mukul Rohatgi

Attorney General Mukul Rohatgi on Monday said he will request the Supreme Court to ask liquor baron Vijay Mallya to appear before it, if required.”The Supreme Court has not yet asked Mallya to appear in person but we will request the apex court to ask him to be present in person…””If he (Mallya) is not coming back and we are unable to proceed with the matter further, we can then initiate the proceedings like revoking the passport and all. If revocation doesn’t work, we can initiate extradition process with the UK,” Rohatgi said about the Mallya’s case while talking to a private TV channel.<!– /11440465/Dna_Article_Middle_300x250_BTF –>The Attorney General said power to arrest does not mean that every offender has to be arrested and it was only a mechanism to ensure that investigation does not get hampered.”It is not imperative that the person must be arrested or detained in every criminal case. That is not the law. Merely because you have the power to arrest, it does not mean that you can arrest everyone. Arrest is only to see that their investigation is not affected…”Banks are not government of India. They are only public sector enterprises who are interested in getting their money back. They have been running from pillar to post for last two to three years, hundreds of hearing have been held in various Debt Recovery Tribunals (DRT), over a dozen times they have gone to the High Court up and down and many adjournments,” Rohatgi said.On the issue of delay by banks in approaching the apex court, he said the banks approached the court after a long process of petitioning DRTs and High Court and again DRTs and the whole process took nearly seven days.The AG was talking about the plea of 13 banks, led by SBI, which had moved the Supreme court for restraining Mallya, who owes them over Rs 9,000 crore, from leaving the country.Mallya, who was said to be in London, had given an interview to a newspaper in which he was quoted as saying that he doesn’t feel that it’s the right time to come back to India.Mallya, however, today said in a tweet, “I have not given any statement to anyone.”

The Vijay Mallya story: How the King of Good Times made bakras of 17 banks

The flamboyant liquor baron, Vijay Mallya, once hailed as the King of Good Times and Indian version of Richard Branson, is being chased by almost every institution in the country — the banks, regulators and, finally, the judiciary — for the Rs 9,000 crores he owes to the lenders. How did Mallya fall to his current plight, where he is personally held accountable for the failure of the airline business Kingfisher Airlines and delayed repayment of loans? The answer lies in a decision forced on him by lenders in 2010 to give a second lease of life to the airline that was then on the brink of a collapse.

Vijay Mallya with modelsVijay Mallya with models

Vijay Mallya with models

“Mallya had his back against the wall. Banks insisted him to offer personal guarantees for any further lending,” said a retired banker, who was previously with State Bank of India (SBI), on condition of anonymity.

“Otherwise, there was no reason why Mallya is personally held responsible for the repayment of the loan (Rs 9,000 crore now including the accrued interest amount). There are bigger stressed borrowers (companies) around,” the banker said, giving examples like Bhushan Steel and Winsome Diamonds.

The Kingfisher Airline, grounded in 2012, never made profit in its eight years of operations. When Mallya approached the group of lenders for further lending in 2010, there was serious differences of opinion among the group of senior bankers in SBI, and other banks in the consortium, on why should they lend to the airline again. But, the majority decision was to take the big risk again and lend to Mallya.

“It was, in a way, throwing good money after bad (since the KFA exposure was already stressed),” the banker quoted earlier said. “But, if we didn’t do that at that point, the exposure till then would have gone bad instantly. No one wanted that to happen. There was no option before us,” said the official. But, everyone knew what was in the store, though no one said anything in the discussion room. “The mood was partly that of helplessness and partly optimism,” the banker said.

Bankers were optimistic because Mallya himself was hopeful of turning around the airline, even though the entire aviation industry was groping in darkness. Ironically, however, despite Mallya’s optimism, everyone saw the writing on the wall.

Mounting losses

In March 2012, Kingsiher halted its international operations to Europe and Asian countries and cut down local flights to 110-125 a day with a fleet of 20 planes from 340 flights earlier to save money. By October 2012, the bird flapped its wings for the last time. Since then, it hasn’t seen the skies.

Kingfisher, once the second-largest airline in India, had little chances of resuming its operations since the necessary regulatory approvals were not in sight and its balance sheet was bleeding. The company’s losses had widened to Rs 2,142 crore for its fiscal fourth quarter ending in March 2013, compared with a net loss of Rs 1,150 crores a year earlier. The accumulated losses as of March 2013 stood at a whopping Rs 16,023 crore.

Its dues had mounted to over Rs 15,000 –Rs 16,000 crore to banks, airports and others and its flying licences expired at the end of last year. The death bells were begining to ring. In his desperation to revive the airline, Mallya twice submitted revival plans to the aviation regulator, with parent UB Group committing initial funding, but with no luck. In its eight-year life, the airline never made profit even once.

Mallya remained optimistic though not to lose the airline’s licence. “We have not submitted an ambitious plan. We have submitted a holding plan,” Mallya told reporters, while the government wasn’t convinced. “The problem is in the last two to three months, he’s given so many plans and he’s not adhered to any of them,” the then Aviation Minister Ajit Singh told reporters in New Delhi.

Panic grips banks

Panic was beginning to set in in the banking industry, especially state-run banks, which were the majority in the banking consortium. After all, banks had to answer a lot to shareholders not just for further lending to Mallya in 2010, but for offering generous loan recast facilities and converting the debt of Kingfisher to equity at a huge premium.

In early 2011, the bank consortium including SBI had converted debt amounting to Rs 1,400 crore into equity at a 60 percent premium to the prevailing market price. Going by the stock exchange data, on March 31, there was preferential allotment to SBI and ICICI Bank due for conversion of compulsorily convertible preference shares into equity shares at a price of Rs 64.48 each. Remember, on that day, KFA shares closed at Rs 39.90 on the BSE.

“Within a few months, the share value had eroded so much that banks were put in a difficult position,” said the banker quoted earlier. Kingfisher last traded at Rs 1.36 on the BSE on 22 June 2015. The entire loan restructuring exercise to Kingfisher was done without any special dispensation from the RBI, which means that banks had to make heavy provisioning on their books, hoping that the airline will revive sooner or later and pay back the money. That never happened.

Finally, Kingfisher, was declared an NPA by most banks, including SBI, towards the end of 2011 and beginning of 2012. The majority burden of Kingfisher loans was on government-owned banks. The smartest in the lot was ICICI Bank, which managed to sell its entire Rs 430 crore Kingfisher loan exposure to a debt fund managed by the Kolkata-based Srei Infrastructure Finance Ltd in mid-2012. The sarkari banks were the real bakaras in the entire story.

So what lies ahead?

Banks’ chances of getting their money back from Mallya are very less since Kingfisher hardly has any assets left for banks. Even if banks go ahead and sell Kingfisher assets such as the Kingfisher House in Mumbai, it will fetch only a fraction of what is at stake. The only hope for banks is if Mallya himself have a change of mind and decides to pay back banks from his personal wealth (Mallya has shares worth Rs7000 crore in various companies and lot more in fixed assets).

“But, all that will happen if he returns to the country and say he will pay back,” the banker said, adding that bankers are more irked by Mallya flaunting his wealth publicly even now when thousands of crores are at stake. According to reports Mallya already received $40 million of his severance pay fro Diageo before his flew to UK. Can the final battle between banks, led by SBI, and Mallya in Supreme Court and Bangalore DRT result in lenders getting their money back. Chances are less.

(Kishor Kadam Contributed to this story)

dna Morning Must Reads: From India’s disappointment over F-16 deal to Herschelle Gibbs on Proteas chances at World T20

1. India ‘disappointed’ as US decides to sell eight F-16 fighter jets to PakistanMinistry of External Affairs (MEA) on Saturday expressed disappointment over the decision of Obama administration to sell eight F-16 fighter jets to Pakistan worth nearly $700 million. Read more here<!– /11440465/Dna_Article_Middle_300x250_BTF –>2. Afzal Guru row: Government acts tough; arrested JNU leader Kanhaiya Kumar cries vendetta Kanhaiya Kumar, president, Jawaharlal Nehru University Student Union (JNUSU) was arrested on charges of sedition by the Delhi police on Friday and remanded to three days police custody by a trial court judge. Read more here3. Banks’ spring cleaning digs up more NPA dirtPoor Q3 show goes on with Canara Bank’s net plunging 87.05% and IDBI posting the biggest loss among the banks at Rs 2,183.68 cr on account of higher provisions. Read more here4. World T20 ideal platform for AB to improve record, says Herschelle GibbsFormer South Africa opener Herschelle Gibbs says anyone can win as it is open tournament Read more here5. Are wedding bells ’round the corner for Ranveer and Deepika?The homely behaviour of the duo at Filmfare Awards 2016 gives the indication that the couple has their parents’ blessings. Read more here

Amidst Dalit protests, Center enhances capital for entrepreneurship

Amidst protests by students and Opposition over over the suicide of a Dalit scholar in Hyderabad University, the Union Cabinet, chaired by the Prime Minister Narendra Modi on Wednesday enhanced the authorized share capital of the National Scheduled Castes Finance and Development Corporation (NSFDC), a Central Public Sector Enterprise (CPSE). from Rs 1,000 crore to Rs 1,200 crore.The cabinet note stated that the enhanced capital will enlarge economic activities, better coverage and enhanced outreach to double the Below Poverty Line (BPL) Scheduled Caste beneficiaries. “Enhancement of share capital would expand its ambit of coverage and increase disbursement of funds to larger sections of the economically deprived scheduled caste population. The target of NSFDC for the year 2015-16 is to cover 63,000 beneficiaries,” the note stated.<!– /11440465/Dna_Article_Middle_300x250_BTF –>The NSFDC implements its schemes through 37 state channelizing agencies in 32 States/UTs. The agency has not been asked to implement its schemes through select Public Sector Banks, Regional Rural Banks and Other Institutions, as well, wherever required, to enhance its outreach.The NSFDC provides loans through at concessional interest rates for self-employment and economic development activities to Dalits. It also sponsors skill/entrepreneurial training programmes to assist the unemployed members of scheduled castes in wage/self-employment.