Banks opened on Thursday, their first day of business after the government’s surprise move to ban Rs 500 and Rs 1,000 notes, and there was chaos at the counters. A crush of people anxious to get rid of old currency bills forced some banks to call police and others to shut down within hours.
Citing “inconvenience” caused to the people, the opposition launched a fresh attack on the Narendra Modi government, calling the move economic emergency and demanded that the decision be overturned immediately.
The government remained firm and said all currency bills would be reintroduced, with new look and features. The Rs 2,000 note had quite a debut. It arguably would be the most “selfie-d” bill in the country.
The government also announced more steps to make the currency switch easier. Here’s the latest:
Here’s what’s new:
Old 500 and 1,000 rupee banknotes can also be used to pay utility bills and taxes till Friday midnight. The government had earlier said rail, metro and air tickets could be bought with old notes. Old notes can be used for LPG cylinders as well. Government hospitals and pharmacies have been told to accept the old bills.
NEFT, cheque-clearing on Sat, Sun
Transfer of money electronically and through cheques will be allowed over the weekend as well. To meet the rush, banks will remain open on November 12 and 13 and work extended hours on Friday.
The government has asked air carriers to ensure that tickets bought using the old high-value notes at airports are “non-refundable” following an unusual surge in such bookings in the aftermath of the demonitisation decision.
The directive to airline operators came amid concerns that unscrupulous elements could use the tickets to legalise unaccounted for cash by cancelling the bookings and seeking a refund.
ATMs to ‘normalise’ in two weeks
Cash management agencies that move billions of rupees in and out of more than 2.2 lakh ATMs across the country have started a major exercise that could see currency worth Rs 40,000 crore being transported and hope to normalise operations in two weeks.
“We will put in three times the normal efforts to ensure the inconveniences end at the earliest,” Rajiv Kaul, managing director and vice-chairman of CMS Info System, which owns over half of the cash-management market, said.
Generally, one among the 8,000 vans visits an ATM around 12-15 times a month. These visits would go up to at least two a day, the official said, adding even the unclean Rs 100 notes would be used.
The government was looking for ways to help non-resident Indians deposit the old bills in overseas branches of Indian banks, India’s acting high commissioner to the UK said.
“Our endeavour is to help everybody. We have asked Delhi about it (banned notes with NRIs). I have a feeling we will work out something so that people who have carried certain amount of cash in their pocket should be able to deposit it in any Indian bank abroad,” Dinesh Patnaik said.
Small depositors safe
Assuring people that the taxman will not hound those making small deposits in scrapped Rs 500, Rs 1,000 currency, finance minister Arun Jaitley advised them not to crowd banks as there was enough time to exchange the money. Those depositing large amounts of unaccounted for money would have to pay tax and a 200% penalty.
Cash deposits of Rs 2.5 lakh and above would be scrutinised by the tax department and in case of a mismatch with I-T returns, tax plus 200% penalty would be levied, revenue secretary Hasmukh Adhia said on Wednesday.
The RBI has cautioned people against agents offering to exchange old notes.
Against economic terrorism
The demonetisation move would go a long way in fighting “economic terrorism” by checking the use of black money for funding “subversive activities”. Sujata Mehta, secretary (west) of the ministry of external affairs, also said the scourge of cross-border terrorism had assumed highly destructive proportions and there was an urgent need to check safe havens and sanctuaries enjoyed by terrorists.
People who earned their money honestly had no reason to worry, Union minister M Venkaiah Naidu said.”Do not panic. Your notes will not be invalid, if money is valid,” he said.
Union minister of state for home Kiren Rijiju said Prime Minister Narendra Modi’s “surgical strike” on black money had dealt a blow to those supplying fake notes and those funding terror.
Rs 1,000 note will be back
Government would bring back Rs 1,000 note in a few months and also issue a new series of smaller bills with enhanced security features, economic affairs secretary Shaktikanta Das said. The smaller notes in circulation would continue to be the legal tender.
Banks started distributing new notes of Rs 500 and Rs 2,000 on Thursday. The Rs 500 banknote has a new colour, theme and size that clearly marks it out from the earlier bill. The Rs 2,000 note is in magenta colour with Mangalyaan, India’s Mars orbiter, printed on the reverse side.
Huge rush was seen at bank counters on Thursday. People had to wait for hours to change money or make withdrawals using pay-in slips or cheques. Post offices, too, are replacing currency notes.
All ATMs were to get operational Friday, though some did open on Thursday after a day’s break like the banks. The government should have stocked ATMs with new currency before announcing the decision, said some cash-starved customers.
Rivals up in arms
The opposition would have none of it. The Samajwadi Party dubbed the move as anarchist and hasty, while archrival Bahujan Samaj Party said the country was facing a “financial emergency”.
Delhi chief minister and Aam Aadmi Party leader Arvind Kejriwal challenged Modi to make public the names of 648 Indians with Swiss bank accounts whose details were shared with New Delhi during the United Progressive Alliance rule.
Social activist Anna Hazare lauded the Centre for its “bold and revolutionary” decision, saying it will curb black money.
(With agency inputs)