Demonetisation effect: Demand for cash rises 7%, says RBI

People’s demand for cash continues to head northwards compared to pre-demonetisation levels despite the frequency of digital transactions going up and a substantial increase in bank deposits since November 2016.

Currency with the public (CwP), or people’s demand for cash or currency, is 7 per cent higher at Rs 18.25 trillion at the end of April compared to Rs 17 trillion at the beginning of November 2016, the Reserve Bank of India’s (RBI) data reveals.

Over the past four years, through its twin policies of Jan Dhan Yojana and demonetisation, the government has taken necessary steps to expand banking services substantially.
Today, around 80 per cent of Indians have a bank account, thanks to improvements in access to formal finance channels.

While account ownership has increased by 79 per cent since 2014, around 38 per cent of all bank accounts were inactive over the course of last year, the survey found. Similarly, the Jan Dhan Yojana, which was launched in 2014, has added around 310 million banking accounts with deposits totalling Rs 812 billion as of May 9.

ATM cash crunch: PMO takes stock; Madhya Pradesh hit for 3rd day; updates

A cash crunch at ATMs has hit a dozen states, including Uttar Pradesh, Madhya Pradesh, poll-bound Karnataka, Telangana, Andhra Pradesh, Bihar, Gujarat, Maharashtra, Rajasthan, and Punjab. While the Chhattisgarh Chief Minister said his state, too, was facing a cash crunch, with the crisis expected to pass shortly, bank authorities in Jammu & Kashmir and the government in Maharashtra said their respective states were not facing an ATM cash crunch. With automated teller machines (ATMs) drying up, the central government and the Reserve Bank of India (RBI) stepped in to address the currency shortage.

Finance Minister Arun Jaitley attributed the cash shortage to an unusual spurt in demand during the past three months and described it as "temporary", adding that the ATM cash crunch was being "tackled quickly" and that there was "more than adequate" currency in circulation. To fix the ATM cash crunch, the government said that the printing of Rs 500 denomination notes, about 5 billion of which are printed per day, would be increased by five times. Notes worth Rs 700-750 billion (Rs 70,000-75,000 crore) would be printed in a month.

However, what caused the cash crunch and ATMs running dry in the first place? The suspected hoarding of Rs 2,000 notes was cited as one reason by the government. The RBI, for its part, said that logistics and recalibration issues were limiting cash replenishment at ATMs. Further, Finance Minister Jaitley said that the "temporary shortage" was caused by a "sudden and unusual increase (in demand)" in some areas and that it was being "tackled quickly". With the RBI and banks blaming cash management companies for ATMs running dry, ATM industry representatives said that it was the banks that were unable to meet the demand for cash. They said banks had not been able to meet their indent, the daily calculation of cash required, for the past four-five days.

Long queues again? ATMs go dry as many states face cash crunch: Top updates

A cash crunch has been reported in several states of India -- Karnataka, Maharashtra, Andhra Pradesh, Rajasthan, Uttar Pradesh, Madhya Pradesh and Telangana. People are facing a huge monetary crisis, with a majority of automated teller machines (ATMs) running out of cash. In Bihar's Patna several ATMs have gone 'out of service' causing inconvenience to the locals.
Taking stock of the situation, Union Finance Minister Arun Jaitley said: "We have reviewed the currency situation in the country; there is more than adequate currency circulation and it is available with the banks... a temporary shortage caused by the sudden and unusual increase in some areas is being tackled.

Here are the top developments in the crisis caused by a sudden shortage of cash across several states and what the government is saying:
1. Life gets miserable for many Indians, especially traders: Despite the currency flow in the economy going back to the pre-demonetisation level, ATMs are going dry making life miserable for many residents, especially traders. Many are running from one ATM to another in search of currency notes.

PNB fraud: Nirav Modi may face non-bailable warrant; top 10 developments

Nirav Modi and Mehul Choksi's overseas businesses and assets across more than a dozen countries are under the scanner of the Enforcement Directorate (ED), which will soon send judicial requests to countries like Belgium, Hong Kong, Switzerland, the United States, the United Kingdom, Dubai, Singapore, and South Africa for obtaining information about them as part of the widening of its probe into the Rs 114-billion Punjab National Bank (PNB fraud case.

Nirav Modi, his wife Ami, and uncle Mehul Choksi have been summoned by the ED to appear at its zonal office in Mumbai on Monday. According to sources, if they skip the summons, the agency could approach a special PMLA court to get non-bailable warrants issued against them.
Modi has already had his luxury cars, including a Rolls Royce Ghost, a Mercedes Benz, and a Porsche Panamera, and imported watches, seized in the past week. During the weekend, the Income-Tax department seized over 150 paintings by renowned artists from Nirav Modi's warehouse located at Wadala in Mumbai.

While probe agencies continue to put pressure on Modi and Choksi, the Institute of Chartered Accountants of India (ICAI) assured of an "accelerated inquiry" into auditors' role in the PNB fraud.

Cash still king as circulation at 99% of pre-demonetisation level: RBI data

Almost a year after the demonetisation drive, the currency in circulation, as on 16 February 2018, stood at Rs 17.78 trillion (Rs 17.78 lakh crore), according to a Live Mint report.
Before November 8, 2016, the total currency with the Indian public, according to RBI data, was Rs 17.97 trillion. The demonetisation drive sucked Rs 14.48 trillion out of the system.

This means that as of 16 February, 99.94 per cent of the currency is back in circulation.
During a short span from November 9 to December 31, 2016, the Reserve Bank pumped in 23.8 billion pieces of bank notes into circulation aggregating Rs 5,540 billion in value.
Nearly half the currency notes circulated by the Reserve Bank of India during the first nine months of 2017-18 were of smaller denomination, such as Rs 200, Rs 100 and below. This is in line with the government's move to push digitisation and encourage people to do digital banking for high-value transfers.
As on June 16, 2017, the currency in circulation stood at Rs 15.29 trillion (Rs 15.29 lakh crore), or 86.2 per cent of the pre-demonetisation level, according to a Business Standard report.

After yellow Rs 200 notes, get ready for new chocolate brown Rs 10 notes

Still haven't gotten used to the new Rs 200 notes in bright yellow (or is it orange)? Soon, you will be paying your balance using chocolate coloured Rs 10 notes. According to reports, the Reserve Bank of India (RBI) is set to issue new Rs 10 notes that will be chocolate brown in colour.

The new Rs 10 note will be issued by the central bank under the Mahatma Gandhi series and it will sport the picture of the Konark Sun Temple, which is situated in Odisha, Moneycontrol reported on Thursday. Further, citing people familiar with the matter, the financial daily reported that around one billion pieces of the new note have already been printed by the RBI.

The last time the design of the old Rs 10 note was changed was in 2005, the report added. The new design, the financial daily said, was approved by the government just last week.

But why are we set for a newly-designed Rs 10 note? According to the financial daily, the move to re-design lower denomination notes is part of the government's plan to get rid of counterfeit currency in the country.

As reported in December last year, according to information provided by the Minister of State for Finance, P Radhakrishnan, as many as 169.6 million pieces of Rs 500 denomination note were printed till December 8. The minister also informed that the RBI printed 36.5 million pieces of Rs 2,000 notes. Similarly, 17.8 million pieces of Rs 200 notes had been printed by that time.
(Read more)

Note ban made Manushi Chhillar 'Miss World': Shiv Sena's latest dig at BJP

Taking a dig at the BJP, the Shiv Sena on Tuesday wondered why no one from the Bharatiya Janata Party (BJP) has claimed credit after Manushi Chhillar brought the 'Miss World' crown to India.

"This charming woman from Haryana has indeed made the country proud by bagging the 'Miss World' title after a gap of 17 years. This was possible only 'because of the government of (Narendra Modi-Amit Shah)' which assumed power with divine blessings," the Sena said in a tongue-in-cheek edit in the party mouthpieces 'Saamana' and 'Dopahar Ka Saamana'.

What was even more surprising was that "nobody from the ruling establishment" had yet come forth to grab the glory for her victory in the global beauty arena, it said.

"Manushi's surname is 'Chhillar', hence she won. This is actually a victory of (Prime Minister) Narendra Modi's demonetization policy. After the Rs 1,000-Rs 500 currency notes were spiked, people were left with only 'chhillar' (small change) in hand.

"Why nobody has yet come forward to snatch the credit for this is a mystery," the Sena said.

Hazarding its own guess, the editorial said the clue could be in the winning answer given by Chhillar in the competition that impressed the pageant jury which was convinced that she had both beauty and brains.

To the clinching question 'Who should get the highest salary?', Chhillar responded: "A Mother should get that highest honour, and not just salary but also lots of love and respect.

"But it was not her grand triumph, but the success of demonetization. After the note spiking, the situation in the country causes concern. All cash has dried up and people have to eke out a living with 'chhillar' (small change) only," the Sena said.

The editorial came a day after Congress leader Shashi Tharoor remarks on 'chhillar' evoked sharp criticism, forcing him to apologise.

After note ban, will Modi govt now ban cheque books for its digital push?

After deciding to revoke the legal tender of Rs 500 and Rs 1,000 currency notes in November last year, the Narendra Modi -led central government might now be working on another disruptive step to boost digital transactions — banning the cheque book. A senior functionary of the Confederation of All India Traders (CAIT) on November 16 said the Centre might withdraw the bank cheque book facility in the "near future" to encourage digital transactions.

CAIT Secretary General Praveen Khandelwal said the government needed to encourage the use of debit and credit cards. "In all probability, the Centre may withdraw the cheque book facility in the near future to encourage digital transactions," he said.

Impact of cheque book facility withdrawal

Demonetisation was a big disruption for most Indians, right from poor labourers to big industrialists. Now, the withdrawal of the cheque book facility could have a massive impact as well. Most business transactions are conducted through cheques. According to experts, 95 per cent transactions currently take place via cash or cheques.

Since cash transactions have declined, transaction by cheque might have increased after demonetisation.

Use of cheque in India

Cheques are fairly popular in SME payments. By taking a PDC (post-dated cheque) against the delivery of goods, a supplier secures payments due in future from its customer. People pay by cheques while buying land and house, too.

Many landlords now take rent from tenants via cheque. Since November 8, 2016, digital payments like BHIM have grown. However, their sweet spot has been small-value payments (two to three figures). The retail and commercial payment usage strongly suggests that cheque is a very compelling method of payment for large-value payments (four figures and above).

One year of demonetisation: 5 best and worst-performing stocks

STOCK MARKET - Defying the initial shock after the government’s move to demonetise Rs 500 and Rs 1,000 currency notes on November 8 last year, the benchmark stock indices have delivered robust returns on the back of abundant domestic liquidity and the hope of a recovery in corporate earnings.

The knee-jerk reaction in the early days after demonetisation was mainly attributed to the lack of enough cash in the system hitting consumption.

In the one year since the announcement of the note-ban move, the BSE Sensex has jumped nearly 5,800 points, or 21%, while the National Stock Exchange (NSE) Nifty has rallied 20.5% from 8,515.57 to 10,303. During the same period, the BSE Midcap and BSE Smallcap indices have surged 30% and 39%, respectively.

The combined market capitalisation of BSE-listed companies during a year since demonetisation has jumped by more than Rs 33 lakh crore to Rs 145 lakh crore. The biggest contributors to the surge in market capitalisation on BSE have been Reliance Industries, HDFC Bank and Hindustan Unilever, which together contributed over Rs 4.5 lakh crore.

Among the Nifty50 stocks, Bajaj Finance was the top gainer (up 80%), followed by RIL, Bharti Airtel, Tata Steel and Hindalco Industries, all of which jumped in the range of 57-76%. Meanwhile, Lupin was the biggest laggard in the pack, down 42% during the same period. Dr Reddy’s Labs, Tata Motors, Sun Pharma and Coal India were some of the other prominent losers.

RBI to stay on status quo for the rest of 2017: Here's what experts say

The Reserve bank of India (RBI) has determined to maintain the repo rate unchanged at 6 per cent. The six-member monetary policy Committee (MPC), headed by means of Reserve bank of India (RBI) Governor Urjit Patel, announced hobby rate selection on Wednesday at the same time as providing its fourth bi-annual monetary coverage.

Analysts in large part predicted the significant bank to hold the fame quo, but delivered there could be a price reduce later within the monetary year.
next coverage assembly has been scheduled for December 5.
right here's what professionals have to mention:

Tushar Arora, Senior Economist of HDFC financial institution to Sify.com

"No surprises as such. Going strictly with the aid of the optics of headline inflation is unlikely to result in rate cuts. Room to maneuver will simplest come if the MPC chooses to make use of the +/-2 percent bandwidth and indeed looks through a marginal upward push in inflation above the four percentage stage. I trust this may occur later all through the yr as increase numbers hold to marvel on the downside."
READ MORE

Note ban effect: Currency printing cost more than doubles to Rs 7,965 crore

Note ban effect - The Reserve Bank of India (RBI) spent Rs 7,965 crore on printing currency notes between July 2016 and June 2017, compared to Rs 3,420 crore in 2015-16, an increase of 133%, according to RBI’s annual report 2016-17.

This was highest over the last 17 years, Bloomberg reported on August 30, 2017.

The rise in expenditure was attributed to newly designed notes of higher denominations and the need to replace demonetised currency, the RBI report said. Banknotes were often airlifted from the presses to RBI offices across the country to ensure currency was available after demonetisation, adding to the cost of distribution.

Prime Minister Narendra Modi on November 8, 2016 announced the withdrawal of Rs 500 and Rs 1,000 notes–which constituted 85% of cash in circulation–in a move to fight corruption, black money, money laundering, terrorism and financing of terrorists as well as counterfeit notes, a narrative that kept changing, as IndiaSpend reported on December 5, 2017.

Of Rs 15.44 lakh crore demonetised currency in circulation, about 99% or Rs 15.28 lakh crore came back to the central bank as on June 30, 2017, the annual report said.
READ MORE

Demonetisation effect: Direct tax mop-up grows 15% to Rs 1.42 lakh cr in Q1

Advance tax paid by individuals recorded 40 per cent growth in the first quarter (April-June) of the current financial year.

This could be an impact of the demonetisation of high-value currencies, with more non-corporate entities recording higher incomes. 

Overall direct tax collection after refunds expanded by 14.8 per cent to Rs 1.42 lakh crore over the corresponding period in 2016. 

“The government has benefited from demonetisation, as people have started reporting higher income,” Sushil Chandra, chairman of the Central Board of Direct Taxes, told Business Standard. 

Overall advance taxes, both personal and corporate, grew by 11.9 per cent to Rs 58,783 crore. Advance tax is paid within a specified period after the money is earned, rather than waiting for the end of the financial year.

Electronic filing of income tax returns up to June for 2016-17 grew by 18 per cent, suggesting that more people regularised their unaccounted income. “People are aware now that the income tax department is carrying out lots of searches and surveys and that black money will not be tolerated any more,” said Chandra. 

Corporate advance tax collections were up 8.1 per cent. Corporate tax collection, net of refunds, grew by 22 per cent; gross collections grew 4.8 per cent. Refunds, worth Rs 55,520 crore, were 5.2 per cent lower than last year. 

“Last year, we cleared a lot of pending refunds for the year-ago period, whereas there are no pending refunds of the past fiscal (year) this time,” said an official. 

Note ban: Parliamentary panel calls Urjit Patel again on May 25

RBI Governor Urjit Patel has been asked by a parliamentary panel to appear before it again on May 25 over demonetisation issue after former prime minister Manmohan Singh prevailed over BJP MPs in the panel to call him.

Interestingly, Patel was spared a grilling when he had appeared before the Parliamentary Standing Committee on Finance in January this year after Singh, who himself was RBI governor once, intervened to say that the RBI as an institution needs to be respected and Patel should not be put "odd" questions.

Top sources and members of the committee said that Patel has been asked to appear again before it to brief the members about demonetisation as discussion on it is yet to be concluded.

"BJP members in the panel including Nishikant Dubey were not in favour of calling Patel to appear before the committee, but after members from opposition led by Manmohan Singh insisted, it was decided to call the RBI governor," a member said.

The Committee headed by former Union minister and senior Congress leader M Veerappa Moily had in January also called finance ministry officials besides top RBI officials to discuss the demonetisation of currency notes of Rs 500 and Rs 1,000 and the impact thereof.

As members could not complete their questions, the committee had decided to call RBI Governor and ministry officials again on a later date, after the Budget session.

The sources privy to development said that the members in the panel are likely to ask Patel about how much money has come back into the system.

The members will also inquire as to when banks' operations will be normal.
READ MORE

Note ban: 1.8 mn accounts being probed for large deposits, says Jaitley

Authorities have detected 18 lakh cases after demonetisation where the income profiles of people do not match their account profile, the Lok Sabha was informed on Friday.

Preliminary information has been sought from such people and many have responded. Those who have not given details would be issued with notices as per procedure, Finance Minister Arun Jaitley said during Question Hour.

Responding to supplementaries, he said there was an extended footprint of digitisation in the banking sector. With digitisation, the risk of tampering of technology also increases.

But banks are also hiring experts to develop firewalls around their system to make it increasingly difficult to breach it, Jaitley said, adding that technology has to keep pace with crime.

He also said that risk assessment was a continuous process for banks who do it individually and collectively.

In his written response, Jaitley said as on March 31, 2016, 29 per cent of the savings accounts of public sector banks and regional rural banks sponsored by them were inoperative or lying dormant.

A variety of factors have a bearing on an account being inoperative. These may include factors like opening of a new account with change of residence or office, death of the account holder or the relative convenience of operating different accounts, he said.(READ MORE)

Another new note, this time for Rs 200, from RBI on its way?

Are you tired of receiving higher denominations of Rs 2,000 and Rs 500 notes? Or are you still grappling under the effects of demonetisation where Rs 100 notes are a rare sight at Automated teller machines (ATMs)? Worry no more —The Reserve Bank of India (RBI) has cleared a proposal to inject Rs 200 notes around June, 2017.

The development comes after anonymous sources revealed that the decision was taken at the RBI board meeting in March, Live Mint reported.

The move comes against the backdrop of government’s aim to rework the Indian monetary system. An RBI spokesperson declined to comment.

Even though the RBI lifted all cash withdrawal caps from ATM and banks on March 13, 2017, operators say there is a dearth of lower denomination banknotes.

The RBI board has 14 members, including Urjit Patel, four deputy governors, Economic Affairs Secretary Shaktikanta Das.

Narendra Modi government's surprise move on November 8 to scrap Rs 500 and Rs 1,000 notes has posed some temporary trouble for consumers in a cash-dominant economy like India, putting 86 per cent of the currency out of circulation. (READ MORE)

Reason to cheer: No more limits on cash withdrawals at ATMs

BREAKING NEWS - All limits on savings bank cash withdrawals post-demonetisation ended on Monday, as had been announced by the Reserve Bank of India (RBI) last month.

In a two-stage process, the weekly withdrawal limit per account had been raised to Rs 50,000, from Rs 24,000, with effect from February 20, and all limits on ATM withdrawals were slated to cease from March 13.

The announcement had been made by RBI Deputy Governor R. Gandhi following the fiscal's last monetary policy review announcement by the central bank in February, when it kept its key interest rate unchanged at 6.25 per cent, saying it awaited data on the full impact of the government's demonetisation drive.

On January 30, the RBI had ended all curbs on withdrawals from Current Accounts, Cash Credit Accounts and Overdraft Accounts.

The limits were placed following the November 8 demonetisation of Rs 1,000 and Rs 500 notes. The upper limit at ATMs was just Rs 2,500 initially and was later raised to Rs 4,500.

In January, the RBI had hiked the daily ATM withdrawal limit to Rs 10,000 and doubled the weekly Current Account withdrawal limit to Rs 1 lakh.

The upper limit for weekly withdrawal from bank accounts had been raised to Rs 24,000 from Rs 20,000 in November.

While lifting of ATM withdrawal limits represents coming full circle for these machines in respect of demonetisation, the return to normalcy in terms of cash available in them is still awaited, indicating the slow pace of remonetisation.(READ MORE)

Rs 48,000 cr Delhi Budget: AAP focuses on health, education, no new taxes

Breaking News - A Rs 48,000-crore budget for the national capital was today presented by the AAP government, laying major focus on improving transport, health, water distribution and education infrastructure.

In its third Budget, the Arvind Kejriwal government abolished the plan and non-plan expenditure heads and presented it in terms of revenue and capital classification in line with the Centre's decision.

There was no proposal on levying any new tax.

In a first, Deputy Chief Minister Manish Sisodia, who holds the finance portfolio, also presented an "outcome budget" which he said would act like a "contract" between the government and the people.

Sisodia asserted that the economy of the state will grow "despite demonetisation".

At the same time, he said note ban has led to contraction in the city's estimated GSDP for the ongoing financial year (at constant prices) although it will still be higher than the projected growth at the national level.(READ MORE)

Pay Rs 150 after 4 cash transactions in a month at HDFC Bank, ICICI, Axis

Breaking News - Banks including HDFC Bank, ICICI Bank and Axis Bank today began charging a minimum amount of Rs 150 per transaction for cash deposits and withdrawals beyond four free transactions in a month.

The charges would apply to savings as well as salary accounts effective from today, leading private sector player HDFC Bank said in a circular.

The bank would also cap the third party cash transactions at Rs 25,000 per day, while cash handling charges would be withdrawn effective today, the circular added.

The move was seen in some quarters as aimed at discouraging cash transactions and furthering the digital payment drive.

For the basic no-frills accounts, maximum four cash withdrawals would continue to remain free and there would be no fees for cash deposits.(READ MORE)

Note ban: You can withdraw Rs 50,000 from your savings accounts from today

Breaking news - The weekly limit on withdrawal of cash from savings bank accounts will be increased to Rs 50,000, from the current Rs 24,000, from Monday, and the limit will be removed from March 13.

"Effective February 20, 2017, the limits from cash withdrawal from savings bank accounts will be enhanced to Rs 50,000 per week from the current limit of Rs 24,000 per week (and) effective March 13, 2017, there will be no limits prescribed by RBI on cash withdrawal from savings bank accounts."

The Government and RBI had imposed limits on withdrawal of money from ATMs and bank branches in view of the currency shortage following demonetisation.

These limits, however, are being gradually eased, with RBI pumping in new notes of Rs 500 and Rs 2,000. (Read More)

'How many fake notes? Even RBI doesn't know, reveals RTI inquiry

Latest News - The Reserve Bank of India has admitted it has no confirmed data of the number or value of fake currencies detected since the demonetisation of Rs 500 and Rs 1,000 notes, a Right to Information (RTI) query has revealed.

"We presently don't have the confirmed data on this query," said a reply from the RBI's Department of Currency Management (Forged Note Vigilance Division), to prominent activist Anil V Galgali.

In a pointed query, Galgali had asked the RBI to provide details of the number or value of the fake Notes detected post-demonetisation, the name of the banks, dates etc between November 8 and December 10, 2016.

"However, the RBI has made it clear that nearly 11 weeks later, it has simply no data available on this crucial aspect. So the government's claims to demonetise as a weapon to kill fake currency is proving hollow," Galgali said.

He pointed out that Prime Minister Narendra Modi had said that demonetisation would help wean out counterfeit currency notes and choke terror fundings.

"The RBI's replies make it obvious that the government has failed in this endeavour or raised the bogey of fake currencies merely to implement demonetisation. It's now up to the PM to declare the figure/value of counterfeit notes recovered, in national interest," Galgali said.(Read More)