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Live blog: As demonetization kicks in, here is how India is reacting

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In an attempt to crack down on black money, Prime minister Narendra Modi has phased out two major currency denominations – Rs 1000 and Rs 500 notes. While this may prove a major boost for people to use digital means of transactions, there are a lot more ramifications for the larger public. Here we try to catalogue what  has been happening with the currencies being phased out:

(Pinning this here as shameless self promotion: You should totally Download our Digital Payments report here. It will cost you a kidney is FREE for download.)

November 21: In case you’re wondering why we haven’t updated this since November 19th, it’s because we thought we’d do something new. We have a new liveblog HERE. Doing the same old thing, just waaay more fun. Seriously. It’s just a click away. Go on. Click here.

November 19

– 12: 28: The New Indian Express has a fascinating profile of a blind sweet shop owner on the Jammu and Delhi highway. Bhisham Das has honed his sense of touch to detect fake notes of Rs 500 and Rs 1000 and even supports the demonetization drive. He added that the government must have added some way for the blind to detect what notes are. He’s right. The new Rs 2000 notes have the following features for the visually impaired:

  • Intaglio or raised printing of Mahatma Gandhi portrait, Ashoka Pillar emblem, bleed lines and identity mark
  • Horizontal rectangle with ₹2000 in raised print on the right
  •  Seven angular bleed lines on left and right side in raised print

– 12: 03: Read a Supreme Court judgement from 1996 which takes up the demonetization from 1976 which found that there was a sound legislation or ordinance.

One thing is certain though. The judiciary moves at a glacial pace if it gave a judgement in 1996 for challenging a legislation in 1976. That is Kafkaesque.

– 10:52: The barter system is making a comeback in rural India with the demonetization drive. The Wall Street Journal reports that a trader in Orissa gave a kilo of potatoes and cauliflower for half a kilo of honey. Read more here.

– 10: 45: Oh come on China!!!

– 10: 43: Ah the pains of being a digital native. Welcome to the desert of the real world.

– 10:31 : ICYMI, Bill Gates does an U-turn on saying that he supports the demonetization. He added that he only supports the digitization of cash and that would lead to lower interest rates. Read the details here.

– 10:25 : Kiran Jonnalagadda of HasGeek has an important observation between the UPI and Paytm in context of the demonetization.

– 10:07 : The cash crunch is real. The BBC’s Shilpa Kannan reports that a person was given Rs 20,000 in Rs 10 coins and in plastic bags.

– 09:58 : The Asian Age’s Nivedita Niranjankumar reports that people are selling their old Rs 500 and Rs 1000 notes on eBay and OLX. It was found that there were more than 473 listings for Rs 500 notes. There were listings even for Rs 2000 notes. Also worth noting, sellers were claiming notes with the signature of former RBI Governor Raghuram Rajan were ‘special’ and valuable. Authorities should keep an eye on such transactions as they might miss instances of money laundering.

– 09:52: Good morning. Here are updates from the demonetization from last night. The Indian Banks Association said all banks will serve only their respective customers on Saturday and will not exchange the old Rs 500 and Rs 1,000 notes from customers of other banks. This is however, exempted for senior citizens.

November 18

– 16: 59: Bang goes the Shotgun! Opposition within the ruling BJP party is growing with Member of Parliament Shatrughan Sinha questions the implementation of the demonetization.

– 16: 45: The Supreme Court expressed its concern to  government that there may be riots due to the cash crunch following the demonetization drive. Read reports from The Hindu and Press Trust of India.

Meanwhile, the Truth of Gujarat handle has posted another video of a bank branch in Assam getting mobbed.

– 16:30: Reports coming in from NDTV which says that the government will stop accepting old Rs 500 and Rs 1000 notes as the finance ministry found that there was clear evidence of people using proxies to collect the new notes, or of those who had already collected their quota or lining up again at banks.  Looks like there is going to be more confusion in the coming days.

– 14: 26: Some important updates from the finance ministry regarding people using other people’s accounts to launder money.

– 13:56: Tom and Jerry cartoons never get old. Nicely done BuzzFeed.

– 13: 42: Time for a history lesson from Mother Russia. Back in 1991 when MTV was still trying to figure out this grunge music thing and wondering why a dishevelled man in tattered jeans was screaming about ‘teen spirit’, the Soviet Union too ran a demnetization drive and other monetary reforms. USSR President Mikhail Gorbachev signed a decree which sought to remove all 50 and 100 rouble notes from circulation. See if this sounds familiar to our situation.

The government said this measure would freeze unearned incomes, the assets of speculators, corrupt officials, illegal businesses, and counterfeit money, and this would result in a condensed money supply and a halt on inflation.

The confiscatory monetary reform was conceived by Soviet Minister of Finance Valentin Pavlov. In the summer of 1990, Pavlov sent a secret note to Gorbachev and Nikolai Ryzhkov, chairman of the USSR Council of Ministers, arguing in favor of exchanging 50-rouble and 100-rouble banknotes due to be issued in 1991. He wrote that a significant amount of large-denomination Soviet banknotes had been accumulated abroad and by illegal businesses.

Due to the narrow time frame for exchanging money, long lines of people immediately formed at savings banks. It was also possible to exchange money in workplaces and at post offices. The reform dealt a crippling blow to thousands of people keeping money under their mattresses or saving their money with Sberbank. Savings that had been amassed over decades, as much as 15,000-30,000 rubles, vanished overnight.

And finally this happened.

The standard of living in the country plummeted.  By the end of 1991, the economy of the USSR was in a disastrous state.   Production continued to slump. The average national income dwindled by 20% compared with 1990. The state budget deficit, namely, the excess of expenditures over revenues, reached an estimated 20-30% of the GDP. The nationwide growth of the money supply was fraught with the loss of control over the financial system and hyperinflation exceeding 50% each month, which had the potential to paralyze the entire economy.

The main consequence of the reform was the people’s loss of confidence in the government’s actions. Many politicians and historians think that the 1991 Soviet political and financial reforms completely undermined the people’s trust in the Kremlin and seriously influenced subsequent developments, including the August Coup of 1991 and the Belavezha Accords of December 1991 on dissolving the USSR.

Let’s hope this doesn’t happen with India as well. Read the full report here. Hat tip: Twitter user NachiketHass.

– 13: 14: Scroll.in’s M Rajshekhar and Abhishek Dey  report from the ground in Patna on the state of the vegetable mandi. Though there is hardly any movement of goods and demand is quite low, it was found that the commodity prices have remained stable and seem to be stuck at the price on which the demonetization was announced. Traditional models of economics based on supply and demand seem to be in disarray. Ideally, when demand drops, prices of goods and services must also fall. Read the full report here.

– 12: 01: Member of Parliament Baijayant Jay Panda has an interesting observation.

– 11:43: Hindustan Times has a fantastic breakdown of how much time it will take to replace Rs 14 trillion taken out of circulation. Check out the very well-desgined graphics to show readers how money will go from the printing press in Mysuru to other parts. Their estimate for the demonetization: 6 months.

– 11: 40: Well, okay then.

– 11:36: Your daily subzi and food market update.

– 11:25 Well what’s new about this.

– 11:23 ANI News reports that Rs 91.5 lakh was seized from a vehicle belonging to Maharashtra state cooperation minister Subhash Deshmukh.

– 11: 15: Watch a live stream from Phoneradar’s Amit Bhawani about situation in an ICICI Bank.

– 10: 55: Watch an interview of KV Kamath, chief of the New Development Bank of BRICS countries,  on demonetization. Kamath talks in detail about benami transactions, real estate, cash crunch and impact on interest rates.

– 10: 52: Mayur Shetty of the Times of India has some numbers on cash transactions from the State Bank of India.

– 10: 47: Who says court rooms are dry and dreary places. They have the best humour. Murali Krishnan of Bar and Bench has some interesting tidbits.

– 10: 40: Petrol pumps will be able to dispense Rs 2000 from November 24. They might be using micro ATMs from banks. Business Standard reports.

– 10:31 : Ah here’s another interesting view point. Goa’s casino industry has been hit with the demonetization. Casino.org reports:

Casino-goers are unwilling to accept 500 and 1,000 rupee bills as payment, and the gaming operators are running out of lower denomination bills to reward winners.

Read the full report.

– 9: 43: The Economic times reports that Bangalore’s SP Road, a hub for electronics, has seen a huge slump in sales following the demonetization. It adds that many traders are now considering digital payment methods. You would think a hub for the sale of electronics would have adopted digital money a long time ago. Hmmm.

– 9: 38 Mint has a great video on how the demonetization is affecting travellers from abroad.

– 9:36: Good morning. Lets start with a round up of political moves in New Delhi. Delhi and West Bengal  chief minister Arvind Kejirwal and Mamata Banerjee’s rally against the demonetization turned out to be a damp squib as supporters of the move burned black flags. The leaders held the rally to expose the “scam that the demonetization was”. Read more here.

November 17 (updates from Shashidhar again today.)

17:56: Read my mind, bro, read my mind. Alright signing off today. Take care you all.

17:41: Nitin Pai of the Takshashila Institution has interesting observations on the ground realities of the demoentization. They can be found under the Twitter hashtag #FootNote. Other members have been giving updates under the same Hash Tag.

16: 43: But this was expected from banks. Expect more to follow.

15:21: An IANS report says that a major bank employees union,  All India Bank Employees’ Association (AIBEA), may withdraw support for the demonetization. The union had issues with the usage of indelible ink to ensure multiple withdrawals did not take place. More details here.

15:07 : In what might point to a delay, a currency press in Madhya Pradesh wants more stock of security ink to print new notes. The Indian Express reports.

14:55: Bitcoin is now worth over Rs 60,000.

14:23 : Former finance minister P. Chidambaram explains the logistical unpreparedness of the demonetization drive while replacing the notes. We wish to remind our readers that we have no political affiliation and do support the demonetization. But we question many parts of its implementation.

14:18: Here’s your daily fix of LOL. That’s it. Nothing more.  Soldiers at the border are ….

14: 12: Here is how the demonetization drive has impacted Reliance Communications’s recharges. Gurdeep Singh,  CEO, Consumer Business, said this in an analyst call.

Well, let me put this in two parts. One is on the postpaid side, over 67% of our collections are already through electronic transactions, so we’re least impacted on the postpaid side. On the prepaid side, we did see a dip for the two days or three days, initial two days or three days. And we use this opportunity to push lot more digital wallet to our customers, encourage them to load the digital wallet, that wonderfully worked. And situation for the last four days is back to normal.

14:09: The problem of the Internet is that it doesn’t speak your language. More Indic language support is needed.

14:05: Bill Gates gives his thumbs up for the demonetization drive.

13: 47: Being India has a collection of photos which highlights the plight of people waiting in queues to withdraw money.

13: 41: Ire against demonetization increases. A State Bank of India ATM was attacked in Imphal. A request: damaging ATMs will only delay people getting cash. These incidences does not help anyone.

13: 26: This is disturbing. The Economic Times has reported that Bandhan Bank has suspended micro-credit disbursement. Bandhan Bank began its operations as a micro-finance institution and its core customers are people who avail micro-credit. Chairman CS Ghosh said that many of its customers won’t be able to use the Rs 2,000 notes.

13:19: In the same vein, it’s good to hear such stories.

13:17: Bloomberg Quint reports that Central Board of Direct Taxes will track high value deposits.

13:15: Heartening to see vegetable mandis accepting cards as a payment option.

11:28: Anuj Singhal from CNBC TV 18 has some interesting inputs regarding scaling back limits to Rs 2000.

11:14: Chaos in Parliament was expected.

11:11 Oh for God’s sake. Make up your mind.

11:02: Former RBI Governor D Subbarao warned that banks should not use deposits made during the demonetization to recapitalise themselves as such a step would send out the wrong message. Read more at Mint.

10:51: Ring the wedding bells then. KYC compliant accounts can now withdraw Rs 2.5 lakh.

10:44: Some relief for farmers. The Economic Secretary says that registered can withdraw Rs 50,000 per week to pay workers at mandis.

10.36: The Quint reports that the government is now focusing on printing new Rs 2,000 and Rs 500 notes rather than Rs 100 notes. Gentle reminder to the government, the recalibrations of many ATMs could have been avoided if the new Rs 2000 notes were of the same size of the old notes and reduce queues across the country. There is still time. Government can still do it.

10.31: The North East India paper reports that due to cash crunch, many places in Assam are using currency from Bhutan. Old currency denominations of Rs 500 and Rs 1000 are being exchanged for the Bhutansee currency. Read more here.

November 16 (updates from Nikhil Pahwa today. You can tweet to him here)

18:04: The Wire has brutally simple approach to capture how people facing trouble standing in line at ATMs and banks everywhere. Film and ask them what they’re feeling.

17:28: It’s called acetone. Or better known as nail polish remover. Ask your wives or girlfriends, maybe?

17:19: Newslaundry has an excellent piece on Banking 101 and explains how demonetization will result in a windfall of deposits in the banking system. The upshot for all of this, in the long term, cheaper loans for everyone. Extra points for the memes and Gandalf nod loop.

17:12: Rediff.com reports that an MP in the ruling BJP party has questioned the implementation of the demonetization as it has halted the rural economy to a grind. The MP from Porbandar also questioned why people in rural areas were not able to deposit and withdraw money from the co-operative banks. Read more here.

17:02: Deepak Shenoy has a tweet storm on the virtues of cash and why it is still such a preferred mode of payment in India.

16:42: The Opposition in the Rajya Sabha took up the demonetization.

16:32: YourStory has an interesting report on how banks and cash logistics firms are petitioning with the Reserve Bank of India to outsource many of the operations. This would probably cut down the bank interchange fee at ATMs and cut expenses for banks. Read on more here.

16:24: A whole new spin on “Got inked yet?”

3:51: This is hilarious

(okay. will update with more serious stuff now)

3:45: The BBC reports that an Indian doctor, who was reported dead after an alleged tax raid, held a press conference to say that he’s alive, and that there was no raid. This does wonders for the credibility of the Indian media (not). Do read this.

2.59: Cricketers are economic experts now

2.18: Joke of the day (so far):

2:15: Poetry in the times of demonetization:

12:29: Google has taken this opportunity to remind us that Google maps can help find ATM’s near you. Here’s what they’re linking to on their India homepage. (Hat Tip: @sowmyarao_)

google-india-atm

 

12:22: Swarajya says that “it is clear that the logistics of the announcement are not going as well as they should have. That is putting it mildly, perhaps.” OMG! OMG! OMG!

Anyway, it suggests that demonetization is about behavioral change (read this and solving a moral problem (read this).

12:06: Germans like cash because of its anonymity. Ditto for Indians, I guess, but really, not many people care for privacy in this country. At least, the Indian government certainly doesn’t.

11:54: On-ground report on the impact of demonetization
– The cashless economy of Chikalthana (read)
– Impact on Nagaland (read)
– Malda, where fake currency flows into India (read)
– Chennai’s flower trade (read)
– Fruit markets in West Bengal (read)
– Malls in Chandigarh (read)

11:48: Meanwhile, here is aggression for you, while the banks are busy:

11:40: We had questioned Paytm’s numbers yesterday. We got a response from Deepak Abbot, who joined Paytm earlier this month:

11:23: What’s your pick? The attorney general needs (a) A reality check, or (b) sensitivity training?

This is with reference to this comment:

10:56: Business Standard reports that Banks, flush with cash, may reduce lending rates. More here.

10:38: A man tried to set himself on fire at a bank. How soon before people set fire to a bank? I hope they don’t.

10:12: In case you missed it yesterday, Scroll has this great read on what happened when Muhammad Bin Tughlaq changed currency in 14th Century India. The sultanate almost went bankrupt. That won’t happen now, will it?

– 10:00: Today we’re also going to highlight tweetstorms on demonetization. Tweetstorms are a series of tweets, linked to each other (because of twitter’s 140 character limit). To start with: Four tweetstorms by James Wilson, Member, Mullaperiyar Special Cell, Govt of Kerala:
– On currency notes and our preparedness

– Questions for ministry of Finance and the Reserve Bank of India:

– What happens when the RBI runs out of Rs 2000 notes

– Comparing demonetization in 1977-78 to 2016

– 9:50: ICYMI, two stories we did yesterday:

  • We checked out Paytm’s Indian language app yesterday, and it still needs some work. But really, this is a great opportunity for ecommerce and payments apps to launch Indian language interfaces, and that will benefit the entire Internet ecosystem. Here’s the value chain as I see it: ecommerce and payments –> advertising in Indian languages –> publishers create content in Indian languages. It happened for the Internet in India. Needs to happen for Indian languages for Internet growth now.
  • One critisism of wallets is that there’s still a fee when transferring digital money to bank accounts. Mobikwik and Freecharge are not charging anything, while Paytm is charging 1%. Are these companies now taking on the cost of this transfer? That’s not sustainable. Opportunistic, but not sustainable.

– 8:11 am: In a “what’s the point of demonetization, then?” kind of move, UP Chief Minister Akhilesh Yadav is allowing cash for land registration. Thanks for pointing this out Ashish Kaul.

– 8:01: People dying while waiting in line is something that is, despite the correlation-causation argument I might get as a response to this update, is difficult to digest. What’s the value that our country puts on a life of a person?

Here’s a report from Hindustan Times from Kanpur, about a person dying while waiting in line for 8 hours. HuffPo puts the demonetization death-toll at 33 in 8 days.

– 7:57: Deloitte weighs in on impact on sectors.

  • Positive for: E-commerce and Fintech (Payment gateways, Cards, Mobile wallets, Online retail, Net and payment banks, e-marketplace)
  • Negative for: Agriculture, Luxury goods, Real Estate, Commodities, Traditional Retail (both Consumer durables and Consumer non-durables)

– 7:39: Exceptions are being carved out. We have the Chief Minister of Maharashtra allowing old currency notes to be used in Theatres in the state. A tweet from a Minister in the Maharashtra Government:

(P.s.: An earlier version of this update assumed that the exemption referred to Films. We stand corrected. Thanks @heytal.

– 7:38: A 2014 cash survey in this Tufts University report on the Cost of Cash in India (pdf, via V. Vinay):

“Thus,while 96% of cash users feel cash allows them freedom of negotiations, 90% of credit card users feel the same. The proportions are still very high, but it is worth nothing that the sanctity of cash is questioned more once users are exposed to other payment forms. A similar pattern is seen when respondents are asked if cash allows them greater control over spending, and provides assurance of exact payments. Interestingly, those who use both cash and debit cards have higher confidence that cash is the fastest transaction method (87%), compared to those who use cash only and credit card users (82%).

and

“One of the characteristics of cash is that it contains memory and provides tangible cues about how much money has been spent and how much remains. From the large cash share of cash expenditures, we infer that consumers value the benefits of cash, such as tangible balance monitoring”…”There is great level of comfort in keeping moderate to significant levels of cash in hand, especially in small towns and traditional rural areas. Even card users keep significant amounts of cash in hand, and they keep higher balances. “

– 7:25: Good question, this:

Why is no bank telling its users about UPI? Have banks missed a trick? We’ve seen newspapers full of ads from Payment companies, but why have the banks not tried to push people to digital payments? I guess they were probably too busy dealing with the mess they were left with, wrt the sudden announcement and the subsequent rush.

– 7:22: In the “oh no he didn’t” comment of the day (it’s early so there isn’t much else), UP CM Akhilesh Yadav said that black money helped India during the global recession. More here.

– 7:15: The Indian Express writes about how Demonetization is likely to impact crops, saying that it has left Farmers in UP with no money for fertilisers or seeds, and this might impact the rabi season. Farmers are suffering now because prices have crashed because of lack of cash in the market, so their income from the kharif crop has also been impacted.

November 15

– 15:48: Found from a WhatsApp forward. A tax consultant in Mumbai has drawn a table of how much tax and penalty a person is liable for different amounts. Note, this is merely an indication of taxes applicable and we urge our readers to contact a professional to better understand their situation.taxes-due – 15:32: Zee News reports that the Supreme Court is hearing a bunch of appeals against the demonetization of Rs 500 and Rs 1000 notes on Tuesday. The pleas seek quashing of the government’s decision on the grounds that it infringed citizens’ right to life and trade among others. Read the full report here.

– 15:29:  Anupam Gupta posted an interesting graph on which industries would be hit most by the demonetization:

– 15:07: Lawyer Apar Gupta raises some valid concerns:

– 14:46: This should have been done ages ago. Paytm’s Android app will now be available in 10 different regional languages – Hindi, Tamil, Telugu, Gujarati, Marathi, Bengali, Kannada, Malayalam, Oriya and Punjabi. Most internet apps and the internet in general, are for an English-speaking audience. Making the app available in multiple Indian languages will certainly increase usage as people are more comfortable in their native tongues.

FreeCharge and MobiKwik would be wise to adopt the same.

– 14:40: Oh, expenses tracker Walnut too has an ATM finder on its application. There are more apps we’ve mentioned below which uses crowd-sourced data and live data for which ATMs have cash. Check them out below as well.

– 14.30: Economic Affairs Secretary Shashikanta Das said that indelible ink used in elections will be used to mark people coming in from withdrawing cash multiple number of times at bank branches.

Right, perhaps they would not need to keep coming to bank branches if POS machines were functional.

– 12:29: The Times of India reports that the district collector of Indore has banned posting “inflammatory” posts on the demonetization drive. The collector imposed the ban by invoking Section 144(2) of the Indian penal Code. He added that even commenting on posts is not allowed. The sheer lunacy of this mind boggling. Let’s start with the basics then, how are you going to monitor who is commenting on what?

Read the report here.

– 11:29: Catch News reports that perishable goods such as fish and flowers are not seeing any takers as most are refraining from buying them following the demonetization. Read more here.

– 11:18: Hufflington Post’s Shivam Vij points out the many ways people can still launder their black money despite the demonetization. Note that donations in temples will not be questioned by the government. Go on share this with certain people in your WhatsApp group. You know who they are.

– 10:49: Defence minister Mannohar Parriker says that the demonetization drive has led to less stone pelting of security forces in Jammu and Kashmir. Meanwhile, the Indian Express’ Praveen Swami disagrees and points out that incidences of stone pelting has been reducing in the Valley for some time now.

-10:23: ATMs around the country have more troubles coming. Free Press Journal reports that more than 40,000 ATMs serviced by Chennai-based Financial Software and Systems Private Limited (FSS) will not be working as it has not renewed its software licence from US-based ACI Worldwide. The report added that ACI Worldwide had issued a public notice in newspapers that it terminated agreement with FSS with effect from November 1, 2016. More details here.

-10:00: A number of ATM finder apps have started popping up. An Indian Redditor has built an application which shows the status of ATMs in a neighbourhood. The data is crowd-sourced and citizens need to give feedback that the whether the ATMs are dispensing cash or not. More here.

Similarly, currency management network CMS has built a web app which also shows the availability of funds in an ATM. Note that this is available only on 55,000 machines managed by the CMS group. Check out the application here.

November 14:

Here are some of the recent developments over the weekend and today.

Update: we missed this: Paytm has an updated version of its video ad, which was pulled following criticism for insensitivity, and then there was a backlash about Paytm being forced to pull the ad.

– 16:52: Twitter user Subash Pais has an interesting thread. He runs a business where he designs high-end home theatre systems and since the demonetization, he has seen a surge of orders from clients. Many of them want to spend on these systems in order to hide black money. Read on:

– 16:49: I wrote about how card transactions have been failing over the weekend. The gist of it: the card acceptance network is woefully low to handle around 700 million cards in circulation.

-16:00: Retail magnate Kishore Biyani tweeted that Future Group’s businesses were bouncing back showing “resilience” from citizens to change.

However Twitter user Shrinivasa SG had a quick come back for that.

– 15.54: Here is a curious case. A bank employee union has hailed the demonetization and has extended support to the move. The All India Gramin Bank Workers Organisation today said it has decided to defer the nationwide dharana it has called earlier.The union had called for a strike on November 21, December 5,6 and 7 and February 13. The union has nearly 88,000 employees are working in 56 rural banks in 28 states with a network of 26,000 branches in 645 districts. Read more here.

– 12:05:  The Economic Affairs Secretary Shashikanta Das has said that people having current accounts for more than three months will be allowed to withdraw up to Rs 50,000 to pay wages. The Economic Times’s Sangita Mehta reports:

– 11.57: PTI reports that two bank employees of a state-run bank were booked with cheating and criminal breach of trust for allegedly depositing Rs 6 lakh old currency notes in the bank without ID proof and then withdrew equal amount of new currency without intimating their manager. Read more here.

– 11:28: Troubling videos coming in from a Twitter handle called Truth of Gujarat. The video shows police lathi charging customers at a State Bank of India branch.

– 10:27: An IDBI Bank branch in Delhi was damaged and employees of the bank were attacked. The Quint has an eyewitness account of the violence at the bank’s branch. Read and watch here.

-10:22: Long lines in ATMs again as today is Gurunanak Jayanthi and a bank holiday. May the force be with you.

-10.17:  There were multiple instances when card payments on POS terminals failed across the country. My debit card was declined twice in two restaurants in Mumbai. Meanwhile, my colleagues Salman and Sneha also found card payments were failing in Bangalore and Pune. A shopkeeper I spoke to said that the POS machine was offline for a number of hours on Saturday and Sunday and he had to insist on customers paying cash.

November 10:

– The revenue secretary has clarified rules on what action Income tax department would take regarding old notes deposited in banks. If the income tax department finds that a large amount of cash such as Rs 10 lakh is being deposited and is not matching the declared income of a citizen, it would be treated as a case of tax evasion.

– 16:45: ANI news reports another U turn from the government and has accepted Maharashtra government’s plea to allow citizens to pay their dues with old denominations.

– 16:42: Journalist Pragya Tiwari points out some historical context and highlights that Moraji Desai’s demonetization drive was squarely aimed at freezing the opposition’s funds.

-16:29: LiveLaw.in tweeted that the Madras High Court dismissed a PIL against the demonetization and the ebench said that “demonetization is good for the country”

-13:22: Catch News has a great report on how the rumour on nano-chip enabled currency notes were traced to Baba Ramdev. Why are we not surprised. Vishakh Unnikrishnan writes:

“(Baba Ramdev took credit for providing the idea of inserting a nano chip on to every 2000 rupee note to track illegal cash flow even though the RBI notice did not mention any such ‘chip.'”

Welcome to the post-fact world.

– 13:14: Here’s more food for thought

– 13:05: Scroll.in has an interesting opinion on how demonetization has essentially undermined the entire trust system of cash overnight. It points out that there are still 300 million people who do not have an identity proof such as an Aadhaar and as such people will not be able exchange notes: Devangshu Datta writes:

“It will impact the middle class in terms of inconvenience for several months. It will gut the very poor and the lower income groups. These are people with little in the way of ID proof and they often keep cash stashed under the bed because they have no bank accounts.”

– 12:58: All denomination of notes will be reintroduced with new design and new features: Shaktikanta Das, Economic Affairs secretary.

– 12:44: Update: Kunal Shah clarified on Twitter that he was merely tagged in the post but and said that it wasn’t his point of view.

Earlier: In a Facebook post, angel investor Vijay Anand along with FreeCharge chairman Kunal Shah, questioned Paytm using the Prime Minister’s photo in a full page ad for helping boost digital payments.

Here is the ad in newspapers

– 12.37 PM: Indian Express reports that people are taking photos with the new bank notes :

– Some more interesting pictures coming in from Uttar Pradesh. ANI News says that sacks full of burnt Rs 500/1000 notes found on roads in Bareilly after government announces its decision to scrap Rs 500/1000 notes.

– More foreign exchange troubles. Reports coming in from Malaysia where money exchangers are refusing to accept Rs 500 and Rs 1000 notes from travellers coming from India. Some advised only advised customers to wait for further announcement from the Indian government. Read more at Malaymail Online.

– The economic affairs secretary also clarified that Rs 50 and Rs 10 notes will still be valid as a tender:

– Well this is a damp squib. Reports are coming in that the Rs 1000 notes will be brought back into circulation with a new design. This is coming in from the Economic Affairs Secretary Shashikanta Das.

– Digital wallet FreeCharge launched  Wallet on Delivery (WoD), which will allow users to pay on delivery by using their FreeCharge wallet.The feature will cover Snapdeal and FreeCharge users across the country over the next few weeks. FreeCharge. The wallet reported a sharp 12X overnight jump on November 9th in the average wallet balance as consumers loaded up their wallets to face a cashless day across the country.

– The government announced that the new Rs 500 and Rs 2000 notes will be available in ATMs from Friday(November 11).

– ATMS around the country open and predictably, there is much confusion as people queue up to go about their day. Note that withrawals are limited Rs 2000 per day.

– The Hindustan Times has an interesting photo essay of people rushing to ATMs and ensuring that they have enough money for the day.

– In 2014, at  the Lalit Doshi Memorial Lecture, former RBI Governor Raghuram Rajan spoke on how demonetization may not help in rooting out black money:

“In the past demonetisation has been thought off as a way of getting black money out of circulation. Because people then have to come and say “how do I have this ten crores in cash sitting in my safe” and they have to explain where they got the money from. It is often cited as a solution. Unfortunately, my sense is the clever find ways around it. They find ways to divide up their hoard in to many smaller pieces. You do find that people who haven’t thought of a way to convert black to white, throw it into the Hundi in some temples” – Raghuram Rajan

The whole text of the question and answer session can be found here.

November 9th: 

– Bar and Bench reports that two petitions have bee filed in the Supreme Court challenging the decision of the Central government to demonetize Rs 500 and 1000 notes. One petition questioned the manner of implementation of the scheme which as the government has “failed to follow constitutional rule of law, principles of natural justice and provide sufficient time to citizens of India to prepare for such phasing out of specified bank notes.”

– While hailing the government’s decision to phase out the currency denominations, Uber also made a pitch to the government against its old bete-noire, two-factor authentication. In a statement, Uber India’s president Amit Jain said:

“Uber and other tech companies in India and around the world depend on consumers being able to frequently make low value payments with minimal friction. We encourage the government to adopt practical measures that can make digital transactions more convenient and seamless. Considering the unique infrastructure challenges India faces, the government and central bank should consider a waiver on two factor authentication (2FA) requirements for low value transactions. This would make it easier for customers to pay for goods and services online, allowing e-commerce players to further boost their contribution to economic growth and build the foundation for India to become a cashless economy.”

It also asked riders to load money on their wallets during the transition period or carry lower denominations.

– Sudarshan Motwani, CEO of BookMyForex, pointed out that the demonetization will have major impact on the travel industry with banks benefiting from the asymmetry in cash:

“Forex travel spends can be significant and use of cash in travel related business is rampant. Although RBI limits cash payment for purchase of forex to Rs 50K only, but this limit is per person. For instance, four members in a family can buy forex against cash for total Rs. 2 lacs! Apart from that there is no credible check on if these four people can be stopped from going to four different money changers and use Rs. 2 lacs cash for forex four times over.

With demonetization, this should change dramatically and while it will be a loss to local money changers who deal in cash for large numbers of transactions …. Rough estimate of forex against cash is at least half official outbound retail forex market of $15 billion and hence impact from demonetization would be extremely significant. The demonetization will also impact private overseas remittance (money transfer) market and we expect Banks to gain from this move.”

– Ola Money, the digital wallet service from cab aggregator Ola, reported  reported over 1500% increase in recharges across the 102 cities of its operation. This includes cities like Nagpur, Chandigarh, Bhopal, Lucknow, Patna, Ahmedabad, Coimbatore, Jaipur, Indore etc. A majority of rides are being paid for using Ola Money as against cash across India.

“Demonetisation of 500-rupee and 1000-rupee notes is perhaps the most brilliant and boldest policy decision since Economic Liberalisation in the Nineties. Though Prime Minister Modi has announced it will primarily combat black money and funding of terrorism, it is pretty much a winter house cleaning of illegal money in elections, capitation, real estate, dowry, expensive marriages, bribes and kickbacks.

For e-commerce players such as us at Netmeds, we don’t foresee much of a change or problem, neither for our subscribers nor us as a startup. Yes, cash-on-delivery may be impacted but only just. As we have experienced, people pay cash on medicine purchases that are below Rs 500. The government move would naturally encourage online payments and cashless transactions. Netmeds is a facilitator, the India ki Pharmacy, a value-add for offline business with integrated mobile and card payment processes. Overall, we are good with the financial overhaul.” – Pradeep Dadha, Founder, Netemds.com.

 

More updates and reactions will be added in through out the day. 

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