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Deadline to deposit banned notes ends today. Here’s a list of flip-flop in norms by Centre post demonetization

<!– /11440465/Dna_Article_Middle_300x250_BTF –>The deadline to deposit old Rs. 500 and 1,000 currency notes ends on Saturday. However, the people will still have time to exchange the currency notes at designated Reserve Bank of India (RBI) counters till March 31 after giving valid reasons for not depositing defunct notes in their accounts by December 30. From today, it will be illegal to have the banned notes and one could be fined heavily for carrying them according to a new law.One can deposit old notes only in select branches of RBI after today’s deadline. Furnishing wrong information while depositing the old currency between January 1 and March 31 will attract a fine of Rs 5,000 or five times the amount. Prime Minister Narendra Modi is likely to address the nation this evening, and according to reports, is expected to spell out the post-demonetization roadmap. This will be his second address to the nation since his announcement to scrap 1,000 and 500 rupees notes on November 8. While announcing the landmark decision, he had asked the people to give 50 days for demonetization and getting accustomed to a cashless economy. In a television address to the nation on November 8, Prime Minister Modi said, “The magnitude of cash in circulation is directly linked to the level of corruption. Inflation becomes worse through the deployment of cash earned in corrupt ways.” He said to break the grip of corruption and black money, the government has decided that from midnight Rs. 500 and Rs 1,000 currency notes will cease to be legal tender. Till date, the government has made several changes to the norms.After reports on crop sowing taking a hit due to no availability of cash, the government allowed the farmers to buy seeds with old Rs 500 currency notes. A November 17 announcement allowed the farmers to withdraw up to Rs. 25,000 per week from their KYC-compliant account.Following reports on abuse of Jan Dhan accounts, the Reserve Bank of India (RBI) capped the withdrawal limit to Rs 10,000 per month.On November 17, the government made more modifications to the existing rules. Families could now withdraw up to Rs. 2.5 lakh for weddings. The currency exchange limit was reduced from Rs 4,500 to Rs 2,000 per person.The traders in agricultural mandis were permitted to draw up to Rs 50,000 in cash per week to pay for sundry expenses like wages.Also, government employees up to Group C could draw Rs. 10,000 salary in advance in cash.The demonetization decision has also taken a toll on the common man, with reports of some dying while standing in queues to collect money. In between all this, Prime Minister Modi has continued to address the nation at various public gatherings and through his ‘Mann ki Baat’ radio programme.Making an emotional appeal at an event in Goa on November 13, Prime Minister Modi asked the “honest” people of the country to bear the hardships for another 50 days.Exactly two weeks later on November 27, the Prime Minister urged the farmers and small traders to go cashless at his monthly ‘Mann ki Baat’ address. “The common man will be trouble free if they are made aware of the digital financial transaction options,” he said asking the youth to lead the change.The opposition cornered the government during the Winter Session of Parliament over the inconvenience faced by the nation post-demonetization.

Demonetisation: RBI ups ATM withdrawal limit to Rs 4,500/day from 1 Jan

The Reserve Bank on Friday late night increased the withdrawal limit from ATMs to Rs 4,500 per day from the current Rs 2,500 from 1 January. However, there has been no change in the weekly withdrawal limit, which stands at Rs 24,000, including from ATM, for individuals (Rs 50,000 in case of small traders).

“On a review of the position, the daily limit of withdrawal from ATMs has been increased (within the overall weekly limits specified) with effect from January 1, 2017, from the existing Rs 2,500 to Rs 4,500 per day per card,” the central bank said in a notification.

atm-queueatm-queueFollowing demonetisation of old Rs 500/1000 notes from 9 November, limits had been imposed on withdrawal of cash from banks as well as ATMs.

The Reserve Bank’s notification further stated “there is no change in weekly withdrawal limits” and such disbursals “should predominantly be in the denomination of Rs 500”.

Earlier in the day, the RBI had permitted White Label ATM Operators (WLAOs) to source cash from retail outlets.

Most of the White Label ATMs are running dry since demonetisation as the operators were facing difficulties in sourcing cash from their sponsor bank(s).

Friday was the last day to deposit the invalid currency notes in banks. However, people 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.

However, it remains to be seen whether the relaxation in cash limits will be of any help to the customers as, according to media reports, banks do not yet have enough cash to supply to the ATMs.

A report in The Indian Express on Friday said only 40 percent of the 2.2 lakh ATMs in the country have cash to serve the public.

The report quotes Ramaswamy Venkatachalam, managing director, India and South Asia, Fidelity Information Services (FIS), as saying that banks are not meeting the “full cash requirement” to operate ATMs round the clock.

The RBI and the government also seem to be clueless about when the cash situation will return to normalcy, though they insist there is enough notes to dispense.

Even on the 50th day of demonetisation they have not been able to provide the update the details of the new currency issued and also the deposits of old notes received.

The last press release on the cash situation was on 21 December from the RBI. As of 19 December, the banks have issued Rs 5.93 lakh crore to public either over the counter or through ATMs. That is a nearly 40 percent of the cash sucked out of the system on 9 November, when the demonetisation came into effect.

In this backdrop, while the public and the authorities are remain clueless about when the cash situation will improve, the increase in withdrawal limit from ATMs would mean little for the customers.

With PTI

First Published On : Dec 31, 2016 09:41 IST

Demonetisation: Withdrawal limit from ATM hiked to Rs 4,500 per day from 1 January

Mumbai: In a relief to common man, the Reserve Bank of India (RBI) on Friday said cash withdrawal limit from ATMs will be increased to Rs 4,500 per day from the current Rs 2,500 from 1 January.

Representational image. Reuters

Representational image. Reuters

However, there has been no change in the weekly withdrawal limit, which stands at Rs 24,000, including from ATM, for individuals (Rs 50,000 in case of small traders).

“On a review of the position, the daily limit of withdrawal from ATMs has been increased (within the overall weekly limits specified) with effect from 1 January 2017, from the existing Rs 2,500 to Rs 4,500 per day per card,” the central bank said in a notification.

Following demonetisation of old Rs 500/1000 notes on 9 November, limits had been imposed on withdrawal of cash from banks as well as ATMs.

The RBI’s notification further stated “there is no change in weekly withdrawal limits” and such disbursals “should predominantly be in the denomination of Rs 500”.

Earlier in the day, the RBI had permitted White Label ATM Operators (WLAOs) to source cash from retail outlets.

Most of the White Label ATMs are running dry since demonetisation as the operators were facing difficulties in sourcing cash from their sponsor bank(s).

Friday was the last day to deposit the invalid currency notes in banks. However, people 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.

First Published On : Dec 31, 2016 08:34 IST

Demonetisation Day 50: Expect no clear winner in this drawn Test for Indians

For a nation that loves cricket, the demonetisation drive launched by Prime Minister Narendra Modi on November 8 to pull out 86% of the cash floating in India’s economy has been like a one-day match, with roughly 50 days to the core deadline set by the government to swap bad cash with good resembling the number of overs in a game full of twists and turns.

As Modi gets ready to address the nation on December 31 in a stock-taking speech, sober watchers of the game may find no nail-biting finish or clear winner. We might need to use something resembling the Duckworth-Lewis method that cricket scorers use when rains or disruptions mar a match.

PTI file photoPTI file photo

PTI file photo

We can expect the prime minister to announce on Saturday some populist handouts that would make the headlines on the New Year Day as he declares partial victory in a long-term war on black money that he will vow to carry on. But the real ammunition may be held back until the February 1 budget.

What is clear is that there is no fairy tale El Dorado of a huge pile of unambiguously wasted black cash as it was being made out soon after the government pulled the plug on old 500 and 1,000-rupee notes. There was talk of a fiscal bonanza for the government through a windfall dividend from the Reserve Bank of India then. The RBI has since virtually ruled out such a possibility.

Of the Rs 15.4 lakh crore worth of scrapped currency, some Rs 14 lakh crore has been deposited in banks or exchanged already. Some more money may trickle in through the ambiguous Pradhan Mantri Garib Kalyan Deposit Scheme window over the next three months or in last minute deposits on Friday. Clearly, there is no winning shot in this match in sight.

What we can expect next is a patient round of bean-counting in the Finance Ministry as taxmen zero in on high-value cash deposits. Some 60 lakh depositors have put in deposits totalling Rs 7 lakh crore since November 8 in instances exceeding Rs 2 lakh each. But toothcombing these and actually calling the bluff on tax evaders may take months or years and in cases involving big fish, involve appeals to income tax tribunals or even high courts.

However, we can reasonably expect Finance Minister Arun Jaitley to announce a very comfortable fiscal deficit situation for the 2017/18 financial year when he rises to present the budget on February 1. This would be largely though anticipated income tax gains from the deposits made in banks. The minister is already setting the mood by pointing to robust growth in tax collections..

A low deficit will give the government enough elbow room to play shots – be it in the form of lower taxes for citizens, populist schemes, recapitalising banks scarred by bad loans or fresh spending on infrastructure.

A Robin Hood-like transfer of a big chunk of fiscal gains to the poor holders of Jan Dhan Yojana may be the most romantic outcome of the demonetisation drive.

This, in fact, may become a political necessity because the government has been bitten badly on two fronts. A fall in the current year’s GDP growth resulting from the demonetisation is an economic scar, while stories of millions of industrial workers and farm hands suffering due to the cash squeeze resulting from demonetisation spell political wounds ahead of state elections in UP and Punjab.

To this we may add the image damage caused by a slew of ad-hoc measures linked to the drive – the latest of which is a Quixotic ordinance to fine those who may be caught with more than 10 outlawed notes. The international media has hit Modi where it hurts.

The government also faces a 5-judge bench of the Supreme Court on the Constitutional validity of the demonetisation. In the judiciary and in election rallies, the after-effects of demonetisation may drag on – long after the queues in front of ATMs vanish. That would make it seem like a drawn test match, not a one-day sizzler.

(The writer is a senior journalist. He tweets as @madversity)

First Published On : Dec 30, 2016 07:56 IST

Demonetisation: Cash withdrawal cap may not be necessary from 1 January : Gangwar

New Delhi: The cap on cash withdrawal may not be necessary from 1 January, as 250-300 million currency notes were being printed on a daily basis, Minister of State for Finance Santosh Gangwar has said.

“I have been told that 25-30 crore notes are being printed on a daily basis. Continuing with the withdrawal cap is not necessary from January 1,” Gangwar told CNBC TV18 in an interview here on Thursday.

“Inconvenience of limited withdrawal will lessen after 30 December. Improvements can be seen in the transaction process in the last few days,” he added.



The central government had demonetised Rs 500 and Rs 1,000 currency notes on 8 November, sending the whole nation into a tizzy. Long queues outside banks have been a daily occurrence since then because enough currency notes are not available with the banks.

The Minister said that sufficient quantities of new currency could not have been printed earlier as it would have leaked the news of demonetisation which was intended to be a surprise. This is particularly true for the new Rs 500 notes, printing of which, presumably, started after November 10.

“Could not print currency earlier as the news would have leaked,” he said.

There are four currency printing presses — one each in Nashik (Maharashtra), Dewas (Madhya Pradesh), Salboni (West Bengal) and Mysuru (Karnataka).

The first two are owned by the central government through the Security Printing and Minting Corporation of India Ltd. The other two — in Salboni and Mysuru — are part of the Bharatiya Reserve Bank Note Mudran Pvt. Ltd. (BRBNMPL), a wholly-owned subsidiary of the Reserve Bank of India (RBI).

If all three shifts run, the four presses would be able to print 40 billion notes a year, irrespective of the denomination.

The government had earlier said that it had no intention of printing new notes worth the entire demonetised currency i.e. Rs 15.44 lakh crore.

The requirement of the cash will be measured and according to that it will be pushed into circulation, the Finance Ministry had said.

According to estimates the government would have put about 50 per cent of Rs 15.44 lakh crore in circulation by December-end.

Gangwar said that post-demonetisation the government wants to move towards a less-cash society and not completely cashless society.

“We are not talking about cashless but less-cash,” he said.

On the government receiving flak for its decision of allowing only one-time deposits of amounts of over Rs 5,000, Gangwar said that it was rolled back after receiving people’s feedback.

“There’s nothing wrong in rolling back some decisions. We are answerable primarily to the common man more than the opposition party. We have rolled back certain decisions after receiving feedback,” he said.

First Published On : Dec 29, 2016 16:44 IST

Demonetisation: RBI now gives borrowers additional 90 days to repay loans

In further relief to people hit by demonetisation, the Reserve Bank on Wednesday gave borrowers another 30 days over and above 60 days for repayment of housing, car, farm and other loans worth up to Rs 1 crore.

“On a review, it has been decided to provide 30 days, in addition to the 60 days provided (on November 21),” the RBI said in a notification.



So, borrowers together get 90 days breather from getting the account classified under non-performing asset (NPA) category.

The above dispensation will apply to dues payable between 1 November, and December 31, 2016, it said.

The surprise announcement made by Prime Minister Narendra Modi on 8 November to scrap Rs 500 and 1,000 notes resulted in a cash crunch in the market leading to slowdown in business. As a result, the repayment capacity of the borrowers were impacted and there was fear of loan default rising.

The demonetisation of higher value currency notes has affected normal banking activities including clearing of cheques. Besides, borrowers are unable to get payments from their creditors due to various restrictions including cash withdrawal limit of Rs 24,000 per week, limiting their options to repay their dues.

According to the RBI notification, running working capital accounts or crop loans with the sanctioned limit of Rs 1 crore or less would be eligible for this benefit. Besides, it said, “Term loans for business purposes, secured or otherwise, the original sanctioned amount whereof is Rs 1 crore or less, on the books of any bank or any NBFC, including NBFC (MFI). This shall include agriculture loans.”

The apex bank further said that all regulated entities are permitted to defer the downgrade of an account that was standard as on 1 November, but would have become NPA for any reason between November and December by 90 days from the date of such downgrade.

The additional time of 90 days will only apply to defer the classification of an existing standard asset as sub-standard and not for delaying the migration of an account across sub-categories of NPA. Dues payable after 1 January, 2017 will be covered by the instructions for the respective entities.

Last month, the RBI had provided additional 60 days for repayment of loans worth up to Rs 1 crore. Separately, the central bank came out this special dispensation for farm loan earlier this week.

First Published On : Dec 29, 2016 07:48 IST

Withdrawal cap may be eased to Rs 4,000/day, Rs 40,000/week: sources

<!– /11440465/Dna_Article_Middle_300x250_BTF –>As Prime Minister Narendra Modi gets ready to address the nation after almost 50 days into demonetization on December 30, a reliable source told DNA that the government was seriously considering relaxing current restrictions on withdrawals from banks and ATMs from Rs 2,500 per day and Rs 24,000 per week to Rs 4,000 per day and Rs 40,000 per week respectively.Modi had sought 50 days to normalise the liquidity situation after he made Rs 500 and Rs 1,000 notes illegal from November 8 midnight.A source in the government, who spoke on condition of anonymity, said since the shortage of cash continued to persist, the restriction on withdrawal may not be completely removed but would be eased.”Today, for instance, the restriction is Rs 24,000 per week and Rs 2,500 per day; they might increase that to Rs 4,000 per day and Rs 40,000 per week, but nevertheless, will continue with the restrictions. All of this is expected to be announced by the PM on December 30 evening. He is planning an address (to the nation) at 8 pm in which he is going to connect what he said on November 8 and ask countrymen to be patient,” he said.Also, the government is contemplating an ordinance to restrict holding of banned notes and penalising their possession of beyond a certain limit after December 30. However, the ordinance is likely to be issued only after the liquidity situation improves. “That (ordinance) is being discussed very seriously, but there are two specific challenges. One is that in terms of the RBI (Reserve Bank of India) notification issued on November 8 that even after January 1 people have time till March 31 to deposit with RBI. Technically the ordinance can’t be issued with effect from January 1 because if they say that holding the currency is illegal after January 1, then those who would have planned to deposit it with the RBI (after December 30) will not have that window (given by the government earlier),” said a source.The second issue was shortage of liquidity in the economy; “even today, the country is largely running on Rs 2,000 note. Other denomination notes have not yet been made available and the process of contracting for new currency notes has just started. The problem is not going to vanish from first week of January,” he said.According to the source, tenders for printing of new currency notes of Rs 500 and Rs 2,000 were issued from December 22. “The government can’t just call anybody and ask them to do it. They have to buy the paper, the ink, open tender, and then do it,” he said.Also, the government does not want to take any unpopular decision. “With the after-effects of demonetization still lingering, it does not want to become more unpopular—saying on one hand that holding old money is illegal and you can be penalised, while on the other it still cannot meet the currency demand,” he said.

Demonetisation countdown to day 50: Why are govt, RBI so secretive on the whole affair?

Indications are that cash withdrawal curbs imposed after the demonetisation announcement will not end fully by 30 December, 2016 the deadline promised by Prime Minister Narendra Modi to end the pain of the common man. According to two senior bankers, cash curbs will continue beyond 30 December though some withdrawal relaxations are likely to be announced for businesses.

Also, the Reserve Bank of India (RBI) might ease some restrictions on ATM withdrawals, but curbs on high value cash withdrawals are likely to stay for a longer-than-expected period.



“It will take some more time and only gradually,” said one of the bankers quoted earlier. But it is clear that the government will ease some restrictions, to save its face in the backdrop of the promise made by PM Modi to the common man. In his last Mann Ki Baat telecast of 2016 on Sunday, Prime Minister Narendra Modi aggressively defended demonetisation. His line of attack on his critics was that it is the corrupt and black money hoarders who are finding fault with his government’s 8 November surprise move. Also, Modi justified the frequent changes in note ban rules saying it was being done only because the government is sensitive to the problems of the people. Since note ban, the Modi government’s stance has been that demonetisation is for short-term pain and long-term gain.

But, none of these excuses would suffice to justify the gross inconvenience caused to people from all walks of life owing to the cash crunch that isn’t over even now. Even after a month and a half, people are allowed withdrawals of only Rs 24,000 per week from their banks and Rs 2,500 per ATM. India isn’t facing an economic emergency to face such prolonged restrictions on normal banking transactions. Even by the current limits, banks are unable to honor it simply because there is not enough cash in the banking system despite the repeated assurances from the Reserve Bank of India and finance ministry.

Hence, Modi’s reasoning that only the corrupt and fraud oppose demonetisation isn’t fair. Only five days are left for Modi’s 50-day deadline to come to an end. That’s the time he sought to end the ‘temporary’ pain of the people on account of demonetisation-induced artificial cash crunch. But, it is likely that the PM will fail to make good of his promise in its entirety.

The reasons for this aren’t difficult to understand. Until 19 December, the RBI has infused only Rs 5.92 lakh crore into the banking system as compared with deposits worth Rs 12.44 lakh crore in old Rs 500, Rs 1,000 currencies. Of the total 22.6 billion pieces of notes of various denominations infused, about 20.4 billion pieces belonged to smaller denominations of Rs 10, Rs 20, Rs 50 and Rs 100, while only 2.2 billion belonged to higher denominations of Rs 2,000 and Rs 500. It is not clear how many of the 2.2 billion is Rs 2,000 notes and how many are Rs 500 notes.

Here is where the problem lies. The ongoing cash crunch, according to bankers, is mainly due to shortage of new Rs 500 notes. The government pulled out 86 percent of total currency in circulation on 8 November. According to an RTI response, the RBI had only 4.95 lakh crore in the new Rs 2,000 notes on 8 November and not even a single Rs 500 note on that day. The printing of Rs 500 notes only began later. That means, the government and RBI started on Day One with less than a fourth of stock of new currency, that too Rs 2,000 bills, which caused a cash crunch. So far, neither the government nor the RBI has given any clarity on the breakup of Rs 2,000 and Rs 500 notes infused since demonetisation. Chances are that Rs 500 notes issued are only a small fraction.

PM Modi’s justifications for demonetisation or finance minister Arun Jaitley’s clarifications cannot wish away the fact that the Modi government started blind on a massive gamble in public life and economy. It was totally unprepared and decided matters on the go. That explains the endless number of rules, sharp U-turns and the 60 circulars from the Reserve Bank in just a month.

The government had an excuse of secrecy for making an abrupt start but that excuse no longer holds after a month and a half. The entire exercise lacks transparency even at this stage. According to reports (read here), the RBI has refused to make public the details of the board meeting that discussed demonetisation saying “it would lead to disproportionate diversion of resources of the organization.”

It has thus refused to disclose its recommendations to the government to scrap Rs 500 and Rs 1,000 banknotes. This response isn’t satisfactory since there has been tremendous pain in the lives of the common men during the exercise and the very role of RBI in demonetisation has been questioned by many. On Friday, the Hindustan Times reported that the decision to scrap high-value notes was cleared by the bank’s board hours before Prime Minister Narendra Modi announced the decision on national television on 8 November.

Given that the excuse of secrecy isn’t valid any longer, the common man deserves to know a) how the demonetisation plan emerged in the first place, b) who were part of the decision-making,  c) how many new currency of Rs 500 has been printed so far, d) how long will the cash crunch last, and e) what is the actual quantifiable cost to the economy on account of demonetisation (economic loss, cost of roll out and estimated job losses).

If people have begun hoarding legitimate cash withdrawn from branches and ATMs post demonetisation, that’s because the trust of public with the banking system is shaken and there is considerable uncertainty on the road ahead. The Modi government still draws considerable support from a good number of the 125 crore Indians on the demonetisation gamble, the pains of which is likely to last beyond the short-term and the likely gains (on black money, wider direct tax base and checking fake currency and terror) will only be visible in the long-term. It is only just that both the government and the RBI take the common man fully into confidence and be transparent about the whole affair.

First Published On : Dec 26, 2016 11:27 IST

Not a government of Sonia Gandhi where institutions can be over ruled and subverted: BJP

<!– /11440465/Dna_Article_Middle_300x250_BTF –>Coming down heavily on former prime minister Dr. Manmohan Singh who sought to know whether the Reserve Bank of India (RBI) was given sufficient time to hold deliberations on the government’s demonetization move, the Bharatiya Janata Party (BJP) has said the present dispensation, unlike the UPA tenure, does not ‘subvert and over rule’ the institutions and perform their duties mandated by the constitution.”As far as institutions under the present dispensation is concerned, every regulator is performing their duty as mandated by the constitution and this is not the government of Sonia Gandhi where institutions can be over ruled and subverted,” BJP leader GVL Narasimha Rao said.Rao said Singh worked as a puppet in the hands of Rahul Gandhi and Sonia Gandhi and accused the former prime minister of subverting the institutions for political benefit.”Manmohan Singh himself had lacked authority as the prime minister even when Rahul Gandhi went on a rampage and tore ordinance papers that were cleared by Singh and he talks about institutions, I find it rather curious,” Rao added.During a meeting of the Parliamentary Committee on Finance on Thursday Singh suggested that the panel, which is looking into the demonetization decision, call government officials to depose before it hears RBI Governor Urjit Patel.The issue was being discussed in presence of independent experts, including economists Rajiv Kumar and Mahesh Vyas, former chief statistician Pronab Sen and Kavita Rao of National Institute of Public Finance and Policy, who had been called to offer their views to the panel. Three of the experts were critical of the demonetization decision.RBI governor Patel will brief the panel on January 18 or 19 on demonetization and its implications, while government officials, mostly from the Finance Ministry, will be asked to depose before it on January 11 or 12.

RBI truck carrying new notes penalised by RTO for overloading

Mumbai: A container truck hired by Reserve Bank of India (RBI) to carry demonetised currency notes from Bhilai in Chhattisgarh to Nagpur, was stopped at Deori border check-post in Gondia district and penalised for overloading, by the Regional Transport Office (RTO).

The action was taken on Tuesday night and Rs 30,000 fine was collected from the driver, an RTO official said.

Representational image. Reuters

Representational image. Reuters

“The container had the capacity to carry 16 tonnes of load, but we found that the it was carrying 21 tonnes. The vehicle was filled with scrapped notes of Rs 500 and Rs 1,000 denomination, which it was transporting to RBI’s currency chest in Nagpur,” Vijay Chavan, Deputy Regional Transport Officer of Gondia district told PTI on Friday.

The vehicle was stopped by local officials posted at Deori check-post.

“The vehicle papers and other necessary documents were verified. We received a communication from Transport Commissioner based in Nagpur that the vehicle can be released after the payment of fine,” Chavan said.

“As per the calculation, the driver was asked to pay a fine of Rs 30,000, as the container was carrying five tonnes above the permissible limit. The officials issued a receipt of the fine payment and the vehicle was let off,” he said.

First Published On : Dec 23, 2016 19:55 IST

ED nabs Kolkata tycoon, uncovers black money nexus

<!– /11440465/Dna_Article_Middle_300x250_BTF –>As more and more details emerge after the recent arrest of Kolkata-based tycoon Parasmal Lodha for money laundering, Enforcement Directorate (ED) officials are unravelling a complicated nexus between Lodha and other businessmen for whom he was fradulently converting old notes into new. On Wednesday, ED officials nabbed Lodha at Mumbai airport from where he had been allegedly planning to escape to Malaysia. During interrogation, Lodha admitted that post the Prime Minister’s announcement on demonetization he and his associates had converted old demonetized currency of at least Rs 25 crores into new currency notes for various business tycoons. For this, he would receive commissions that would range from 15 to 20 per cent.Post Lodha’s arrest, officials say they are continuing investigation under the provisions of the Money Laundering Act and that further investigations are going on in the matter.Lodha’s name popped up on the ED’s radar after raids were carried out on the office of Delhi-based lawyer Rohit Tandon, who is the managing partner of T&T law firm, where Rs 13.62 crore, including Rs. 2.62 crores of new denomination notes of Rs. 2000, was recovered on December 10 and seized. Pursuant to this, an FIR was registered by the Crime Branch, Delhi.On questioning Tandon, ED officials zeroed in on Lodha’s name and two visits this week, before his arrest at Mumbai airport, were made by them to his Kolkata home, Lodha House. This is located in Queens Park in Ballygunge, one of the poshest localities in the city. Officials investigating the case told DNA that an estimated Rs 2.6 lakh in new notes was recovered from his Kolkata home in the raid. “We are hopeful that his (Lodha’s) arrest will give us new leads into who else from Kolkata was involved in the racket of converting illegal currency notes into new ones,” said a senior official investigating the Lodha case.Commenting on Lodha’s modus operandi to convert old notes into new, investigative officials said that it appeared that he and his associates acquired new currency notes illegally, through unauthorised channels, with the possible collusion with bank officials. This, say officials, is the only likely explanation, as the recovery of such huge quantity of new currency notes is not possible under the existing guidelines and restrictions put forward by the government and the Reserve Bank of India on withdrawal of cash.Lodha seemed to have had a chequered past even before his alleged involvement in money laundering. In Kolkata, a business associate, speaking on condition of anonymity, said that he would hardly mingle with the business community here, perhaps because he had run into controversies before. “He had been known for his association with several building projects where floors had been added illegally. Lodha had also been questioned by investigators after the infamous Stephen Court fire on Park Street in March 2010, which killed 43 people,” he said.Lodha had also hit the headlines in 1991 for taking over the then largest non-banking financial institution, Peerless General Finance and Investment Company Limited, alleging that it was being mismanaged and he had plans of a thorough revamp of it.Apart from real estate, he had expanded his business to mining, consultancy firms and dealing in antiques. It was believed that he had shifted his base to Delhi because he had found the antique market more lucrative there.

Demonetization: Comment made by Chandrababu Naidu unexpected, says BJP

<!– /11440465/Dna_Article_Middle_300x250_BTF –>The Bharatiya Janata Party(BJP) on Thursday said the critical comment made by Andhra Pradesh Chief Minister N Chandrababu Naidu was unexpected as he is a responsible member of the ruling National Democratic Alliance(NDA).”Chandrababu Naidu is a seasoned politician and a responsible NDA partner, any irresponsible statement cannot be made by him. He is one of the first leaders to support the demonetization move and making such statement was not expected of him,” BJP leader Prem Shukla said in Mumbai.Naidu said, “It (demonetization) was not their wish”, but on Wednesday, refuted media reports that he was against demonetization, clarifying that he had only “commented on the lapses in the implementation”.
ALSO READ Breaking my head daily, but unable to find a solution: Naidu’s turnaround on demonetizationNaidu, in a statement, said he had expressed his concern over the suffering of people even after more than one month due to non-availability of currency. “It is very painful to see reports of old people collapsing while waiting at ATM counters,” he said.The Andhra Pradesh chief minister, who heads a 13-member committee appointed by the Central Government to look into demonetization issues, said he repeatedly appealed to the Reserve Bank of India (RBI) and local bankers to adopt a humanitarian approach to prevent inconvenience to people by delivering more number of small currency notes to rural areas.Stating that cashless and digital banking transaction is the only alternative to end the crisis, Naidu, who is spending more than three-four hours a day monitoring the cash distribution system, asked the officials to think innovatively to address the crisis and to encourage urban people to switch over to mobile-banking transactions and distribute the available small currency to farmers in rural areas to carry out agricultural operations for the current Rabi season.He said that cashless transactions were successfully implemented in all 29,000 fair price shops in the state and the dealers of FP shops were appointed as banking correspondents to solve currency problem in rural areas.Addressing a party function of Telugu Desam Party in Vijayawada on Tuesday, Naidu said, “Demonetization is not our will and wish hence our state people are also facing several problems.”Highlighting the problem faced by the people due to the move, he said people’s income has decreased and the Centre is unable to provide funds. “Income has decreased and findings are also not coming from the Central Government,” said Naidu, who had extended his support to the Prime Minister’s decision to ban high-denomination notes of Rs 500 and Rs 1,000, as “a moral victory for the TDP”.

India’s crackdown on cash imperils pivotal national tax reform | Reuters

By Rajesh Kumar Singh

NEW DELHI Indian Prime Minister Narendra Modi‘s crackdown on the cash economy has shattered the consensus needed for a new national sales tax, plunging his boldest reform into limbo and threatening to entrench an economic slowdown.Modi’s government already had its work cut out to finalise a deal with India’s 29 federal states to launch a Goods and Services Tax (GST) on April 1 that would transform Asia’s third largest economy into a single market for the first time.But his decision to scrap 86 percent of the cash in circulation, in a bid to purge the economy of illicit “black money”, has caused huge disruption. A slump in business activity stemming from the cash crunch has caused the revenue of state governments, which collect value-added tax on goods and other duties, to slump by 25-40 percent.The states won’t risk another setback by rushing the sales tax into force.”The investment and economic environment in the country is in bad shape,” said West Bengal Finance Minister Amit Mitra, who earlier head a panel tasked with building a consensus on the GST. “How is the country going to absorb the dual shock of GST and demonetisation?”The GST is India’s biggest tax overhaul since independence in 1947. It would replace a plethora of federal and state levies with one tax, easing compliance, broadening the revenue base and boosting productivity.It took Modi more than two years to forge a political compromise on the tax in August. Now, demonetisation “has created a trust deficit,” said Kerala Finance Minister T.M. Thomas Isaac. “After this, I am not going to sit and compromise. They don’t deserve it.”LEFT IN THE LURCH

Failure to break the deadlock could tip India into a fiscal crisis: The GST would need to come into effect by mid-September, when the old system of indirect taxation is due to lapse.The lingering uncertainty is worrying companies needing to understand financial implications of the new tax. “With so many vital details still missing, they are feeling left in the lurch,” said Saloni Roy, a senior director at Deloitte.Modi’s shock move last month to scrap 500 and 1,000 rupee notes was aimed at India’s shadow economy. But the ensuing cash crunch has caused job losses, disrupted supply chains and slowed construction activity.With cash shortages showing no signs of abating, some economists are calling for emergency stimulus to cushion the economy against the impact of demonetisation.

Ambit Capital, a Mumbai brokerage, forecasts growth this fiscal year will be only half of the roughly 7 percent level many expect. The Reserve Bank of India has shaved its growth outlook by half a percentage point to 7.1 percent.To make up for their losses, states are seeking compensation and will press their case at a meeting in New Delhi on Thursday and Friday with Finance Minister Arun Jaitley.He has already agreed to cover states’ revenue losses for five years after the GST’s launch, but further concessions would narrow his room for manoeuvre in his annual budget presented in February.One top finance ministry official dismissed demands for compensation for demonetisation as unreasonable. But states are adamant. “They have brought it upon us,” V. Narayanasamy, chief minister of Puducherry, told Reuters. “Now they must pay for our loss.”

The quibble is not just over lost revenue. Some states worry about the social and political costs of demonetisation.Take Kerala, where credit cooperatives that farmers and retired government workers rely on cannot swap old bills or issue fresh notes. The state alleges this has encouraged commercial banks to scout for their deposits, sparking a “run” on them.Odhisa’s chief minister has written to Modi, saying curbs imposed on primary agriculture societies were making it difficult for farmers to access crop loans and procurement payments.With the states smarting, they have hardened their stance on how to collect the new GST, which will have federal and state elements.They want sole control over businesses with annual turnover of 15 million rupees ($220,000) and so-called “dual control” over bigger firms. Jaitley opposes this, fearing tax collectors could end up at cross purposes.”We reached this far because states were willing to compromise,” said Isaac, Kerala’s finance minister, told Reuters. “If they want the GST, they will have to now concede to the states.” (Additional reporting by Manoj Kumar in New Delhi, Jatindra Dash in Bhubaneswar and Subrata Nagchoudhury in Kolkata; Editing by Douglas Busvine and Richard Borsuk)

This story has not been edited by Firstpost staff and is generated by auto-feed.

First Published On : Dec 21, 2016 23:13 IST

Tamil Nadu: CBI arrests J Sekar Reddy in Rs 170 Crore cash seizure case, probes links with TN chief secy’s sons

New Delhi: CBI on Wednesday arrested businessman J Sekar Reddy and his associate K Srinivasulu after Income Tax searches at his residence and office in Chennai resulted in seizure of 127 kg of gold and over Rs 170 crore in cash post demonetisation.

CBI sources said his links with the son of Tamil Nadu Chief Secretary Nadu P Rama Mohana Rao are also under the scanner of I-T department as it is believed that Reddy, a contractor, allegedly received his help to get state-wide sand mining contract.

Representational image. IBNliveRepresentational image. IBNlive

Representational image. IBNlive

Rao’s premises are being searched by I-T department on Wednesday.

CBI has registered a case of criminal conspiracy and cheating under Indian Penal Code besides provisions of Prevention of Corruption Act against Reddy and his two associates for conversion of currency in violation of RBI norms, the sources said.

They said it was alleged that I-T department searches had resulted in seizure of over Rs 170 crore in cash which included newly-introduced notes of Rs 2,000 worth Rs 34 crore (seized in two different occasions) besides 127 kg gold from him and his associates Srinivasa Reddy and Prem Kumar.

CBI case is related to seizure of Rs 24 crore of new currency notes from a Tata Ace load vehicle belonging to a Vellore resident, Rishi Kumar, on 9 December following searches at Reddy’s residence in Chennai.

“Reddy and his associates had, with the help of unknown public servants of different banks, converted the unauthorised cash held by them in old currency notes, thereby depriving the public in enforcing their right,” CBI alleged in its FIR.

It said the bank officials, who are allegedly entrusted with the distribution of new currency notes as per instructions of Reserve Bank of India, defied the RBI instructions and helped Reddy for a “consideration”.

“Reddy, Prem Kumar and K Srinivasulu, had in conspiracy with unknown bank officials and public servants converted unaccounted cash held by them in the form of old currency notes to new Rs 2,000 currency notes, cheating the government of India,” it alleged.

First Published On : Dec 21, 2016 19:38 IST

Demonetisation: Customers in spot as banks say no to deposits above Rs 5,000 despite finmin directive

Finance minister Arun Jaitley’s clarification on Monday late night that banks will take more than Rs 5,000 deposits from customers without questioning if the amount is deposited in one go seems to have fallen flat as bankers are refusing to take such deposits without a written declaration, say various news reports.

According to a report in The Times of India, bankers are following the Reserve Bank of India’s notification issued on Monday in letter and spirit which has given rise to the difficult situation.

Representational image. ReutersRepresentational image. Reuters

Representational image. Reuters

The RBI and the finance ministry on Monday morning put out notifications saying customers will be allowed to deposit old Rs 500 and Rs 1,000 notes worth more than Rs 5,000 only once before 30 December. Even then, they will have to satisfactorily explain to two bank officials why the deposits were not done earlier.

“Tenders of SBNs (specified bank notes) in excess of Rs 5,000 into a bank account will be received for credit only once during the remaining period till December 30, 2016. The credit in such cases shall be afforded only after questioning tenderer, on record, in the presence of at least two officials of the bank, as to why this could not be deposited earlier and receiving a satisfactory explanation. The explanation should be kept on record to facilitate an audit trail at a later stage. An appropriate flag also should be raised in CBS to that effect so that no more tenders are allowed,” said the RBI’s notification.

The move, according to the ministry, was aimed at reducing the queues in front of the banks. However, two other unsaid reasons could be fear of money laundering through unsuspecting poor customers and also curbing the accrual of deposits at the banks which have already gone beyond expectations.

However, the directive came under criticism as customers felt the government has deviated from its promise made by Prime Minister Narendra Modi on 8 November that nobody needs to rush to the banks to deposit their cash as there is time until 30 December. After the backlash, the finance minister late night on Monday clarified that customers will be allowed to deposit any amount of old notes if it is done in one go. The clarification just compounded the confusion as it completely contradicted the RBI’s early morning notification.

It is to be noted that there has not been any notification yet on the clarification, which essentially remains a verbal communication to the media from Jaitley.

The bank staff are at the receiving end of the repeated policy flip-flops. A top bank official has told The Times of India that a memo based on the RBI notification has already been sent to the staff. That is the reason they are not ready to accept the deposit without questioning by two officials.

The new notification – 59th after demonetisation was announced on 8 November, according to The Indian Express – is likely to further worsen the relationship between the bank staff and customers. While front office staff are bound to follow the orders received from the RBI, customers on the other hand are going by the finance minister’s notification, prompting an increase in abuses on the banking staff.

What has compounded the situation is the clause that customers have to explain the reason for the delayed deposit to the satisfaction of the questioning bank officials. ‘Satisfaction’ is a subjective term, some of them pointed out to the ToI. What is satisfactory for customer may not be so for the officials. There can be difference between the two officials too.

As author and columnist Vivek Kaul says in his Facebook post, bank staff or officers can’t be blamed. They are neither experts in questioning nor in finding the source of funds.

The bank unions have many times earlier brought to the attention of the authorities the problems faced by the staff. In a letter to the finance minister and the RBI, they had said the central bank’s repeated reiteration that it is dispensing enough cash to the banks is aggravating the situation at the bank branches as customers feel the staff is hoarding the cash to serve the rich and wealthy and that the poor customers are being shortchanged.

Clearly, the new notification is only adding to pain of the customers and banks.

First Published On : Dec 21, 2016 10:23 IST

An inquisition for carrying Rs 5000: Why Modi govt is making it hard to support demonetization

<!– /11440465/Dna_Article_Middle_300x250_BTF –>Some of the harsher critics of PM Modi and the BJP tend to claim that neither of them have ever read a book. It’s an elitist argument made either by eminent historians or disillusioned veterans who can’t get used to change of guards and appears untrue based on the events proceeding the November 8 announcement because someone out there seems to be a huge Kafka fan.The sheer number of rule changes since November 8 has left all of us feeling a little like the bank cashier Josef K, the protagonist of The Trial, who was unexpectedly arrested by unidentified agents for an unspecified crime and then underwent a trial without knowing his crime. Or maybe sitting somewhere in a dark corner, cashier Josef K’s real-life counterpart is just messing with the rest of us to right the wrongs he faced in a fictional world.So far, the sheer number of rule changes and announcements from the institutions involved in demonetization – the RBI, Finance Ministry and PMO – has made us wonder whether they really had a plan in place. The only reason, this hasn’t descended into complete chaos is the charisma of a Prime Minister who the people of this nation trust to do the right thing. But that doesn’t mean it hasn’t become exasperating. The latest rule change in the great demonetization game (at the time of writing) came in the form of a cryptic circular from the Reserve Bank of India (RBI) on December 19 stated that we’d only be given one opportunity to deposit amounts greater than Rs 5000 before December 30. In the RBI’s own words: “The credit in such cases shall be afforded only after questioning tenderer, on record, in the presence of at least two officials of the bank, as to why this could not be deposited earlier and receiving a satisfactory explanation. The explanation should be kept on record to facilitate an audit trail at a later stage.” In a stroke of one press release, amount under scrutiny was brought down from a staggering Rs 2.5 lakh to a paltry Rs 5000. No matter which way you put it, this sounds a lot like having to explain to two faceless bank officials why one didn’t deposit money before December 30 even though we’d been clearly told we had all the time in the world to deposit our notes. The PM in his November 8 address had clearly stated: “Persons holding old notes of 500 or 1,000 rupees can deposit these notes in their bank or post office accounts from 10th November till close of banking hours on 30th December 2016 without any limit. Thus, you will have 50 days to deposit your notes and there is no need for panic.”In the same vein, Finance Minister Arun Jaitley had said on November 12: “Don’t rush to the banks right now, for exchanging or withdrawing old Rs 500 and Rs 1000 notes as there are massive crowds. Wait for a few days as the scheme is open till December 30.”That we must ‘explain’ our own money to faceless officials is quite worrisome and in some ways, is reminiscent of an era of licence raj when a morally ambiguous official’s arbitrary judgement could mean the difference between getting work done and going home empty-handed. And given the spate of adventurism of bank officials and babus, who’ve proven to be the weakest link in the demonetization drive, what’s to say a person can’t deposit their money or hide their ‘audit trail’ after giving a little under the table.As if that wasn’t enough confusion, Arun Jaitley’s press conference later that night showed that the FinMin and RBI have all the communication skills of a newly married couple as he said: “If they go and deposit with bank any amount of currency no questions are going to be asked to them and therefore the 5000 rupee limit does not apply to them if they go and deposit it once. “But if they are going to go everyday and deposit some currency, same person, that gives rise to suspicion that where is he acquiring this currency from. In that event a person may have something to worry about. Therefore everyone is advised whatever old currency you have please go and deposit it now,” he said. And since there is no scope now for earning any old currency because all exemptions have been waived, it makes sense to go deposit all the holding in one go, Jaitley said. “This is the objective of the order passed today.”Law and IT minister RS Prasad went on to cause further confusion when he said: “They (RBI) have issued something, the government will come with structured response on that.” And this wasn’t just talk as a colleague realised as she had to explain why she had Rs 6,000 to 10 different people. It really leaves you wondering what’s next. Show proof that one has sung the nation anthem with gusto at a movie theatre before depositing the money? Prove that one has shared at least five Facebook posts praising the Indian Army?Politics and policy implementation is about perception and even though the intentions behind demonetization are well-meaning, the implementation has left us all bewildered. In some ways, PM Modi’s November 8 speech now feels a lot like Neo’s address to the machines at the end of The Matrix where he tells them: “You’re afraid of change. I don’t know the future. I didn’t come here to tell you how this is going to end. I came here to tell you how it’s going to begin.” It seems even the institutions involved in demonetization only knew how it was going to begin, and have absolutely no clue how this is going to end.

Thanks to Modi govt one can neither withdraw nor deposit his own money now: Congress

<!– /11440465/Dna_Article_Middle_300x250_BTF –>Coming down heavily on the Centre over the burning issue of demonetization, the Congress on Tuesday said the rules related to the move have changed over a 100 times since the major step was taken and over a 100 people have died, but it seems to have made no difference to the government which continues to remain unashamed of the inconvenience it has caused across the nation.”We want to ask Modiji that he had said on November 8 that people can deposit money in their accounts till December 30 and in the Reserve Bank of India (RBI) till March 21, 2017, so why has he betrayed the people now? Till today, rules related to demonetization have changed 125 times. More than 100 people have died. Still the government is not ashamed of itself,” Congress leader Randeep Surjewala said.Miffed with the fact that a person can neither withdraw his money, nor deposit, Surjewala said only Modi government could lead to such bankruptcy.Commenting on the recent development announced by the Reserve Bank of India stating that deposits exceeding of old Rs 500 and Rs 1000 notes exceeding Rs 5000 shall be made only once per account till December 30 but after a satisfactory explanation, Surjewala said that even the banks are going to look like police stations asking questions to one about his own money.”Modi government has led to twin surgical strike on India’s workers, labourers and the common man. On the one hand, the interest rate of Employees’ Provident Fund (EPF) has been reduced from 8.8% to 8.65% & on the other hand, in a (Tughlaqi farmaan) has now put a cap of Rs. 5000 on one’s own deposits. Even when you will go to make deposit, the bank officer will question you like a police inspector and will ask you the source of the money,” he said.Striking the same chord of objection over Prime Minister Modi’s absence in parliament, Surjewala asked the former to show some courage. “In spite of 300 members of parliament, Modiji is shying away from having a discussion on demonetization scam and its investigation. He has time to attend rock concerts, to put allegations in rallies, but does not have the courage to respond in parliament. Modiji, show some courage and stop insulting democracy,” he said.”The truth of deceit will be revealed only after the investigation of the demonetization scam. Modi ji, the entire nation knows that your intentions are black,” he added.The Reserve Bank of India (RBI) on Monday announced that deposits of old Rs 500 and Rs 1,000 notes exceeding Rs. 5000 shall be made only once per account until December 30 but after a satisfactory explanation.Tenders of Specified Bank Notes (SBNs) in excess of Rs. 5000 into a bank account will be received for credit only once during the remaining period till December 30, 2016. The credit in such cases shall be afforded only after questioning the tenderer, on record, in the presence of at least two officials of the bank, as to why this could not be deposited earlier and receiving a satisfactory explanation.

Demonetisation: RBI curbs deposits; 6 points to note if you have more than Rs 5,000 old notes

The government and the Reserve Bank of India have today come out with new rules to curb money laundering at bank counters. As per the new rules, if a customer is making deposit above Rs 5,000, he or she will face questions from the bank officials on why the deposits were not made earlier.

Representational image. ReutersRepresentational image. Reuters

Representational image. Reuters

Stipulating that restrictive conditions will also apply on the cumulative deposit of such notes in a single account when it exceeds Rs 5,000, RBI said that defunct currency up to any amount can be deposited under the new black money amnesty PMGKY scheme.

Here’s the full text of the RBI’s rules in today’s notification:

i) Tenders of SBNs (specified bank notes) in excess of Rs 5,000 into a bank account will be received for credit only once during the remaining period till 30 December, 2016. The credit in such cases shall be afforded only after questioning tenderer, on record, in the presence of at least two officials of the bank, as to why this could not be deposited earlier and receiving a satisfactory explanation. The explanation should be kept on record to facilitate an audit trail at a later stage. An appropriate flag also should be raised in CBS to that effect so that no more tenders are allowed.

ii) Tenders of SBNs up to Rs 5,000 in value received across the counter will allowed to be credited to bank accounts in the normal course until 30 December, 2016. Even when tenders smaller than Rs 5,000 are made in an account and such tenders taken together on cumulative basis exceed Rs 5,000 they may be subject to the procedure to be followed in case of tenders above Rs 5000, with no more tenders being allowed thereafter until 30 December, 2016.

iii) It may also be ensured that full value of tenders of SBNs in excess of Rs 5,000 shall be credited to only KYC compliant accounts and if the accounts are not KYC compliant credits may be restricted up to Rs 50,000 subject to the conditions governing the conduct of such accounts.

iv) The above restrictions shall not apply to tenders of SBNs for the purpose of deposits under the Taxation and Investment Regime for the Pradhan Mantri Garib Kalyan Yojana, 2016.

v) The equivalent value of specified bank notes tendered may be credited to an account maintained by the tenderer at any bank in accordance with standard banking procedure and on production of valid proof of Identity.

vi) The equivalent value of specified bank notes tendered may be credited to a third party account, provided specific authorisation therefor accorded by the third party is presented to the bank, following standard banking procedure and on production of valid proof of identity of the person actually tendering, as indicated in Annex-5 of our circular cited above.

First Published On : Dec 19, 2016 16:29 IST

Demonetisation: RBI curbs deposits above Rs 5,000; what happens to Modi’s promise now?

On the 41st day of Prime Minister Narendra Modi’s 50-day promise to get back normalcy in common man’s life post 8 November demonetisation announcement, yet another promise is broken made to the common man.

A customer waits to deposit 1000 Indian rupee banknotes in a cash deposit machine at bank in MumbaiA customer waits to deposit 1000 Indian rupee banknotes in a cash deposit machine at bank in MumbaiThe Reserve Bank of India (RBI), in a press release said in the remaining days of this month, one can make a deposits in Rs 500 and Rs 1,000 notes in excess of Rs 5,000 only once per account.

If you want to deposit cash in banned currency in excess of that amount, you’ll have to explain in the presence of at least two officers on why you could not do it earlier. Even if the deposits are made in small amounts multiple times, if they add up to the magic number of Rs 5,000, again you stand exposed to questions.

One wonders what happened to PM Modi’s promise (read the full text of PM Modi’s 8 November speech here) to the nation that, “Persons holding old notes of 500 or 1,000 rupees can deposit these notes in their bank or post office accounts from 10th November till close of banking hours on 30th December 2016 without any limit. Thus you will have 50 days to deposit your notes and there is no need for panic. Your money will remain yours. You need have no worry on this point.”

The RBI circular is also silent on why should an honest citizen need to answer a banker on the timing of his deposit and the amount? A banker, after all, is not an investigator. Or is the assumption here that anyone who hasn’t deposited invalidated currencies in their bank accounts are hoarders of black money?

Repeated flip-flops in withdrawal/exchange rules since 8 November makes one wonder what is the nature of the plan both the RBI and the government claims to have for the ‘well-thought out’ rollout of currency ban. It reminds one the statement of former Prime Minister Manmohan Singh’s caution to the RBI, an institution he headed once, about the trust deficit the central bank is facing with the way it dealt with the demonetisation from the very beginning.

“It is no good that everyday the banking system comes with modification of the rules, the conditions under which the people can withdraw money. That reflects very poorly on the Prime Minister’s office, on the finance minister’s office and on the Reserve Bank of India. I am very sorry that the Reserve Bank of India has been exposed to this sort of criticism which I think is fully justified.” The ardent fans of frequent rule flip-flops in government and the RBI would do well reading history and find the story of a former Delhi sultan, Muhammad bin Tughluq.

What do the government and the RBI achieve by breaking their promise by restricting deposits before the 30 December deadline? One possibility is that the government doesn’t want a likelihood of all money demonetised returning to the bank counters. At the last count, almost Rs 13 lakh crore of the Rs 15.4 lakh crore demonetised currency notes had found their way back to the bank counters. If all the Rs 15.4 lakh crore returns, it will be an egg on the face of the government, which probably expected a good part of the unaccounted wealth to get destroyed. This would have helped it to say that much illegal cash is destroyed in the exercise. Earlier, the government was expecting only around Rs 10 lakh crore to return, but the public surprised the government by depositing money diligently.

If the action is to target hoarders, it is unlikely that the government finds any luck with this latest flip-flop. The tax evaders would have deposited their money much earlier in small doses either by creating fake accounts (like in the Axis Bank episode), donating to one of the 1866 political parties that enjoy no tax, no scrutiny under the current laws, by splitting the amount to several small bundles or depositing it multiple benami accounts.

Thus, the likely victims of this latest U-turn will be the common man, some of whom would have waited for the queues in banks to get short to deposit their old currency savings. If they have a large amount to deposit, they should get ready to face questions at bank counter to establish that this is their own money. Last month, the government had abruptly stopped the currency exchange facility at bank counters after initially promising until 30 December. Remember, a number of time rules have changed for the common citizens on cash withdrawals and deposits. Bankers, at one point, even inked customers to ensure people don’t withdraw cash beyond certain specific limits, reminding one of war-time rationing.

Demonetisation story is taking new turns rapidly with changing goal posts and theories of as yet uncertain gains in the long term. But, no matter what the final gains of the demonetisation are, both the RBI and the government will have to answer the common man on the repeated breach of promises while executing a ‘well planned operation’ and fight a growing trust deficit that’ll also have likely political implications.

First Published On : Dec 19, 2016 15:38 IST

NGT raps Uttarakhand govt over rehabilitation of villagers facing threat from wild animals

<!– /11440465/Dna_Article_Middle_300x250_BTF –>The National Green Tribunal (NGT) on Monday questioned the Uttarakhand Government over the issue of relief and rehabilitation of villagers residing inside Rajaji National Park, who are facing threat from wild animals.Today, on the plea of Ex Jila Panchayat Member, for the relief and rehabilitation of thousands of poor villagers residing inside the Raja Tiger Reserve, the NGT issued notice to the Uttarakhand Government and asked them to file a proper response. Madan Singh, an ex zila Panchayat member has stated in his application that about 10 villages which are inside the Rajaji National Park are not only facing threat from dangerous wild animals but have been deprived by the Uttarakhand Govt of basic fundamentals facilities like Water, Electricity etc.The court after hearing the submission made by the counsel of the applicant orally directed the Counsel of the Uttarakhand Government to look into the matter and to file proper reply till next date of hearing.The next hearing in the matter is on 9th February 2017.

People have lost faith in RBI, banking system post demonetization: Anand Sharma

<!– /11440465/Dna_Article_Middle_300x250_BTF –>Congress on Sunday targeted RBI and banks in the country, saying people have “lost faith” in the “banking system” after Prime Minister Narendra Modi’s “disastrous movement” to demonetize the high-value currency notes.Senior Congress leader and party’s chief spokesperson Anand Sharma alleged that “crores and crores and crores of newly-printed currency (notes) are going out” from the “back doors” of the banks while common people were denied their right to withdraw their hard earned money they have deposited in these banks. “People had faith in Indian banking system. After the financial crisis and after the economic crisis of 2008-09, Indian banks showed their resilience and their trustworthiness. “The Reserve Bank of India had a formidable reputation.Today, people’s trust in the Indian banks is shattered and the reputation of the RBI is dented,” Sharma told reporters here. The ex-Union Minister for Commerce said, “I am telling you why. People who toil hard have small small savings. You put your money in the bank and you have the assurance that the money is safe. When I need it, I can go to the bank and withdraw it.” “But the bank is not giving that money. Because cash is not available and the cash which is available is not coming from board or the counter”, he said. “ATMs are running dry. And from the back doors crores and crores and crores of newly-printed currency is going out.So how can people have trust…” he asked.He said it will take a long time for the Indian banks to rebuild their trust. “What ethics are there and correctness is there when your own money is snatched. You will say that your money is there, don’t worry. It is safe. But it is safe with me as a government. I will use it the way I want and I won’t give it to you. That is where the trust is gone. It will take a longtime to rebuild the trust in the banking system,” he said.Sharma, who is also the Deputy Leader of Opposition in the Rajya Sabha, attacked Prime Minister for the “sufferings” of the people through the “disastrous movement”. “Prime Minister must be held to account and the BJP government for creating the huge upheaval in the lives of the citizens for afflicting the sufferings, for destroying the economy and for over 111 deaths. He has misled the nation and its people,” he said.

DNA Morning Must Reads: New Army, Air Force chief; RBI officials held in currency fraud & more

<!– /11440465/Dna_Article_Middle_300x250_BTF –>Lt Gen Bipin Rawat is next Army chief, Air Marshal Birender Dhanoa to head Air ForceThe Centre on Saturday named Lt Gen Bipin Rawat, Vice-Chief of the Indian Army as the next Army chief, succeeding General Dalbir Singh Suhag. The decision could trigger a controversy as Rawat has superseded Lt Gen Praveen Bakshi, who is heading the Eastern Command, and Lt Gen PM Hariz, heading the Southern Command. Read moreTwo more RBI officials held in currency exchange fraud, arrests a big blow to regulatorTwo more officials of the Reserve Bank of India (RBI) were arrested by the Central Bureau of Investigation (CBI) on Saturday for their alleged role in currency conversion fraud cases. Read moreThree soldiers killed in militant attack on Army convoy in J&KMilitants sent a chilling reminder to the Mehbooba Mufti-led government on Saturday when they attacked an Army convoy on the strategic Srinagar-Jammu National Highway at Kadlabal, Pampore, in south Kashmir, leaving at least three army men dead. Read moreCricket prodigy Pranav Dhanawade’s brush with lawFifteen-year-old Pranav Dhanawade from Kalyan, who took the cricket world by storm with his 1,000-run world record knock in a local game in Mumbai in January 2016, was on Saturday detained by the police after he allegedly got into a spat with them on being prevented from practising on a ground being used as a makeshift helipad for a Union minister’s visit to the city. Read moreNo New Year cheer for gay couples as restaurants, bars shut their doorsSame sex couples wanting to ring in the New Year with a bang are in for a rude shock. Not only are high-end bars and nightclubs turning them away, they are actively stating that they will only accept heterosexual couples. Read more

Maha Forest dept plans to tinker with tiger sex ratio

<!– /11440465/Dna_Article_Middle_300x250_BTF –>Faced with low tiger occupancy in the Navegaon-Nagzira Tiger Reserve (NNTR) in Vidarbha, the Maharashtra Forest Department is planning sex ratio manipulation — by releasing more males or females, as need be in the habitat — to boost breeding and numbers. This will be the first such experiment in the state.Spread across five protected areas of Bhandara and Gondia district, the tiger reserve covers a core habitat of 653.67 sq kms. However, despite its linkages with rich tiger bearing areas like Tadoba, Pench, and even Kanha in Madhya Pradesh, the resident tiger population in the habitat is as low as only seven wild cats, as per the last survey, conducted in 2015“We are planning sex ratio manipulation in NNTR,” Shree Bhagwan, Principal Chief Conservator of Forests, and Maharashtra’s Chief Wildlife Warden, told DNA.NNTR was recently notified as the fifth tiger reserve of Maharashtra. It comprises five protected areas including Nagzira Wildlife Sanctuary (152 sq km), New Nagzira Wildlife Sanctuary (151 sq km), Navegaon National Park (133 sq km), Navegaon Wildlife Sanctuary (123 sq km) and Koka Wildlife Sanctuary (97 sq km).During the late 1990s and early 2000s, sighting of tigresses with cubs was common in the Nagzira Wildlife Sanctuary, but it has since declined.“After conducting the sex ratio census, we will decide whether to introduce more male or female cats to manipulate them for breeding. Presence of two to three tigresses with cubs can sustain any any tiger reserve,” said Bhagwan.Meanwhile, the Chandrapur landscape in Vidarbha, which covers the Tadoba-Andhari tiger project and the neighbouring Bramhapuri forest division, is packed with tigers beyond its carrying capacity, which leads to man-animal conflict, and tiger deaths in territorial fights.Like NNTR, the Sahyadri Tiger Reserve, which covers parts of Western Maharashtra and Konkan region, also suffers from lack of adequate tiger numbers — it has just five to seven tigers — and officials are mooting the need for translocating tigers from Tadoba. However, Bhagwan said they would first examine the prey base in the reserve before taking a decision. The Sahyadri ti er reserve is spread over the Koyna Wildlife Sanctuary and the Chandoli National Park covering a 1,165.56 sq km area including a 600.12 sq km core and 565.45 sq km buffer in four districts.

Demonetisation: CBI arrests two RBI officials in currency conversion case

New Delhi: CBI has arrested two employees of cash department of Reserve Bank of India in Bengaluru in connection with alleged conversion of Rs 1.99 crore of demonetised currency with specified bank notes of Rs 2,000 and Rs 100.

CBI sources said Senior Special Assistant Sadananda Naika and Special Assistant A K Kavin were arrested for unauthorised exchange of the currency and have been booked under charges of criminal conspiracy and cheating besides provisions of Prevention of Corruption Act.

Both the accused have been sent to four days of CBI custody by a special court in Bengaluru, they said.

Representational image. AFPRepresentational image. AFP

Representational image. AFP

“It is alleged that both the accused and other unknown officials of RBI, Bengaluru entered in criminal conspiracy with unknown others,” CBI spokesperson Devpreet Singh said.

She said in furtherance with the criminal conspiracy, the accused, along with other unknown officials, who were entrusted with the responsibility of new currency notes, “fraudulently” gave away new notes to the tune of Rs 1.99 crore to RBI officials and others.

It is alleged that the exchange was done in violation of exchange limits imposed by the Bankers’ Bank.

CBI had earlier arrested another employee of RBI in a separate case in which currency worth over Rs six lakh was converted by him using his influence over officials of State Bank of Mysore.

First Published On : Dec 17, 2016 18:39 IST

BJP leaders arrested forts against fatwa by Muslim cleric

<!– /11440465/Dna_Article_Middle_300x250_BTF –>Protesting against the ‘fatwa’ issued by Imam of Tipu Sultan Masjid Syed Md Nurur Rahman Barkati, state BJP leaders had organised a protest rally from party state headquarters at 6 Muralidhar Sen Lane in north Kolkata to Tipu Sultan Masjid in Esplanade area of Central Kolkata but police stopped protestors near their party office itself.There had been a huge police posting since morning near the BJP office and the entire proposed length of the rally. Protestors tried to break police barricade and a scuffle between them and police officials followed. When BJP workers tried to put up a blockade on the second lane of CR Avenue where they were stopped, police opened a lathi charge to disperse protestors.As many as 48 BJP supporters including party MLA Swadhin Sarkar and senior state party leaders such as Krishna Bhattacharya, Locket Chatterjee and Amitava Roy were arrested. An effigy of Barkati was also burnt.”Police are acting as the cadre of TMC. On the behest of Chief Minister Mamata Banerjee, police had hit our people who were protesting peacefully. We will fight it to the finish,” Chatterjee said as she was taken to the prison van.State BJP vice president Jayprakash Majumder said, “Mamata is the Chief Minister of a state which comprises 72 per cent Hindus and yet it is sad to see that she has to take refuge behind a Muslim cleric.”Later at a press conference, party state president Dilip Ghosh said that what police had done was undemocratic. “Section 144 has been imposed at the Reserve Bank of India area and TMC leaders have been protesting there for the last two days. No police action has been taken there. Our supporters had taken out a peaceful rally police rained sticks on them injuring at least eight who had been sent to the hospital. It is highly undemocratic,” Ghosh said.Coming down on Mamata he said, “She is the Chief Minister of West Bengal but it seems Barkati is calling the shots. What authority does he have to issue a ‘fatwa’ against me?”On December 12, Barkati had said that he had issued a fatwa according to which stones should be pelted at Ghosh wherever he is sighted and that he should be thrown out of Bengal.It was found out that state BJP would put up protest demonstrations across the state till December 21 when it culminate into a bigger protest movement. “On December 21 we will put up sit in demonstrations in front of all district magistrate and superintendent of police’s offices across the state,” he said.

CRPF constable, wife and kid crushed under dumper’s wheels

<!– /11440465/Dna_Article_Middle_300x250_BTF –>A Central Reserve Police Force (CRPF) constable, his wife and a child died in a road accident in the Kalindi Kunj area on Tuesday, while the couple’s two other children survived.The incident took place around 2pm. Rajkumar, 31, was on his motorcycle along with his wife Seema, 28, and three children Ritu, 9, Surya, 6, and Avinash, 3. The family was returning from their native village in Kripalpur, Aligarh. Only Rajkumar was wearing a helmet.A dumper hit their motorcycle from behind. Eyewitnesses said the two boys fell on the right side of the bike and survived. The other three fell on the left side and were crushed under the wheels of the dumper.”I was on my bike just behind them. Rajkumar and his daughter died on the spot. His wife seemed to be alive for a bit but then died within minutes. Their bodies were completely crushed. It was very disturbing. The two boys had injuries on their heads and limbs. I then called the police and the ambulance,”said Dharmendra, an eyewitness.Rajkumar was posted at the old JNU campus and lived in a government-allotted flat in the Pushp Vihar area.The two injured boys are recuperating at the Holy Family hospital. The driver of the dumper, identified as Rambeer, was beaten up by the public and is undergoing treatment at the AIIMS Trauma Centre. The family members of the victims are expected to arrive in the Capital soon. A case in this regard has been registered and further investigtaion is on.

Banks take back $184 billion of old notes, RBI says | Reuters

By Suvashree Choudhury

MUMBAI Indian banks have taken back 12.44 trillion rupees ($184.24 billion) of high-value currency that the government abruptly abolished last month, Reserve Bank of India Deputy Governor R Gandhi said on Tuesday.That represents about 80 percent of the 15.44 trillion rupees in 500- and 1,000-rupee notes that were circulating before Prime Minister Narendra Modi abolished them on Nov. 8, in a surprise move targeting counterfeiters and people holding undeclared wealth. Analysts had estimated that only about 13 trillion of those abolished notes would be deposited at banks, because people with undeclared cash would be wary of attracting the scrutiny of tax authorities.Indians have until Dec. 31 to turn in their old notes.Economists said total deposits were likely to reach about 13 trillion to 13.5 trillion rupees by the end of the year, in line with the estimates.”The old notes of 500 and 1000 rupees which have been returned back to the Reserve Bank and the currency chest amounted to 12.44 trillion rupees as of Dec. 10, 2016,” Gandhi said in a short news briefing.

The RBI has printed some 1.7 billion new 500- and 2,000-rupee notes, which will replace the abolished notes, Gandhi said. That is a fraction of the 24 billion individual notes that were withdrawn. Modi’s action has created a widespread cash shortage that has hit many aspects of the economy, from manufacturing to consumer demand.But Modi says it was necessary to crack down on India’s shadow economy, although Indians have resorted to ingenious ways to try to deposit their undeclared assets, such as splitting up their money and paying others to temporarily park it in their bank accounts.

The government and the RBI have vowed strict action against those believed to be trying to deposit undeclared assets, including tougher scrutiny of all deposits of more than 250,000 rupees.The RBI on Tuesday also asked banks to keep all CCTV footage from Nov. 8, in another bid to scrutinise depositors.A source at the Central Bureau of Investigation told Reuters on Tuesday it had arrested an RBI officer in Bengaluru for “unauthorised changing” of 600,000 rupees in old 500- and 1,000-rupees notes.

RBI Deputy Governor S.S. Mundra, at the same news briefing, said a junior central bank official had been “suspended” because “he was recorded to be present in a bank branch where some suspected transaction was happening.” “We have instituted investigation and due action would be taken once the details are ascertained,” Mundra said.($1 = 67.5199 Indian rupees) (Additional reporting by Abhirup Roy, Devidutta Tripathy in MUMBAI and Aditya Kalra in NEW DELHI; Editing by Rafael Nam, Larry King)

This story has not been edited by Firstpost staff and is generated by auto-feed.

First Published On : Dec 13, 2016 19:49 IST

Demonetisation: Senior RBI official arrested for illegal exchange of old notes

The Central Bureau of Investigation (CBI) has arrested a senior special assistant of the Reserve Bank of India in Bengaluru for alleged involvement in a currency exchange racket, according to news agency ANI.

Media reports said nine men were arrested in connection with alleged exchange of Rs 1.50 crore worth of banned currency notes.



The government had on 24 November stopped over-the-counter exchange of old currency notes at bank counters, but continues the facility at RBI windows until 30 December.

There have been suspicion that old notes are being exchanged at a premium, helping the black money holders to whiten their ill-gotten wealth.

A report in The Times of India said the arrested RBI official and others were exchanging the notes at a 15-30 percent commission for exchanging the notes.

The Bangalore incident is another proof that illegal exchange of old notes is rampant despite the government and its investigative agencies keeping a hawk’s eye on all such activities after the demonetisation of Rs 500 and Rs 1,000 notes on 8 November.

A report in The Economic Times today, however, said the premium for such illegal exchange of old notes have fallen drastically now and the money changers are even ready to pay an interest to black money holders in return for a one-year lock-in.

This reversal of trend, according to an economist quoted in the report, indicates that the black money has already entered into the system. Another reason being spoken about is that holders have found new ways to convert their black money into white.

First Published On : Dec 13, 2016 14:57 IST

In the time of demonetisation, it is the small change that comes to the rescue

The Income Tax Department may not tax, penalise or even frown at much of the hoarded money that is coming out — the small change — the coins of Re 1, Rs 2, 5, and 10. They are being taken out of that corner drawer or the kid’s piggybank after replenishing it with a crisp Rs 2,000 bank note.

“Look, how nice it looks. Pink and not a crease or an ink spot. Now, there is more room for coins,” is usually the explanation given to the suspicious child. After a pause, comes the qualifier: “Later”. Heaven knows when that “later” would arrive.

It was both scarce and plentiful. Even at the counter of the supermarket, which does 12 hours of brisk business, you proffered a note, including the denominated notes of Rs 500 and Rs 1,000, and the cashier would say,  “Change, sir?”

Representational image. Reuters.

Representational image. Reuters.

You insist and they would bring out the coins and give you the change. Like you and every other shopkeeper, they too hoarded, because of two reasons. The shopkeepers bought them at a commission, Rs 15 for every Rs 100 from moneychangers who include beggars. You did not carry them around because they weighed down your pocket.

Now they are back in respect.

The other day, my bank gave me Rs 1,000 in coins, as many as 100 of the shiny Rs 10 in a nicely sealed plastic bag. The wife grabbed it as anything other than Rs 2,000 bank note was welcome. Because, between Rs 100 and the Rs 2,000 currency notes, there isn’t any currency-stifling transactions.

There was a time you liked crisp bank notes, but seldom got any, be it from the bank where a cheque was encashed or across the counter from a shop or a superstore. You settled for whatever was provided, even the most battered notes.

There was also preference for higher denomination notes of Rs 100 and 500, and even Rs 1,000. Since Rs 10 fetched very little, it did not count for much and a Rs 50 note was just alright. So was the denomination of Rs 20. The idea was not to physically fatten the wallet.

Wallets have to be fat by virtue of its value, not grammage. When we spend for thinner, lighter mobile phones, never mind its length and breadth, but consider the thinness a desired quality, thick wallets are passé.

Who wanted the coins! It lasted a journey back home to rest in a small pile, and if you had a grandchild, into his or her piggybank. Even beggars frowned at the Re 1, Rs 2, and didn’t mind the Rs 5 coins, and the Rs 10 isn’t as much in circulation. Even the beggar suffers the weight of inflation and the ignominy of having to stretch a palm.

The coins were after all chillar. It has its demeaning nuance.

Post-denomination, most of us came close to stretching our palms after waiting in the queue without instigating a riot for the cash crunch. If the banks didn’t readily part with your money to you, how would a neighbour?

The days of the small loan are over. At least in the short term. It is for the Reserve Bank of India to determine what that ‘short term’ means. You have lost control of your money, so why not let the central bank decide on the timeline? Anyhow, you have the other time on mind – the time you would need to spend in a queue outside an ATM which disgorges only the Rs 2,000 note.

Disgorge is not mot juste here. It only reluctantly tosses out one.

The curious aspect of queues outside ATMs is where the machine is stocked with Rs 100 notes. The attempt is to draw Rs 1,900 and Rs 2,000. That big-daddy bank note is money you cannot use much. It is a limited attempt at gaming the system.

First Published On : Dec 13, 2016 14:28 IST

Demonetisation one month: Gains of PM Modi’s currency crackdown will be known only in the long term

It’s been a month now since Prime Minister Narendra Modi’s address to the nation socked almost every Indian in the guts and once again polarised opinion like never before.

The sudden demonetisation of Rs 500 and Rs 1,000 notes turned out to be one big leveller – people with a few hundreds and a few thousands in cash were in the same plight as those with a few lakhs and a few hundred crores. Overnight the money in their hands (or lockers) was rendered useless.

Commentaries in newspaper columns, news websites and social media platforms took up either of two extreme positions – the demonetisation advocates (DAs) insisted this was the best thing to happen to the country and the demonetisation detractors (DDs) outraged that this was the worst thing to happen. At least the DAs agreed that the demonetisation exercise could have been better managed; the DDs set refused to concede anything at all (let’s not even get into the hysterical hyperbole that this group resorted to).

Prime Minister Narendra Modi. PTIPrime Minister Narendra Modi. PTI

Prime Minister Narendra Modi. PTI

One month on, how has demonetisation played out? What has it achieved?

The latter question is a bit tricky, since we don’t exactly know what prompted the move. And that’s because the government itself keeps talking about different goals.

Initially, it was supposed to be about getting out black money. Modi’s speech and the government’s initial defence of the move only talked about attacking black money. Then it was about tackling the problem of fake notes and terror funding. And soon it was about readying the country to move to cashless transactions.

The DDs were quick to challenge the black money narrative. Only a small amount of black money is held in cash; the rest is in real estate and gold; why not go after that, they said. The first point is factually correct (even the DAs concede this); the second question betrays churlishness. To say that it is pointless going after black money held in cash until all black money held in physical assets is confiscated deliberately obfuscates the point that it is the former that facilitates the acquisition of the latter. The overnight strike on black money held in cash will render other transactions more difficult.

That said, it is not clear how much of black money held in cash has come into the system. Latest figures indicate that as much as Rs 11.5 lakh crore has been deposited in banks since November 8. But all of this will not be concealed income; it could well be cash held by honest individuals and institutions for perfectly valid reasons. Besides, the State Bank of India economic research team has pointed out that this could include some double counting as well as deposit of legal tender (valid notes of lower denominations). The real picture of how much of the old currency has been brought back (cash in circulation as of 8 November is estimated at Rs 15,441 billion) will be known only in January; how much of this was black money will perhaps never be known.

A lot of the black money could well have been laundered in the past month. There was, for example, a huge surge in gold purchases on 8 and 9 November. Zero balance Jan Dhan accounts are now flush with cash – according to this report, Rs 21,000 crore has been deposited in these accounts after 8 November. The deposits have been waning after the government issued warnings.

The demonetisation exercise also spawned a black market in new notes. People exchanged their old notes for new and put it right back into their lockers. The exchange rate for old notes was in the range of 30-45 per cent and is reported to have come down to 25 per cent after the second Income Declaration Scheme of 30 November. The response to this second IDS will give some sense about how successful the demonetisation exercise has been in unearthing black money.

What will also be difficult to estimate is how much the exercise has helped in curbing terror funding. There has been some success — extremist groups in Kashmir, the Naxal belt and the north-east were suddenly left with no legal tender – but there are also reports about Naxal groups forcing people to deposit old currency in their own accounts and of new currency finding its way to the north-east.

If the purpose of demonetisation was to push cashless transactions, that seems to have met with a fair degree of success. Debit and credit card payments, use of e-wallets and mobile wallets as well as prepaid cards have all surged. Whether this is because of the temporary cash crunch or will result in behavioural change will be clear only later.

Never mind the rationale for it, how has demonetisation played out on the ground? Even the most ardent of DAs finds it hard to deny that the implementation has been messed up. Modi asked people to put up with 50 days of inconvenience, but there are enough indications that the inconvenience could last longer.

Despite the Reserve Bank of India asserting that 196 billion pieces of currency have been put into the system – equivalent to three full years of supply – banks and ATMs do not have adequate cash. Individual bank branches are setting their own limits on cash withdrawals. Salary payments in cash have been affected. At his press conference after the quarterly review of monetary policy, RBI governor Urjit Patel asked people not to hoard new currency. But given how rules on exchange of old currency and withdrawal of cash have been changed almost whimsically, people are holding on to whatever little cash they have till the situation eases.

As a result, spending has been compressed and economic activity has been disrupted. The small and medium sector has been affected the most. The fear of job losses is a real one, though the extent may not be as high as the guesstimate of many DDs. One set of DAs pooh-poohed initial estimates of how much of a hit the economy would take, but have quietened down with the RBI lowering its growth estimates for this year to 7.1 percent. NITI Aayog vice-chairman Arvind Panagariya has admitted in this interview that 8 percent growth will perhaps now not be possible before the end of 2017-18.

Will the pain of the demonetisation exercise be worth the benefits it will bring? That will depend on a lot of things. The fight against black money will be fruitful only if the government starts acting against benami transactions and properties, reduces tax rates and eliminates scope for corruption (the market buzz is that the majority of those who went on a gold shopping spree after Modi’s shock announcement on 8 November were either tax officials or policemen!) Cashless transactions will get going only if the digital divide is truly bridged and connectivity issues addressed.

All this will be known only in the long-term.  No, we may not all be dead by then.

First Published On : Dec 9, 2016 07:27 IST

30 days of demonetisation: Pros and cons of the Modi govt’s note ban move

The demonetisation of high value currency denominations featuring Rs 500 and Rs 1,000 notes were banned effective 8 November midnight by Prime Minister Narendra Modi in a televised announcement. Today is exactly one month since the ban on the outlawed notes was imposed, but things on the ground are yet to see any meaningful change in the overall scenario.

While it has been a daily struggle for lakhs and lakhs of people so far to get their money back from the ATMs or bank branches, let’s take a look at the positives and the weaknesses the demonetisation of notes could have on the people and the economy at large.

Pros: Since the decision to ban high value currency notes was taken in early November, the government has tried to portray the brighter side of the note ban and its benefits on the economy in the long run. The decision to ban high value notes was taken to weed out black money and counterfeit notes from the system which has been deep-rooted in the economy for the past many decades.

With 86 percent of the total money circulation wiped out from the system, the government plans to keep a tight leash on the corruption front. According to Ambit Capital report, the share of the informal economy in India could shrink from 40 percent to 20 percent and the formal organised sector will gain market share.

The sustained crackdown on black money will also prevent people from parking their savings in physical assets such as gold and real estate, and instead boost the flow of savings into the financial system. With the quantum increase in financial savings, the cost of debt capital in India should fall. Further, as saving rate increases, lending rates are likely to fall in the line. Through the demonetisation exercise, the government has been pressing hard to become a cashless economy and is encouraging more and more people to adopt the digital payments system for their transactions. The government wants people with smartphones to use the United Payments Interface (UPI) app for a cashless transaction. Besides banks, online wallet companies including Paytm, MobiKwik and Free-Charge, too, are promoting their online products and wooing customers to get away from cash-based transactions.

In the aftermath of demonetisation, reports also suggest that housing prices in 42 major cities across India could drop by up to 30 percent over the next 6-12 months.

Cons: Although several advantages of demonetisation rolling into the economy could be far-fetched, there are immediate challenges the economy is already staring at. Following the decision to ban the currency notes, the government’s lack of preparedness to deal with cash availability has hit the common man really hard. Despite the government’s assurance to improve cash availability on a daily basis, several banks and ATMs across the country continue to dispense little or no cash.

People in villages and semi-urban areas are worst hit as majority of the transactions are done through cash. The government’s constant flip-flops on withdrawal and deposit limits at bank branches and ATMs have put people in complete disarray. With one month past the note ban move, the problem doesn’t seem to be fully resolved as banks continue to face cash crunch.

The bigger threat arising out of demonetisation is the impact on the country’s economic growth. While brokerage Ambit Capital created shock waves by predicting that GDP growth will fall to 5.8 percent in 2017-18 from 7.3 percent estimated earlier, former Prime Minister Manmohan Singh, also an economist, echoed concerns by suggesting that demonetisation could contract the GDP by as much as 2 percent.

According to CPM’s Sitaram Yechury, since 8 November, four lakh jobs have vanished, and more than 31.9 million people employed in the textile sector or “government” sectors have not been getting wages. Construction and allied sectors, jewellery, textiles and real estate are some sectors where job losses, if not already happening, are imminent.

Similarly, 20-25 percent of the roughly 2.5 lakh workers in the leather industry have been adversely affected as they are daily wage workers. The industry has been hit particularly hard as 90 percent of the units are small and medium enterprises. In the jewellery sector, 15-20 percent of workers, who are paid daily, too, have been affected.

Economist Pronob Sen has also warned that a virtual shutdown of India’s informal sector could spell doom for employment.

Recently, the July-September growth numbers of 7.3 percent also came below analysts’ estimates. A day before, the Reserve Bank of India in its policy statement cut down growth forecast to 7.1 percent from 7.6 percent earlier for the current fiscal year.

One month of demonetisation: Let’s wait for more data before writing the epitaph

It’s been one month since the central government’s decision to discontinue high-value Rs 500 and Rs 1,000 currency notes, and an extraordinary amount of commentary has been generated in the last 30 days, most of it eager to write off demonetisation as a grand ego-fuelled failure.

Part of the anguish is understandable. The move has been hugely disruptive for an economy that was booming, and a populace unprepared to be at the receiving end of such a shock. Hardships, inconveniences and adjustment blues are inevitable in the event of such a disruptive change, but as we grapple through the temporal tremor, we must reflect whether it is too early to pen the epitaph of what must rank among the ballsiest of reforms ever undertaken.

People queue up to change their old currency notes outside Bank of India in New Delhi on Thursday. PTI Photo(PTI11_10_2016_000315B)People queue up to change their old currency notes outside Bank of India in New Delhi on Thursday. PTI Photo(PTI11_10_2016_000315B)

People queue up to change their old currency notes outside a bank in New Delhi. PTI

Vivek Dehejia, professor of economics at Carleton University, points out in a column in Livemint: “…the essence of politically difficult economic reform involves managing distributional conflict: Between gainers and losers today, between losses today and gains tomorrow, or some combination of intra-temporal and inter-temporal distributional impacts. This is the first law of political economy.”

Any analysis on demonetisation, at this stage, must take into consideration that nobody knows for sure what will happen for certain beyond educated guesstimates. An experiment such as this one, on such a scale, involving this complexity, affecting 1.25 billion people at the same time, has never been conducted before. There are simply no reference points. Even noted economists have resembled little more than punters, sometimes choosing to comment on the moral and ethical nature of the move than economic impact. Simply put, in the short to medium term, till there emerges better data and more macro-economic indicators, any “conclusive assessment” of demonetisation is more likely to be an indication of the commentator’s predilection than truth.

What is becoming clear a month into the exercise, despite the panic being spread from some quarters, is that this isn’t a Waterloo moment for Indian economy because the macro-economic fundamentals remain strong. Often, criticisms have conflated temporary trouble with lasting impact and a number of times, critics and political parties have tried to draw sweeping assumptions based on incorrect or incomplete data.

We have been repeatedly told, for instance, that farmers have been crippled by demonetisation and that Rabi crop (this being the sowing season) has taken a heavy beating, as farmers have been unable to procure seeds in absence of liquidity. And yet, latest data released by the agriculture ministry prove that far from farming taking a hit, total sown area for Rabi crop “has not only jumped substantially in the past one week, but also crossed the last year’s corresponding week figure by over 8.5 percent,” according to a report in The Times of India. The total area sown under Rabi crops (as on 2 December) stand at 415.53 lakh hectares as compared to 382.84 lakh hectare this time in 2015 — an increase of 32.70 lakh hectares, according to the report.

The gap between reality and fear-mongering could be the reason why the Reserve Bank of India (RBI), in a widely-followed press conference on Wednesday, kept the key policy (repo) rate unchanged at 6.25 percent, much to the surprise and even disappointment of bankers and the market, though its Monetary Policy Committee revised downward its FY17 growth forecast to 7.1 percent from 7.6 percent, taking into account the negative impact of currency ban.

Though a sharp reduction, it is still nowhere close to the two percent fall in GDP that former Prime Minister Manmohan Singh had envisaged recently on the floor of the House, because RBI believes that transition pangs and growth slowdown are transitory in nature. Overall, the central bank gave an indication that it would rather wait and watch than jump headlong into rescuing the Indian economy, perhaps because it may not need any saving.

As quoted by Reuters, the RBI said, “It is important to analyse more information and experience before judging their full effects and their persistence…if the impact is transient as widely expected, growth should rebound strongly.”

This is the exact sentiment put forth by India’s Chief Economic Advisor Arvind Subramanian. In an interview to Economic Times, he praised the RBI’s move not to tamper with the repo rate and repeatedly stressed on the need for studying more data before committing on the medium to long term effects on demonetisation.

On whether North Block sees RBI’s estimate of a 7.1 percent growth forecast “too optimistic”, Subramanian said, “Because there are a lot of mixed signals coming, we have to wait, assess the data. We still do not have a proper macro read. Even the first macro read of what is going on. Once we have the data, we will analyse them very carefully and come back with a more considered assessment in the days and weeks ahead. At the moment, it is not very easy to make a really definitive call on the magnitudes of all these impacts.”

Some of the commentary has revolved around the figure of Rs 11.55 lakh crore, the value of scrapped currency notes that have crawled back into the system. It is being said that the final deposit amount before 30 December deadline may well match (or be marginally lower than) the figure of Rs 14.17 lakh crore, the value of notes in circulation during demonetisation. This argument has been stretched to a conclusion that this implies demonetisation is a failure.

This is too simplistic a contention and fails to take into account one of the purposes behind demonetisation — to increase the tax base and adopt more of the informal economy into the banking network. To quote Professor Dehejia again: “…the movement of some or many of the unbanked into the formal financial sector and the movement of firms from the informal to the formal economy (or, equivalently, the process of ‘creative destruction’, whereby new formal sector firms replace defunct informal sector firms) has a permanent and positive impact on the economy, even though the gains from taxing black money via the currency swap is putatively one time only.”

Also, there is no reason to assume that black money changes colour the moment it is returned to the system. As India’s revenue secretary Hasmukh Adhia clarified recently on the sidelines of a Brics event, “Depositing the money in a bank account (doesn’t make) black money into white…it will become white when we charge taxes, when the income tax department is able to reach to them and issue them a notice”.

Overall, we aren’t even remotely close to the end of demonetisation debate. And as the discussion rages, it would be worthwhile remembering CP Scott’s immortal lines: “Comment is free, but facts are sacred.” So, let’s wait for more facts.

First Published On : Dec 8, 2016 16:06 IST

Kashmir unrest: Rights group accuses India of ‘indiscriminate’ use of force against protesters

<!– /11440465/Dna_Article_Middle_300x250_BTF –> A US-based health rights group has accused Indian security forces of “excessive” and “indiscriminate” use of force against protesters with weapons like pellet guns during clashes in Kashmir this year, resulting in injuries and deaths.In their report, Physicians for Human Rights (PHR) describes the excessive and indiscriminate use of force against protesters by Indian state police and Central Reserve Police Force with weapons misleadingly represented as “less than lethal”.These included tear gas grenades, pepper gas shells, live ammunition, and 12-gauge shotguns loaded with metal pellets, which account for the majority of injuries, it said in a report yesterday.”While Indian authorities claimed that the use of these weapons was meant to reduce the potential for injuries or fatalities, PHR researchers found that their use had in fact caused serious injury and death,” a media release said.It also accused security forces of using “intimidation tactics” against medical workers attempting to treat the injured.PHR said it found that authorities actively impeded protesters’ access to urgent medical care, both by harassing medical workers attempting to treat protesters and by preventing doctors from reaching the hospitals where they work.PHR called upon the Indian government to demonstrate its respect for the rights of all citizens by: prohibiting weapons for crowd control that are indiscriminate and cause excessive injury and death, namely the 12-gauge shotgun loaded with No9 shot; and provide adequate equipment and training to police forces to minimize injuries and deaths caused by police action.It also called upon India to cease unlawful practices that obstruct access to health care.

Modi’s cash clampdown gamble may force RBI to cut rates | Reuters

By Rafael Nam and Suvashree Choudhury

MUMBAI An intense cash shortage in India could force the central bank to cut interest rates to a six-year low on Wednesday as Prime Minister Narendra Modi‘s currency gamble threatens to hit nearly every aspect of the economy, from consumers to supply chains.A majority of the nearly 60 analysts polled by Reuters predict the Reserve Bank of India (RBI) will cut the repo rate INREPO=ECI by 25 basis points (bps) to 6.00 percent, the lowest since November 2010, while six predicted a deeper 50 bps cut.Pressure on the RBI and Governor Urjit Patel to act has grown since Modi stunned the country on Nov. 8 with a drastic plan to abolish 500 and 1,000 rupee notes ($7.35-14.70), removing 86 percent of the currency in circulation in a bid to crack down on India’s “shadow economy.” Data so far shows the measure has hit the cash-reliant economy more than expected: auto sales plunged and services sector activity dived into contraction last month for the first time in 1-1/2 years.The prospect that India’s robust growth will be derailed could offset any worries about a volatile global environment, which saw the rupee INR=D2 sink to a record low last month as part of a sell-off in emerging market assets.Analysts say the RBI has room to act given consumer inflation INCPIY=ECI eased in October to 4.20 percent, the slowest pace in 14 months and below the RBI’s target of 5 percent for March 2017.

“We expect the RBI monetary policy committee (MPC) to cut rates by 25 basis points,” said Radhika Rao, an economist with DBS Bank, in a note. “While lingering external uncertainties raise the odds of a no-move, the RBI MPC is likely to take a growth supportive stance to offset downside risks to growth from the demonetisation effort.”A rate cut is not without risks. It would mark a second consecutive 25 bps easing by the six-member MPC, and some foreign investors warn it could raise concerns about whether the central bank is losing its focus on inflation.

A cut would also come at a time when emerging markets are under pressure after the election of Donald Trump as U.S. president last month sparked a surge of capital flows back into the United States, a trend that could accelerate as the Federal Reserve gears up to raise interest rates next week. In India, foreign investors sold a net $4.7 billion in debt and equities in November even, though the country is seen as in better shape than other emerging markets.But a rate cut would signal the RBI’s priority is in supporting the economy, which grew an annual 7.3 percent between July and September, the fastest rate for a large economy in the world but still below the levels needed to sustain full employment.

Investors will also want more details from Patel about how the RBI is managing the process of demonetisation after coming under criticism from market participants for frequently announcing adjustments to its policies.Most analysts say the RBI will likely partly roll back a directive for banks to place their entire deposits under the central bank’s cash reserve ratio in a bid to absorb the extra liquidity generated by the government’s banknotes move.The need to keep it in place has eased after the government announced last week it would raise the issuance of special bonds to soak up the liquidity. (Editing by Kim Coghill)

This story has not been edited by Firstpost staff and is generated by auto-feed.

First Published On : Dec 6, 2016 23:30 IST

Jayalalithaa dead: How Amma’s populist policies left a debt bomb ticking in TN

The word, ‘Amma’ (mother) is used six times in Tamil Nadu’s 2016-17 budget document, presented by finance minister O Panneerselvam on 21 July, the adjective Puratchi Thalaivi is used once and references to ‘chief minister’ 31 times.

Just like the verses of scriptures typically begins with a prayer to the cosmic force, Panneerselvam, appears to offer prayers to the AIADMK supreme leader often in the budget speech, thus making the whole 86 page budget document a humble submission at the feet of his and his party men’s supreme ‘mother’.

File photo of Jayalalithaa. PTIFile photo of Jayalalithaa. PTI

File photo of Jayalalithaa. PTI

A quick glance through Panneerselvam’s 2016-17 budget document reaffirms Jayalalithaa’s iconic, cult status. Terms like, “unparalleled”, “unflinching” “historic”, “infinite love”, “affection” are used to describe Mother Jayalalithaa, who died on Monday night at Apollo hospital in Chennai, while serving her sixth term as the chief minister.

Perhaps, in these times, there is no other Indian state as TN where political leaders enjoy blind devotion of their followers, mostly the poor strata of the society. For most part of her life, Jayalalithaa carried the stature of a demigod, first as an actress and later as a politician, universally admired by her followers as ‘mother’, before whom they never shy to prostrate. For them she was never human.

Most of the social welfare schemes in TN are named after her — ‘Tamil Nadu Village Habitation Improvement’ (THAI) scheme (‘Thai’ in tamil means mother), “Amma Unavagam” (subsidised food), Amma Kudineer (drinking water scheme), Amma laptops, ‘Amma Baby Care Kit’,‘Amma Magapperu Sanjeevi’ and ‘Amma Arogiya Thittam’. There are a number of such schemes that carry her name. People adore those products/services as mother’s blessings, thus melting the thin line between political populism and insane, often blind personality-driven politics.

The populist bandwagon

How did Jayalalithaa win the hearts of poor? To say the least, she was also the ‘mother’ of all freebie schemes that ensured the support of middle and lower-income class in multiple areas. To be sure, some of these were transformative in nature in the areas of education, housing and aiding small entrepreneurs.

Certain examples include the World Bank-aided ‘Pudhu Vaazhvu Project launched in 2005.  Under this scheme, which the government claims to have given job-oriented skill training to 3.27 lakh youth. The THAI scheme, so far implemented in 71,126 habitations pertaining to 9,511 village panchayats and the housing scheme under which in the last four years, the Tamil Nadu Housing Board has constructed 10,059 units at a cost of Rs 565.92 crore, including 2,293 houses for the low income group.

‘Amma’ is also known for her investor-friendly approach, which explains the reason why the state is home to more industries and employment than any other Indian state, according to IndiaSpend research. TN is also home to a small-sector movement with the Micro, Small and Medium Enterprises (MSME) sector providing employment to 63.18 lakh persons.

No doubt. Jayalalithaa has been an able administrator. This is evident from the progress made by the state in the areas of poverty eradication, social welfare, investor-friendly measures and overall economic numbers. TN’s Gross State Domestic Product (GSDP), which fell to 3.4 percent in real terms, during 2012-13, was reversed to 7.3 percent towards 2013-14 — higher than the national average growth rate of 4.7 percent of that period.

The state recorded a GSDP growth rate of 8.8 percent in 2015-16 as against the country’s Gross Domestic Product (GDP) growth rate of 7.6 percent, based on the 2011-12 constant prices. The gross fixed capital formation, which indicates the investment activity too has improved significantly, touching Rs 34,091 crore in the fiscal year 2014 compared with Rs 23,054 crore when her predecessor, M Karunanidhi left office in 2010-11.

A TN debt-bomb in making?

But, in the process of rolling out freebies, she also built a debt bomb for the state. At this point, TN’s debt is over Rs 2 lakh crore. But, according to an IndiaSpend analysis, TN’s debt has witnessed a 92 percent increase over five years ending 2015. According to the Reserve Bank data, TN registered the highest gross fiscal deficit among all states in 2015-16 at Rs 31,830 crore. For current fiscal the TN government pegged its fiscal deficit at Rs 40,534 crore or  2.96 of GSDP.

state debt tablestate debt tableIn the last five years, when Jayalalithaa was in office, the debt level of Tamil Nadu has risen 105 percent from Rs 1.14 lakh crore to Rs 2.35 lakh crore. This is the sharpest increase in debt levels by a large state.

Of all Indian states, only Haryana has beaten TN with a 141 percent rise in public debt. It is needless to say most of this debt is the consequence of Jayalalithaa’s populist bandwagon aiming at the poor of the state. Other large industrial states like Maharashtra and Gujarat have seen their debt level increasing by a relatively better 64.5 percent and 60.3 percent in the same period.

There is no impressive trend in tax revenue correspondingly. According to 2016-17 TN budget, the tax revenue is estimated to increase to Rs 90,691.87 crore in revised budget estimates for 2016-2017 from Rs.86,537.70 crore as per the revised estimates 2015-2016.

For TN, ‘Amma’ leaves an era of political populism and a debt bomb in making. Amma’s presence will still be felt in the TN cabinet meetings through her image and the memories of her charismatic leadership. But, the task of dealing with the debt bomb in making is up to her trusted lieutenant O Panneerselvam and his AIADMK colleagues.

(Kishor Kadam contributed to this story)

First Published On : Dec 6, 2016 15:08 IST

Demonetisation seals RBI rate cut deal, but that will not reboot a battered economy

Most of the originally stated results of the demonetisation exercise—killing black money, corruption and terror, are disputed now by experts. It is too early to assess these outcomes. But, if there is one result for certainty with regard to the massive currency crackdown, then that is a rate cut from the Reserve Bank of India (RBI) on Wednesday (7 December)—which, perhaps, wouldn’t have happened under normal circumstances, when the rupee is struggling to recover and global factors are at play.



Most economists forecast a quarter percentage point rate cut decision by the Monetary Policy Committee (MPC) that will be read out by governor Urjit Patel, but even a 50 basis points cut in the key lending rate of RBI repo, at which the central bank lends short-term funds to banks, cannot be ruled out now given the deep slowdown fears in the economy after the government sucked out 86 percent currency in circulation overnight on 8 November while executing the demonetisation plan.

What this means is that the MPC and the RBI are left with no option but to take a growth supportive stance sooner than it thought, said Radhika Rao, economist at Singapore-based DBS Bank. “Ahead of the looming US rate hike at the mid of this month and ongoing volatility in domestic financial markets, especially the weak rupee, the MPC would have ideally preferred to wait-and-watch before easing rates,” Rao said.

“However, the government’s recent banknote ban has raised downside risks to growth for at least two quarters, starting 4Q16. Scope of food inflation dragging headline inflation lower also keeps the door open for an easy policy bias. These are likely to prod the MPC to consider a 25bp rate cut on Wednesday, followed by another cut in 1Q17,” Rao said.

It is indeed true that demonetisation has resulted in a cash crunch that has caused considerable pain on the ground. It is difficult to assess the actual impact yet. Small traders, construction workers, services sector, perishable goods market are all hit due to the ongoing cash-crunch. The activities in the informal sector have come to a standstill considering, even on conservative estimates, close to 70 percent of India lives on cash economy. There isn’t any consensus yet on the resultant impact on the GDP.

According to former Prime Minister, Manmohan Singh, the hit that the GDP growth will take will be as much as 2 percent. Many others predict 1 to 1.5 percent and some state that it could be less than one percent. But, almost everyone, like Rao of DBS, agree that the dragging effect on the economy will continue for at least two quarters.

The growth scene is not looking good if one goes by the latest GDP growth print. The July-September growth, despite a marginal improvement in the overall numbers to 7.3 percent in Q2 from 7.1 percent in the April-June quarter, has been disappointing since the only bright spot in the GDP graph is a minor improvement in the agriculture sector. Also, there is no sign of investment activity picking up yet.

Gross Fixed Capital Formation (GFCF), which portrays the actual investment activity on the ground, dropped by close to 6 percent at constant prices. Now remember, this parameter has been contracting for the last three quarters at least. That is not a healthy sign for an aspiring, ambitious economy. When investments don’t support a growth-revival, typically, a consumption-led recovery should come to the rescue. Now, what has been happening here is the government spending, which picked up from the last quarter in a major way, has actually dropped in the second quarter, from 18.8 percent in Q1 to 15.2 percent in Q2, in terms of constant prices. As against this, private spending has shown a marginal increase during the period — from 6.7 percent in Q1 to 7.6 percent in Q2.

In terms of current prices, the government expenditure has fallen to 20.8 percent on year-basis in Q2 from 24.3 percent in Q1. The corresponding numbers for private spending is 11.7 percent in Q1 to 12.4 percent in Q2, showing a minor rise. If one looks at sectors, except the growth shown in agriculture, all other segments —mining, manufacturing, electricity, construction and services such as hotel industry— have shown a decline. This means it is consumption that has been holding the growth story and remains the main growth driver. But, this is where the challenge lies ahead in the aftermath of the demonetisation exercise. The recent PMI data, the first set of economic indicators after the demonetisation exercise, shows a decline to 52.3 in November compared with 54.4 in October. Though, theoretically, a number above 50 is growth-positive, what it indicates is a slowing trend ahead. Services PMI fell even more sharply to 46.7 in November from October’s 54.5, the first time since June 2015 that the index has gone below the 50 mark that separates growth from contraction. It was also the biggest one-month drop since November 2008, just after the collapse of Lehman Brothers triggered the global financial crisis.

Will an RBI rate cut make any major difference at this stage to aid growth? It is doubtful for a few reasons.

First, if banks wanted to lend more to industries, they would have done so already. There is liquidity surplus already in the banking system. More than the availability of cash to lend, poor demand has been hurting loan growth, especially to industries. If one looks at numbers till October (just before the demonetisation happened), bank credit to industry contracted by 1.7 per cent in October 2016 in contrast with an increase of 4.6 per cent in October 2015, with all major sub-sectors witnessing deceleration, contraction in credit include infrastructure, food processing, gems and jewellery and basic metal and metal products.

Second, the problem of NPAs (non-performing assets) continues. Till the time the bad loan stock is cleaned up and bank balance sheets turn healthier, banks are unlikely to take more risks.

Third, the demonetisation and resultant chaos on the ground would mean that consumer spending will go through a dull phase in the near-term. Bankers do not expect any major pickup in consumer lending when the economy is looking at a prolonged downturn.

Nevertheless, a rate cut must happen on Wednesday’s RBI bi-monthly monetary policy review and the full credit for that should go to demonetisation. What most economists agree is that the solution to revert to the growth path lies in the following steps — 1) resolve the cash crunch at the earliest before it does more damage and get economic activities going, 2) boost public spending and work on ways to bring in more private capital to get the economic engine going, and, 3) make sure farm output doesn’t suffer on account of the currency shortage since a crop failure could stoke inflation further and erase the inflation gains. A rate cut from RBI would be of least help at this stage to reboot the economy.

First Published On : Dec 5, 2016 12:02 IST

Demonetisation cash crunch: Close banks for 15 days, demands bank union

Employees’ unions have demanded that the banks should be shut down for 15 days, until the Reserve Bank of India prints enough currency to meet the demand of the customers, a report in The Economic Times has said.

People queue as they wait for the bank to open to withdraw currency and exchange their old high denomination bank notes in the early hours. ReutersPeople queue as they wait for the bank to open to withdraw currency and exchange their old high denomination bank notes in the early hours. Reuters

People queue as they wait for the bank to open to withdraw currency. Reuters

“RBI should take a view to stop banking operations for 15 days till adequate money is available. Let RBI close the banks till money comes,” CH Venkatachalam, chief of the All India Bank Employees’ Association (AIBEA), has told the newspaper.

The union has been of the view that the RBI was not at all prepared for such a grand scheme of demonetisation and that the central bank has faltered in its implementation. Over the weekend, bank ATMs across the country witnessed long queues of customers waiting to withdraw cash after the salary day.

Banks were under pressure on Friday, the first salary day after the government announced the demonetisation of Rs 500 and Rs 1,000 notes on 8 November, but weekends saw bigger crowds at ATMs as customers sought to stock up cash ahead of the week days.

However, the cash crunch continued as there is scarcity of notes of lower denomination such as Rs 500 and Rs 100. Customers have been getting Rs 2,000 notes from ATMs which they are finding it difficult to use for want of smaller denominations.

It is in this context that the bank staff union has demanded that banks should be kept shut until the RBI is ready with cash. According to media reports, Rs 500 notes are being printed but there is a 21-day lag for for these notes to come into the banks.

It is to be noted that the RBI has not yet come out with exact details of how much currency has been printed and how cash is dispatched to the banks. The union has also demanded more transparency from the central bank.

At a press conference in Chennai, Venkatachalam also said the staff will resort to protests in the next 10 days to bring the plight of the staff to the notice of the government.

On 2 December, AIBEA and the All India Bank Officers’ Association had written a letter detailing the hardships the staff at various branches are facing. The acute shortage of notes is forcing branches to ration cash disbursal and this is resulting in tensions, exchange of words, quarrel, abuses, insults, insinuations on bank staff, the letter said.

“While RBI is repeatedly making public statements that adequate cash is being supplied to banks, the reality is otherwise. These statements are making the public to feel that RBI is supplying cash to Banks and bank staff are deliberately not extending payments,” the letter said.

First Published On : Dec 5, 2016 08:54 IST

Coming your way – new Rs 20, 50 notes

<!– /11440465/Dna_Article_Middle_300x250_BTF –>The Reserve Bank of India (RBI) has said that it will issue new series of Rs 20 and Rs 50 notes, while the existing ones will continue to be legal tenders.“Will shortly issue Mahatma Gandhi series-2005 without the inset letter in both the number panels, bearing the signature of Urjit Patel, Governor, RBI, and the year of printing 2016 will be printed on the reverse side.“The design and security features of these notes will be similar to the Rs 50 notes, with the ascending front of numerals in both the number panels without the intaglio print as in the earlier Mahatma Gandhi series 2005,” the RBI said.With the government printing more Rs 2,000 notes, people are finding it difficult to get smaller denomination notes. This may have forced the government to get fresh sets of lower-denomination notes. The Rs 100 notes comprised 17.5 per cent of the total currency in circulation until March 2016, according to the last figures from the RBI. Data shows Rs 50 constituted 4.3 per cent of the total cash in circulation and Rs 20, 5.4 per cent.NS Venkatesh, Executive Director, Lakshmi Vilas Bank, said: “The small notes in circulation will take care of the daily payments by individual households, and for larger payments, we can use the digital channel. I think the Government of India and the Reserve Bank of India(RBI) are on the right track.”

Demonetisation: PDP-BJP govt in Kashmir admits people facing ‘inconvenience’ due to cash crunch

Srinagar: The Bharatiya Janata Party (BJP) and Peoples Democratic Party (PDP) coalition government in Jammu and Kashmir has admitted that people in the state are facing ‘tough times’ due to Prime Minister Narendra Modi’s decision to demonetise the Rs 500 and 1,000 currency notes, which has led to a shortage of currency notes in circulation.

The difficulties have been aggravated across Kashmir due to the lack of bank branches in the state, with banks even refusing to advance loans to businessmen who defaulted on payments of interest due to the four month long shutdown. Majority of the over 2-lakh loan accounts are running in default due to delays in payment of interest.

People queue outside the State Bank of India in Jammu and Kashmir. PTIPeople queue outside the State Bank of India in Jammu and Kashmir. PTI

People queue outside the State Bank of India in Jammu and Kashmir. PTI

The government has, for the first time, admitted that people are facing grave inconvenience due to demonetisation. Through an order issued by the state’s finance department on 19 November, it was directed that a part of the salary for the month of November will be released in advance and the employees will be provided cash of Rs 10,000 to overcome the difficulties that they have been facing due to demonetisation.

The government directed that the salary be released by 24 November to non-gazetted officers and other lower income employees. The order read, “the shortage of notes in circulation has resulted in inconvenience to a cross section of society, particularly the low income sections of society including the non-gazetted and class-IV employees.”

Only four days later, however, the government expressed its inability to implement the order and informed the employees that the advance salary can’t be released as the Reserve Bank of India (RBI) had expressed difficulties in providing additional cash to the Jammu and Kashmir (J&K) bank.

The J&K bank is the lead financial institution in the state, with the government holding majority stake in the bank, and the employees’ salaries get credited into the accounts operated by the bank. As per the revised order of the government, “the salary for the month of November 2016 will be credited into the accounts of employees at the end of the month as usual. The employees, however, are free to withdraw the cash requirements from their bank accounts within the ceiling imposed by the RBI.” The order was issued by the Commissioner Secretary, Finance, Navin K Choudhary.

Minister of State for Finance, Ajay Nanda, however, appeared to be optimistic and said that the rush witnessed outside the ATMs had declined. “Once the bar on the withdrawal limits is eased by the government, the situation will improve.”

President of the Kashmir Chamber of Commerce and Industries, Mushtaq Ahmad Wani, said that the cash flow of the business units had dried up due to demonetisation. “The note ban has come at a time when we are already asking the government to restructure the loans. We couldn’t pay back the loans due to the restrictions and the curfews imposed by the government. The onus lies on the government to restructure the loans,” Wani said.

Majority of the banks in Kashmir have decided not to provide any fresh loans to account holders running in default, and to those whose accounts have been declared as non-performing assets (NPAs). The situation is more grave in the state as the banks here were already unable to meet their credit disbursal targets and as there are many areas where the bank branches don’t exist. Across Jammu and Kashmir, the banks have extended credit of Rs 15,753 crore to the 4.8 lakh beneficiaries against the target of Rs 23,605 crore in the last financial year.

The banks have also lagged in opening their branches in the state. The RBI had directed the state that the 104 villages with a population of 5,000 plus, which are devoid of banks, should be covered with new branches. However, against the target of opening 18 new branches in the last fiscal year, only one was opened. And records reveal that against the overall plan of opening of 246 branches in the state during the last financial year, only 54 branches were opened by different banks, thus drawing further flak from the government.

First Published On : Dec 3, 2016 09:34 IST

Demonetisation: 27 public sector bank officials suspended over corrupt practices, 6 transferred

New Delhi: In a major crackdown on bank employees involved in irregularities post demonetisation, as many as 27 senior officials of various public sector banks have been suspended and six others transferred to check corrupt practices.

The suspensions comes amid reports of income tax authorities conducting search and seizure at many places, including one at Bengaluru where Rs 5.7 crore cash in new currency notes was recovered from two businessmen.

Allahabad: Passengers gives 500 rupees for train ticket at a booking window at Alalhabad Railway station in Allahabad on Wednesday. PTI Photo(PTI11_9_2016_000066B)

PTI Photo.

Some cases have come to notice of officials involved in carrying out transactions which were irregular and violative of RBI’s instructions, the Finance Ministry said in a statement.

“Action has been taken in such cases and 27 officials of various public sector banks have been placed under suspension and six officials have been transferred to non-sensitive posts,” it said.

It also cautioned that while all efforts are being made to facilitate genuine transactions, “illegalities will not be tolerated and appropriate action will be taken against individuals involved in irregular and unauthorised activities”.

Following the decision of the government to demonetise of old Rs 500/1000 notes from midnight of 8 November, 2016, people have been depositing the invalid notes into banks.

The Reserve Bank has put in cash withdrawal limits for individual as well as businessmen.

The ministry further said that banks have done commendable work by putting in long hours of untiring effort in managing banking transactions.

In the biggest-ever seizure of cash in new currency, over Rs 5 crore even as the Income Tax department said it detected unaccounted income worth Rs 152 crore after it conducted searches in a dozen premises in Bengaluru and other locations.

Earlier, RBI had asked banks to take action against erring officials to ensure cash availability for customers thronging banks.

First Published On : Dec 2, 2016 19:42 IST

Demonetisation: Old Rs 500 notes for fuel, air ticket only till tomorrow; repeated U-turns do not augur well for Modi govt

Despite the hardships to common man, the Narendra Modi government always had the moral ground to defend its decision to demonetise 86 percent of currency notes— a bold step for the larger ideas of killing black money, fake notes and usher in an era of cashless economy. But, the government doesn’t have any excuse to justify the repeated flip-flops on the roll out.

Representational image. ReutersRepresentational image. Reuters

Representational image. Reuters

On Thursday, when the government announced that the deadline for using old Rs 500 notes at petrol pumps and for airline tickets at airports has been cut short to 2 December, instead of December 15, as announced earlier, it became the latest of the U-turns during the implementation of demonetisation exercise.

The last was on 24 November when it abruptly stopped the facility to exchange old Rs 500, Rs 1,000 notes at bank counters as against the earlier promise by the Prime Minister himself and the Reserve Bank of India (RBI) that the facility will continue till 31 December. No adequate explanation was offered even then for going back on the earlier promise.

Now, the question is why on earth the government wants to promise something to the citizen, only to roll back the facility or go back on the promise just a few days later? What has changed between 24 November and now to stop the use of Rs 500 notes on petrol pumps and buy air tickets? If the fear is that people will misuse the airline booking leeway (to book and cancel to get rid of the old notes), why was this allowed in the first place?

Even the abrupt termination of old note exchange facility at bank counters, some one month before the promised date, was an avoidable decision and only points to lack of foresight. Such breach of promise could even upset those standing in long queues but still support the PM thinking of a larger national cause.

According to a PTI report, the government has also dropped its earlier announced plan to allow the use of Rs 500 notes for payment of toll at national highways from 3 December. Toll payment in both old Rs 500 and Rs 1,000 notes was accepted till 2 December, and from 3 December, it was to be limited to Rs 500 notes. But now, this facility too has been withdrawn.

This sort of U-turns are unfortunate because despite the widespread criticism in the way demonetisation was implemented, the very idea of demonetisation was never a hated concept by the common man on the street, forget economists and experts. Even though the peasant in the rural village didn’t understand the whole concept, he knew that this was being done for some good of the society. Hence, it is necessary to live through the difficult days.

But, the flip-flops confuses him and prompts him to doubt all other rules in place. There is a difference between reacting to the situation on ground during the roll out of a complex exercise in a large economy and failing to frame the fundamental rules that defines the implementation of the larger plan. The frequent changes in the cash withdrawal limits at banks/ATMs can be tagged in the first category, while the U-turns on deadlines to exchange old notes at counters and now asking not to use them for certain essential activities falls in the second.

Ever since the demonetisation announcement on 8 November, there has been a series of changes in rules by the government. In the case of exchange, the daily limit was first set at Rs 4,000, then increased to Rs 4,500 and later the limit was reduced to Rs 2,000. Then the government introduced a new method — of marking people who come to exchange notes with indelible ink and late to stop the exchange facility itself one month ahead of the promised time. Today’s (Thursday) announcement to discontinue use of old Rs 500 notes in petrol pumps and airline ticket booking marks the latest.

Once again, former prime minister, Manmohan Singh‘s comment in Parliament on demonetisation implementation becomes relevant. “It is no good that everyday the banking system comes with modification of the rules, the conditions under which the people can withdraw money. That reflects very poorly on the Prime Minister’s office, on the Finance Minister’s office and on the Reserve Bank of India. I am very sorry that the Reserve Bank of India has been exposed to this sort of criticism which I think is fully justified.”

The short point here is flip-flops in rules by the government do not augur well for the two main stakeholders in this gigantic exercise—the government itself and the common man. It breaks the trust element and give rise to suspicion. The government should refrain from such adventures, especially given the persisting cash crunch on the ground.

First Published On : Dec 1, 2016 14:38 IST

Demonetisation: Manufacturing activity cools in November on cash crunch, shows PMI

Indian factory activity decelerated sharply last month after Prime Minister Narendra Modi‘s currency crackdown led to a rationing of cash and cooled domestic consumption, new orders and production.

The Nikkei/Markit Manufacturing Purchasing Managers’ Index fell to 52.3 in November from October’s 54.4, its biggest month-on-month decline since March 2013.

However, it held above the 50 mark that denotes growth for the eleventh straight month.



“PMI data for November showed that the sudden withdrawal of high-value banknotes in India caused problems for manufacturers, as cash shortages hampered growth of new work, buying activity and production,” said Pollyanna De Lima, economist at survey compiler IHS Markit.

The new orders sub index that measures both foreign and domestic demand was knocked down to 53.3 from 57.7 in October, the largest monthly fall in over 4-1/2 years.

Modi’s decision last month to scrap Rs 500 and Rs 1,000 banknotes as part of a crackdown on tax dodgers and counterfeiters removed 86 percent of the currency in circulation virtually overnight.

That left banks flush with cash but knocked consumption and investment and led to markets calling for aggressive rate cuts from the RBI to support demand.

Slowing demand in the world’s fastest growing major economy could undermine growth in coming quarters especially as factories have already started cutting output.

India’s $2 trillion economy picked up pace between July to September compared to the previous three months, growing 7.3 percent against expectations of 7.5 percent expansion in a Reuters poll, official data showed on Wednesday.

But cooling price pressures, as reflected in the latest PMI where both input and output price rises decelerated, may act as a temporary relief and provide room for the Reserve Bank of India to cut interest rates further.

“Of respite to firms, cost inflationary pressures softened, which in turn encouraged the vast majority of businesses to keep their selling prices unchanged. If this trend is sustained we will likely see further cuts to the benchmark rate,” De Lima said.

Indian consumer inflation eased for a third straight month in October to 4.2 percent, helped by smaller rises in food prices.

First Published On : Dec 1, 2016 11:44 IST

DNA Morning Must Reads: RBI’s steps to save payday blues; Karunanidhi hospitalised & more

<!– /11440465/Dna_Article_Middle_300x250_BTF –>RBI, banks take steps to save payday bluesFinance ministry and the Reserve Bank of India (RBI) are keeping a close watch as the payday approaches. Viewing the first week of the month as salary time, the central bank has released less cash in the past two days to ensure larger availability from December 1, sources said. Read detailsNagrota attack: Terrorists did recce of Army base for a week, local recruits believed to have aided themPost the Nagrota attack in Jammu, where seven Army men were killed on Tuesday, an assessment carried out by intelligence agencies reveals alarming findings. Intelligence officials believe that the terrorists had not only been in Indian territory for over a week, but also had the support of freshly recruited local militants. Read moreChinese govt reacts to WION expose, rejects accusations of military activity deep inside eastern AfghanistanChina’s Defence Ministry has rejected accusations of military activity deep inside eastern Afghanistan, after a report by WION last month about regular patrols by Chinese security forces there. Read full storyDMK chief M Karunanidhi admitted to Kauvery Hospital in ChennaiDMK chief M Karunanidhi was on Thursday morning admitted to Kauvery Hospital at Alwarpet in Chennai for allergy related issues. The 92-year-old former Tamil Nadu chief minister was reportedly rushed to the hospital at around 5.50 am. Read moreDemonetization: In Patna, Mamata calls Nitish Kumar a traitor; says country in a state of ‘super emergency’West Bengal CM Mamata Banerjee on Wednesday called Bihar Chief Minister Nitish Kumar a ‘traitor’ for deserting the anti-demonetization camp. She alleged that the country was in a state of ‘super emergency’ due to Prime Minister Narendra Modi’s policy of banning high currency notes. Read more

War on black money: At least 50 people nabbed, over Rs 90 crores cash seized after demonetization

<!– /11440465/Dna_Article_Middle_300x250_BTF –>In the three weeks since PM Modi announced the demonetization decision, at least 100 cases have been reported of large amounts of cash being seized by authorities across the country.Though there seems to be divided opinion on the planning, implementation and after-effects of demonetization, it has also given sleepless nights to several black money hoarders. While there have been reports of people burning or throwing demonetized Rs 500 and Rs 1000 notes in dustbins and rivers, there have also been instances where people have been caught red-handed trying to hide, exchange or find other ways to convert any untaxed or black money.On the basis of media reports so far, around Rs 90 crore has been seized in old and new currency and around 57 people have been detained and arrested since November 10. The maximum number of incidents were reported from Maharashtra, Gujarat, Delhi and Bihar. Two cases involving BJP leaders were also reported from Maharashtra and Gujarat, where money amounting to Rs 91.5 lakh and Rs 31 lakh respectively was seized.
ALSO READ Jan Dhan deposits jump to Rs 64,250 crore, Uttar Pradesh leadsThough, no official figure on fraudulent transactions is available yet, the Reserve Bank of India (RBI) has released data on the deposits made since November 8. A total of Rs 2.99 lakh crore was reportedly deposited in banks from November 19 to 27, while Rs 5.11 lakh crore was deposited between November 10 to 19. There has also been a sharp increase in Jan Dhan deposits across the country. Rs 27,200 crore were deposited in 25.68 crore accounts in just 14 days, from November 9 to 23, while the deposits before November 9 amounted to Rs 45,636.61 crore.While those trying to hide their black money are finding loopholes in the system, the government is trying to avoid leaks. Income Tax Amendment Bill which was passed by Lok Sabha on Tuesday proposes 85% tax plus penalties for those caught illegally converting money, while those who disclose black money will have to pay 50% tax, out of which 25% will be returned after four years.
ALSO READ War on black money: 50% tax on unaccounted deposits, 85% tax if caughtIn order to ensure that people do not deposit someone else’s unaccounted black money in their account, it was earlier declared that the Income Tax department would punish the violators of newly enforced Benami Transactions Act with penalty, prosecution and rigourous jail term of a maximum seven years. PM Modi had on November 8 declared that Rs 500 and Rs 1000 notes would not be legal tender starting midnight that evening, which sent a wave of panic across the country. Opposition parties, who are not happy with this decision of the government have been protesting against demonetization in Parliament for the last 10 days, while blaming the PM for 82 deaths related to bank hassles that took place after the announcement was made.

RBI, banks take steps to save payday blues

<!– /11440465/Dna_Article_Middle_300x250_BTF –>Finance ministry and the Reserve Bank of India (RBI) are keeping a close watch as the payday approaches. Viewing the first week of the month as salary time, the central bank has released less cash in the past two days to ensure larger availability from December 1, sources said.Companies are looking for creative ways to help employees not stand in queues for getting their monthly salaries. The demand for cash cards has gone up by hundreds of thousands.Banks have a tough task at hand as pensioners and the salaried class queue up for monthly salaries. With state treasuries restricted from accepting or giving cash, state government employees and pensioners may find it difficult to get their monthly dues, not to mention the thousands of other employees in the organised and unorganised sectors.”While the RBI reserves may be depleting, it is also being replenished to ensure sufficient cash,” ministry officials said, adding that there was enough cash till December 31. The government was of the view that the ATM withdrawal quantum could be raised at a later stage when more Rs 500 notes will be made available.State governments, which were earlier worried about making payments to employees and pensioners through treasuries are now heaving a sigh of relief, with the RBI promising them adequate supply. Kerala Finance Minister Thomas Issac on Wednesday said that the state will face no difficulties on payday as the RBI has agreed to release Rs 1,000 crore to the state.Arundhati Bhattacharya, chairman of State Bank of India (SBI), told DNA: “We have also tried to use analytics to forecast cash requirements during salary period so as to ensure better preparedness. We hope to be able to undertake salary payments smoothly. Till date, we have tried our best to ensure that we are able to serve the maximum number of people – both at the branches and ATMs.”Bhattacharya added: “We would like to appeal to people to use debit cards for purchases rather than for drawing cash.”The RBI on Wednesday took steps to increase the liquidity situation to ensure adequate cash supply for stabilising the cash crunch scenario, triggered by demonetization.December 1 is also the payday for private and government sector, and most employees are now demanding salary in cash rather than online or cheque payment.Taking this into consideration, the Finance ministry has asked the RBI to step up liquidity to increase printing of currencies and circulation of the same.The bank explained that it is trying its best to increase cash circulation of Rs 100, Rs 500 and Rs 1,000 notes for all markets, apart from printing more currency notes. In the next one week, the RBI is expected to increase the cash circulation of the aforementioned denominations.Rituparna Chakraborty, President, Indian Staffing Federation (ISF), said that it will all also propel some desirable changes such as bringing the informal workers into the fold of formal workforce. Today, 94% of India’s workforce is in the informal sector, whose incomes do not even get properly accounted.”In the medium to long term, she feels employers engaging casual workers will be compelled to make payments to them only through banking or other formal modes. You will not see any impact of it (cash shortage due to demonetization) on large organisations and bigger metros. It would be only in sectors like real estate, construction and infrastructure, where a lot of work used to get done through cash,” Chakraborty added.

To the woodshed: Demonetised notes recycled to make plywood, stationery and fuel

The Reserve Bank of India (RBI) is staring at 15,000 million old currency notes currently and it may take the institution a year to destroy them. To be clear, this number is just an estimate; it’s assuming RBI receives even 70 percent of the old notes, according to The Times of India.

Post demonetisation, as these notes cease to be legal tender, the process of shredding them has begun, according to The Times of India report, which also mentions that the central banking institution has 40 verifying and shredding machines across 19 locations in India and the imported machines can destroy about 2,50,000 notes in an hour.

It doesn’t stop there.



A report in The Economic Times mentions that once these notes are shredded, the bits are sent to dealers for recycling or to make briquettes, which are compressed blocks of biomass material used for fuel. It adds that these notes will head to Western India Plywood (WIPL) yards in Kannur, Kerala — chosen by the RBI — for pulping.

PK Mayan Mohamed, the managing director at WIPL, was quoted by The Economic Times as saying that they have received “over 140 tonnes of Rs 500 and Rs 1,000 notes for pulping over the past three weeks” and the company was selected by RBI a few days before the note ban announcement on 8 November.

These shreds of notes are combined thoroughly with wood chips before being fed into a press. “Out of every 100 kg of pulp compound pressed, only 7 kg is shredded notes; the rest is wood chips,” the report said.

The NDTV reported that the pulped and shredded currency will either be turned into briquettes or into stationery such as calendars, paper weights, files and boards. It added that this relatively new method is followed by most central banks to make briquettes out of soiled notes.

First Published On : Nov 30, 2016 16:48 IST

Modi govt turned RBI into Centre’s mouthpiece, alleges AAP

Fri, 25 Nov 2016-08:00pm , New Delhi , PTI
<!– /11440465/Dna_Article_Middle_300x250_BTF –> The Aam Aadmi Party on Friday alleged that demonetization has shown the Reserve Bank of India (RBI) has “turned” into a mouthpiece of the Centre under the Narendra Modi government.Party spokesperson Raghav Chadha said the RBI’s status as an institution beyond politicking has taken a hit due to the “fiasco” in the wake of the currency restriction measure announced on November 8. “Prime Minister Narendra Modi has turned RBI into a BJP mouthpiece. It makes misleading statements in the public. Modi has eroded the credibility of all institutions including and the central bank is the latest casualty. Only PM is responsible for the situation RBI finds itself in,” he told a press conference.Chadha and AAP’s Delhi Convenor Dilip Pandey also demanded that a probe be initiated into alleged land deals undertaken by some BJP leaders days before demonetization was announced. Delhi Chief Minister and AAP’s National Convenor Arvind Kejriwal will address six rallies across Uttar Pradesh and BJP-ruled Jharkhand, Madhya Pradesh and Rajasthan on demonetization next month.

NGT orders ban on noise, solid waste pollution in Sundarbans

<!– /11440465/Dna_Article_Middle_300x250_BTF –>The National Green Tribunal has ordered a ban on noise and solid waste pollution in the Sundarbans area in a bid to protect the wildlife during the coming tourist season.The Kolkata bench of NGT, comprising Justice (retd) SP Wangdi and Dr PC Mishra, taking up the matter suo motu, prohibited the use of mikes or loudspeakers blaring music, fancy decorative lights, release of solid waste and other material in river water. The bench, in an order passed this week, directed the principal secretaries of four departments, Tourism, Environment, Home and Panchayat to ensure compliance of the order to maintain the ecology of the forests.”Hundreds of motor launch, steamers and cruises take tourists to the Sundarbans during the winter for excursions and picnics leading to a lot of sound, air and solid waste pollution in the rivers and canals crisscrossing the largest mangrove forest in the world,” environmentalist Subhas Dutta, who has been appointed amicus curiae in the matter by the NGT bench said.Home of the Royal Bengal Tiger, apart from a large number of other wildlife including alligators, dolphins, deer, wild boars, etc, the Sundarbans on the Ganga delta is already facing a threat to its ecological balance owing to deforestation and increasing human habitats and population.Air and sound pollution are also on the rise in the Sundarban National Park and Tiger Reserve and its fringe areas owing to modern facilities being extended to these areas, which are not so remote now as compared to a decade ago, with better road communication and other modern facilities being available. “The NGT has also directed the Pollution Control Board (PCB) to visit all 174 hotels, resorts, lodges and homestays operating in the Sundarbans area and review their pollution control systems and whether these are conforming to rules and guidelines,” Dutta said.The state PCB officials would check the year of establishment of these places, whether these have consent to establish and consent to operate by the PCB as also the Coastal Regulatory Zone (CRZ) permission, he said.

Shiv Sena chief equates feedback over demonetization to Britain referendum before Brexit

<!– /11440465/Dna_Article_Middle_300x250_BTF –>After taking repeated digs at the Centre over demonetization, Shiv Sena chief Uddhav Thackeray dubbed the move on Thursday as “extortion of common man” and asked the BJP to take former Prime Minister Manmohan Singh’s words on the issue seriously as it came from a “renowned economist”.”I will not hesitate in taking a critical stand on the process in which demonetization was implemented,” Thackeray told reporters here. “The way in which a referendum was sought in Britain before its withdrawal from the European Union, a survey is being done here. But seeing people’s response, their (UK) Prime Minister chose to step down. Will something similar happen here?” he said.Thackeray was apparently referring to the Prime Minister seeking people’s feedback over demonetization on the Narendra Modi App, where a number of questions have been posed with regard to scrapping of old Rs 500 and Rs 1,000 currency notes. He said there was no point in Modi becoming emotional at a time when people have tears in their eyes. “One person cannot take a decision for 125 crore people. Before taking the decision to demonetise the currency, people should have been taken into confidence,” he said.
ALSO READ Maximum black money transactions took place under UPA: Arun Jaitley hits back at Manmohan Singh”Former Prime Minister Manmohan Singh is a renowned economist. Thus, his words and opinions should be taken seriously. The way in which money is being collected, seems that money is being extorted from common man. You have brought tears in the eyes of people who made you come to power with a lot of aspirations,” Thackeray said.Coming down heavily on the government over the issue, Singh castigated the government and the Prime Minister over demonetization during Rajya Sabha debate on Thursday, saying its implementation was a “monumental management failure” and a case of “organised loot and legalised plunder”.
ALSO READ GDP will take 2% hit thanks to demonetization: Manmohan SinghReferring to the Reserve Bank’s decision not to allow district central co-operative (DCC) banks to exchange the old currency, the Sena chief asked if liquor baron Vijay Mallya had taken loans from these banks. “Did Vijay Mallya take loans from any of the DCC banks? Banks from which he did take loans, how have they been allowed to exchange the old currency?” he questioned.He said that the government should extend the dates up to December 31, until which defunct Rs 500 and Rs 1,000 notes are accepted at petrol pumps and hospitals.

Jharkhand: CoBRA commandos kill 6 Naxals, recover 600 bullets, ammunition

<!– /11440465/Dna_Article_Middle_300x250_BTF –>Six Naxals were killed on Wednesday and over 600 bullets and a dozen IEDs recovered after a gunbattle with CRPF commandos in the jungles of Jharkhand’s Maoist hotbed of Latehar district. Officials said the encounter began at about 7:00 amin the Karamdih-Chhipadohar jungles on the banks of north Koel river of the said district where a squad of CoBRA commandos of the CRPF was out for operations. “We have recovered six male bodies of Naxals in uniform, 600 bullets of various calibre, about 12 Improvised Explosive Devices, an INSAS rifle, an SLR, a carbine and three other firearms. Search operations are still on,” CRPF Inspector General (Operations) in Jharkhand Sanjay A Lathkar said.The IG added some more explosives and cordex wires, used to trigger IEDs, has also been recovered from the spot, over 130 km from here.Officials said the team of 209th battalion of the CoBRA along with other units was out for operation since last two days and the encounter started when the squad received fire from the Maoists side. The gunbattle continued for sometime after which the bodies of the Naxals, wearing black uniforms, were recovered, the IG said.The Commando Battalion for Resolute Action (CoBRA) is an elite jungle warfare unit of the Central Reserve Police Force deployed extensively for anti-Naxal operations in Jharkhand and other states.

RBI asks banks to ensure cash supply to rural cooperative banks for ongoing Rabi crop season

Mumbai: The Reserve Bank on Tuesday asked banks to ensure adequate cash supply to cooperative banks and Regional Rural Banks (RRBs) so that farmers can have enough valid notes needed for purchase of seeds, fertiliser and other inputs during the ongoing rabi season.

The decision comes a day after Finance Minister Arun Jaitley had a meeting with RBI, Nabard and all bankers and impressed upon them to make available funds to the cooperative sector as it is an important financing mechanism for rural India.

Representational image. ReutersRepresentational image. Reuters

Representational image. Reuters

According to RBI, it is imperative that farmers are adequately supported financially to ensure unhindered farming operations.

“It is estimated that about Rs 35,000 crore would be required by DCCBs (District Co-operative Banks) for sanction and disbursement of crop loans to farmers at the rate of Rs 10,000 crore per week,” an RBI notification said.

National Bank for Agriculture and Rural Development (Nabard) will be utilising its own cash credit limits up to about Rs 23,000 crore to enable the DCCBs to disburse the required crop loans to Primary Agricultural Credit Society (PACS) and farmers, it said.

“As many of these loans will be disbursed in cash to facilitate farming related expenses, we advise in this regard that banks with currency chests should ensure adequate cash supply to the DCCBs and RRBs,” it said.

Adequate cash supply should also be ensured for rural branches of all commercial banks, including RRBs, it said.

Further, it said, bank branches located in Agricultural Produce Market Committee (APMC) may also be given adequate cash to facilitate smooth procurement.

Jaitley on Tuesday said its focus will now be on rural areas and more measures will be announced for farmers.

The minister said the credit flow from banks will also go up for various activities, including agriculture as huge amount of cash due to demonetisation was deposited in the banking system.

It is expected that the government may announce some more measures to ease pressure on the farm sector.

First Published On : Nov 22, 2016 20:59 IST

Do not teach patriotism to people who are distressed and standing in lines: Uddhav Thackeray

<!– /11440465/Dna_Article_Middle_300x250_BTF –>Shiv Sena on Tuesday escalated its broadside against the BJP over demonetization with party chief Uddhav Thackeray saying the senior ally should stop branding people as partiots or anti-nationals as per its “whims and fancies”.The hard hitting remarks by the Sena came when it took strong exception to Maharashtra Chief Minister Devendra Fadnavis’s statement that those opposing the move are harming the country. Sena mouthpiece ‘Saamana’ came out with yet another stinging editorial, holding that the currency scrapping exercise has failed to unearth the “real” black money and that it only helped the government deflect attention from burning issues like hunger, inflation and unemployment. “You do not need to teach patriotism to people who are distressed and quietly standing in queues. Their hard earned money is being used for all works in the country. Thus, you (the BJP) should not label people as patriots or anti- nationals as per your whims and fancies,” Thackeray told reporters at his residence ‘Matoshree’ in suburban Bandra.Fadnavis, while addressing a civic election rally at Ratnagiri recently, had said those opposing Prime Minister Narendra Modi on demonetization were harming the country and people should come together to win this decisive battle against black money. On reports of Reserve Bank mulling opening of “Islamic window” in conventional banks for “gradual” introduction of Sharia-compliant or interest-free banking in the country, he wondered as to where the country was heading. “You do not allow district co-operative banks to exchange old currency and on the other hand permitting Islamic banking. I do not understand where is our country headed towards,” he said.Thackeray further said that if demonetizing Rs 500/Rs 1,000 bills could stop terrorism, the whole world should have adopted this model. “If it were true that scrapping old currency would stop terrorism, the whole world should adopt this model as terrorism is a global evil and every country is at risk,” he said. While criticising the government over demonetization, the Sena mouthpiece also took a dig at NCP supremo Sharad Pawar over his remarks on “financial emergency” in the country, saying that he should have made the comment in the presence of Prime Minister Narendra Modi (when they met during an event at Pune recently).”Due to the demonetization decision, the government has been able to divert the attention of people from hunger, inflation, unemployment and terrorism. The government was successful in making people forget important national issues,” an editorial in ‘Saamana’ said. “Not a single big fish has been seen standing in long queues to exchange their money. This means that the real black money has not yet come out and Modi’s friends (supporters of the decision) will have to accept this,” the NDA partner said.Seizing on Pawar’s remarks, the Sena said “It is hypocritical of Pawar to say there is financial emergency in the country, or Pawar would have made the comments in presence of Modi (in Pune). But indulging in bonhomie and then speaking against Modi outside is not good for the people.

BJP by-poll victory indicates people support PM Modi’s war on black money: Assam CM Sonowal

<!– /11440465/Dna_Article_Middle_300x250_BTF –>Chief Minister Sarbananda Sonowal termed the BJP’s win in one Lok Sabha and one Assembly seat in Assam as the “mandate” of Prime Minister Narendra Modi’s decision to demonetizethe Rs 1,000 and Rs 500 notes.”BJP’s victory in by-polls is a clear indication that people are fully supporting the decision to demonetize Rs 1,000 and Rs 500 notes. It is people’s mandate for the Prime Minister’s decision of demonetization ,” he told reporters here.The Chief Minister said people responded overwhelmingly in support of Modi’s call for eradicating black money and a clear indication that the BJP-led governments at the Centre and Assam were performing well.BJP has won the recently held by-polls in Lakhimpur Lok Sabha constituency and Baithalangshu Assembly seat.Sonowal, who is in the national capital, met the Prime Minister and appealed him to ensure monitoring of construction of fencing along the Indo-Bangladesh border through Army for speedy completion.The Chief Minister also discussed with the Prime Minister a spectrum of issues ranging from demonetization to law and order situation in Assam.Sonowal apprised Modi of different steps that the state government has taken with the help of the Reserve Bank of India to facilitate smooth flow of new currency notes in every nook and corner of the state in the wake of demonetization of high currency notes. He also informed the Prime Minister that the state government machinery with the help of RBI, SBI and other Banks has made adequate steps to ensure smooth flow of new currency notes to all sections of people including tea garden workers.Sonowal also informed the Prime Minister of the progress of NRC work and Indo-Bangla border fencing. Modi also assured all help from the Centre in successfully completing these exercises for the betterment of Assam.

Demonetisation: Banks have distributed less than 10% of scrapped Rs 500 and Rs 1,000 notes

Since the time the Narendra Modi government announced the demonetisation of Rs 500 and Rs 1,000 notes on 8 November, Indian banks have released Rs 1.36 lakh crore worth of currency, which is 10 percent of the total money withdrawn by the government, according to a report by The Times of India.

Referring to fresh data released by the Reserve Bank of India (RBI) on Monday, the report said that the total value of currency released in the form of exchange of old notes and cash withdrawals  “is less than 10 percent of the Rs 14 lakh crore in high-denomination notes (Rs 500 and Rs 1,000) that has been rendered illegal by the government’s strike against black money”.

Representational image. PTI

Representational image. PTI

However, banks have received scrapped notes worth “more than Rs 5,44,571 crore” in deposits between 10 November and 18 November, which is roughly four times the currency released since 10 November.

What this means is that banks (including RBI) now have more liquidity than the public.

The excess of liquidity with the banks has spread rumours that the RBI might soon announce an interest rate cut on the one hand to make loans more attractive to both banks and the public. There are also rumours that tax rates may fall.

Of the total currency that was released, the banks “have pumped Rs 1,03,316 crore into the system through withdrawals (through branches as well as ATMs) by account holders and another Rs 33,006 crore via exchange of old notes”, The Times of India report said.

Meanwhile, queues outside ATMs and banks have not shortened even as the demonetisation move enters the 14th day on Tuesday. Over 70 people have lost their lives so far. Several people have also moved to the Supreme Court against the deaths.

According to IANS , Congress leader Sanjay Nirupam said that the prime minister should be booked for murder under Section 302 of the Indian Penal Code.

First Published On : Nov 22, 2016 17:15 IST

Demonetisation: Since 8 Nov, banks have released 10% of the value of deposited illegal notes

Since the time the Narendra Modi government announced the demonetisation of Rs 500 and Rs 1,000 notes on 8 November, Indian banks have released Rs 1.36 lakh crore worth of currency, which is 10 percent of the total money withdrawn by the government, according to a report by The Times of India.

Referring to fresh data released by the Reserve Bank of India (RBI) on Monday, the report said that the total value of currency released in the form of exchange of old notes and cash withdrawals  “is less than 10 percent of the Rs 14 lakh crore in high-denomination notes (Rs 500 and Rs 1,000) that has been rendered illegal by the government’s strike against black money”.

Representational image. PTI

Representational image. PTI

However, banks have received scrapped notes worth “more than Rs 5,44,571 crore” in deposits between 10 November and 18 November, which is roughly four times the currency released since 10 November.

What this means is that banks (including RBI) now have more liquidity than the public.

The excess of liquidity with the banks has spread rumours that the RBI might soon announce an interest rate cut on the one hand to make loans more attractive to both banks and the public. There are also rumours that tax rates may fall.

Of the total currency that was released, the banks “have pumped Rs 1,03,316 crore into the system through withdrawals (through branches as well as ATMs) by account holders and another Rs 33,006 crore via exchange of old notes”, The Times of India report said.

Meanwhile, queues outside ATMs and banks have not shortened even as the demonetisation move enters the 14th day on Tuesday. Over 70 people have lost their lives so far. Several people have also moved to the Supreme Court against the deaths.

According to IANS , Congress leader Sanjay Nirupam said that the prime minister should be booked for murder under Section 302 of the Indian Penal Code.

First Published On : Nov 22, 2016 17:15 IST

Demonetisation is an opportunity to trim wedding expenses, and ensure a social revolution

I was once visited by a scholar from Ireland. He had to cross the Cricket Club of India before reaching my office, and the first thing he asked was about the “huge circus-type atmosphere” at the venue. I told him that it was an Indian wedding, and if it was at the CCI, it must be a well-heeled, big, fat wedding.

His jaw dropped. “It’s a carnival!” he exclaimed, adding that his own wedding in Dublin — which was a “big affair” — had about 40 people, including his bride and the officiating priest. It was my jaw’s turn to drop. Most poor but not indigent people have bigger wedding in India, I told him.

Organising weddings in under Rs 2.5 lakh will be a challenge. Representational image. Reuters

Organising weddings in under Rs 2.5 lakh will be a challenge. Representational image. Reuters

Now that the Reserve Bank of India (RBI) has set a Rs 2.5 lakh cash withdrawal limit for families with upcoming weddings, could this be an opportunity to make Indian weddings inexpensive and ensure a social revolution? It possibly is, though it may not have been the government’s intent when the limit was first set. When the government first announced the demonetisation drive, it hadn’t even realised it was the wedding season and people were halfway through their planning and preparation.

All the cash one might have stashed is trash now, and one has to make do with the Rs 2.5 lakh allowed till 31 December for wedding-related expenses. Already, everyone is talking about the difficulty in organising weddings with such limited provisioning, but not about devising ways and means to make them cheaper. A simpler wedding and a good marriage thereafter can be the preferred option.

The stipulation for the limited withdrawal could be an opportunity rather than cause for lament. Only parents or the person getting married can withdraw. Which implies that the limit set is per wedding, not per person getting married. The couple cannot pool their respective Rs 2.5 lakh to make it a Rs 5 lakh gala. And parents cannot chip in to make it a million-rupee event!

This should be the moment social leaders come forward and push for reforms for wedding expenses. My domestic help, who is now debt-ridden after her daughter’s wedding, recently told me that it cost her Rs 4 lakh. Most families celebrate big weddings by exhausting all their savings, though they later rue the consequences.

After all, “Shadi toh ek hi bar hoti hai na mere beti ka?”

This, of course, excludes those who have riches and oodles of cash, like the Janardhan Reddys of Karnataka, who reportedly spent Rs 500 cr on one family wedding! Had it not been for the brouhaha around the Reddy wedding, and the demonetisation said to be aimed at black money, Income Tax inspectors may not have visited the Reddy family offices.

Planned weddings cannot be called off, for that is the most embarrassing thing to happen, and even worse is when a bride or groom fails to turn up for the event. Now, one reason seems to be not having cash to disburse, because most weddings are organised mostly by cash transactions. Even the caterer takes a part by cheque, the rest in cash, like builders do. Weddings in rich families are when the kala dhan flows out.

The RBI also wants banks to “encourage families to incur wedding expenses through non-cash means — cheques or drafts, credit or debit cards, pre-paid cards, mobile transfers, internet banking channels, NEFT/RTGS and the like. But those who do go for really big fat weddings cannot do that for a while post-demonetisation, unless they cheat and build an untaxed — or tax-evaded — corpus.

Scaling down weddings and making a virtue out of a necessity is in order. Who knows, this could even set a trend. Even if Rs 2.5 lakh is withdrawn, the banker not claiming paucity of cash to honour a cheque, there are other hurdles. Cash disbursals have to be by certifying that the payee had no bank account to have received a cheque instead. There is a lot of record-keeping involved.

Just the other day, a politician on a news television debate had angrily, and unhelpfully, asked whether anyone could get married with “just Rs 2.5 lakh”. Fact is, this guy was both right and wrong. One could, but does not. Most Indians do spend more Rs 2.5 lakh for a wedding-related event. The baraat, the mehendi, the dinner spread, the decorations all need money to be organised.

But one can cut costs. The set practice today is to have a wedding with the cousin’s mother-in-law’s second cousin being invited and giving her gifts, which the receiver may have no use for. And then, with a repeat guest list, an elaborate reception with a huge dinner including a chaat counter, where everyone waits restlessly in a queue to go and meet the couple and be photographed. Who among us has ever had such a group photograph sent to us to see? The newly married couple, tired after the wedding, wearing a trousseau of some expense and unlikely the be worn ever again, except a couple of times soon after the wedding. She may have — in fact most do — added weight. After that, the weight gain makes the groom’s three-piece suit tighter at the waist.

Therefore, keeping it simple makes eminent sense. Not just for now. For all times.

First Published On : Nov 22, 2016 15:18 IST

Government’s new steps to aid farmers, exporters

<!– /11440465/Dna_Article_Middle_300x250_BTF –>Concerned over reports of rural distrust and the Opposition’s plans for a nation-wide stir, Prime Minister Narendra Modi along with Finance Minister Arun Jaitley met top officials on Monday to review the impact of the ban on higher denomination notes in far-flung rural areas.Recently, the top brass of the BJP have been reviewing plans to ease any negative impact of demonetization in these areas and in this regard BJP president Amit Shah and Jaitley held a separate meeting on Monday. This meeting saw discussions on a variety of sops that could be put in place to improve the cash flow to the general public.Sources said the prime minister has already directed the finance ministry to ensure better availability of cash in rural areas. Earlier also, the government had announced a slew of measures to help farmers, one of them being that farmers could purchase seeds with old high-denomination notes of Rs 500. This move came after reports of distress in villages, which have poor access to banking facilities, and that farmers were finding it difficult to pay loans.A government notification, on Monday, stated that farmers could purchase seeds from any government outlet on production of proof of identity. The notification said that this revised rule was being put in place in order to support farmers harvesting the current Rabi crop.In the meantime, in another bid to bring relief to the common man, the Reserve Bank of India (RBI) on Monday also provided an additional 60 days for repayment of housing, car, farm and other loans worth up to Rs 1 crore. This is applicable to loans payable between November 1 and December 31, the RBI said in a notification.Government sources said that the Centre had also been listening to its allies, the Akali Dal and the Shiv Sena, who have placed forth a list of demands which are being taken forward. Sources say the Centre is considering putting money into cooperative banks and then disbursing it through organisations such as NABARD (National Bank for Agriculture and Rural Development) to help people in far-flung rural areas. Punjab Chief Minister Parkash Singh Badal has also asked the Centre to include cooperative banks in the system of dispensing alternative currency.The problems faced by farmers are also on the mind of the Shiv Sena. Earlier, the Sena had joined a protest march by Mamata Banerjee-led Trinamool Congress, where the latter had submitted a memorandum to President Pranab Mukherjee demanding the immediate rollback of demonetization. The Sena however did not sign that memorandum and instead submitted a separate memorandum seeking permission for district cooperative banks to accept old scrapped notes up to December 30. This permission has already been granted to other commercial banks and post offices.There are already reports that India’s exports of one million bales of cotton have been delayed due to demonetization, driving up prices to levels higher than in the global market. This has forced buyers to switch to other producers like the United States, Brazil and other African countries.Despite such measures, official sources admit that economic growth will be slower in the first quarter, but add that the economy is expected to pick up once the banks are flush with money. Top sources in the government expect that a dip in sales or any visible negative impact on the economy would be a temporary phase and would outweigh long term gains. They add that the government expects banks to cut interest rates sharply on account of the surge in deposits. Such a move is expected to ensure public spending and a larger tax base. More ATMs are also expected to be set up across the country to deal with consumer demand.Apart from these measures to address rural distress, the government also increased the cash limit withdrawal for farmers to Rs.25,000 per week from their Know Your Customer (KYC) compliant accounts subject to the normal loan limits and conditions, apart from the other facilities announced on November 17.It’s not just farmers that the government is keeping an eye on. The government is also looking at exporters and sources say, there is a move to increase the cash withdrawal limit for them as well. Reports reveal that the cash crunch post-demonetization had caused some exporters to shut shop or scale down production.In this regard, export promotion councils have approached Commerce and Industry Minister Nirmala Sitharaman on Monday to ask the government to increase the cash withdrawal amount for them and the minister had assured them that she would take up their demand.

Demonetisation: RBI sets stiff riders for Rs 2.5 lakh withdrawal for weddings

Mumbai: The Reserve Bank of India RBI on Monday imposed stiff conditions for withdrawal of up to Rs 2.5 lakh in cash from bank accounts for marriages, saying the money can be withdrawn only from the credit balance as on 8 November, the day demonetisation was announced.

While notifying norms, RBI said the cash withdrawn should be used only to make payment to those persons who do not have bank accounts and the names of such recipients should be mentioned while applying for withdrawal of the cash.

Representational image. Reuters

Representational image. Reuters

The application for withdrawal should also provide names of bride and groom, their identify proofs, addresses and date of marriage. The amount can be withdrawn only if the date of marriage is on or before 30 December, 2016.

With a view to enabling people to perform weddings of their wards, it has been decided to allow higher limits of cash withdrawals from their bank deposit accounts to meet wedding-related expenses, RBI said in a notification.

“A maximum of Rs 2,50,000 is allowed to be withdrawn from bank deposit accounts till 30 December, 2016, out of the balances at credit in the account as of close of business on 8 November, 2016,” the notification said.

“Withdrawals can be made by either of the parents or the person getting married. (Only one of them will be permitted to withdraw).”

The application for withdrawal should be accompanied by evidence of the wedding, including the invitation card, copies of receipts for advance payments already made such as marriage hall booking and advance payments to caterers.

Further, there should be “a detailed list of persons to whom the cash withdrawn is proposed to be paid, together with a declaration from such persons that they do not have a bank account. The list should indicate the purpose for which the proposed payments are being made”.

The RBI also said banks should encourage families to incur wedding expenses through non-cash means through cheques or drafts, credit or debit cards, pre-paid cards, mobile transfers, Internet banking channels, NEFT/RTGS and the like.

“Therefore, members of the public should be advised, while granting cash withdrawals, to use cash to meet expenses which have to be met only through cash mode,” RBI told banks.

Banks have been asked to keep a proper record of the evidence and produce them for verification by the authorities in case of need.

The scheme will be reviewed based on authenticity or bona fide use thereof, RBI added.

First Published On : Nov 21, 2016 21:15 IST

Demonetisation: Bank officers union calls for Urjit Patel’s resignation; focus shifts to RBI

The All India Bank Officers Confederation has called for the resignation of Reserve Bank of India governor Urjit Patel, taking the moral responsibility for the current crisis in the country and the deaths of more than 50 people, including 11 bank officials, according to a report in The Indian Express.

“The present governor has utterly failed in his role by taking a crucial economic decision without planning, which has brought havoc to the nation’s economy and lives of the majority,” D Thomas Franco, senior vice-president of the confederation, has been quoted as saying in the report.

Urjit Patel. ReutersUrjit Patel. Reuters

Urjit Patel. Reuters

According to him, as neither prime minister Narnendra Modi nor finance minister Arun Jaitley is an economist, the RBI has economists who are capable of taking the right decisions on “matters relating to economy and people’s lives”.

In 1978, when the Janata government decided to demonetise, then RBI governor IG Patel had advised against it, he has pointed out.

With the confederation raising calling for the resignation of the RBI governor, the focus now seems to be shifting to the RBI’s role in the development.

An article in Scroll today has pointed out that the RBI’s silence over the last 13 days, when the common people went through serious hardships and the economic activities in both rural and urban areas almost ground to a halt, raises questions about on its independence.

“Urjit Patel, who took over from Raghuram Rajan as the Reserve Bank of India governor in August, has not found it necessary to make a single statement about the chaos that demonetisation has unleashed,” the article says.

Firstpost columnist Yatish Rajawat has also raised the issue in an article today. “The shoddiness with which demonetisation has been executed should have been the responsibility of the RBI governor,” he has said.

The article further argues that the developments over the last two weeks have shown that Patel is “grossly under-prepared for any task that requires quick decision-making”.

Franco too is making this point when he says that the shoddy way in which the entire scheme has been executed shows that the central bank did not have a roadmap at all.

“It was very, very poor planning on the part of RBI that has led to this crisis,” Franco has been quoted as saying in the reported.

First Published On : Nov 21, 2016 11:43 IST