DEMONETIZATION : THE ACTUAL SWATCH BHARAT MOVE

demonetizationDemonetization, this word is the one which we have been hearing more than the regular “hi/hellos” from past one month. You go wherever in the country or you ask anyone, they speak about this demonetization. Some even share their experiences; what they lost/gained by posting it on the social media platforms. Some support it, some go against it; some say it’s a brave move where some say, this is something foolish. So, lets get into the details of what all it is about whether it’s a good move or not and many other details.

What Demonetization is the act of stripping a currency unit of its status as legal tender
Why To combat inflation, corruption and to discourage cash system
When

And

Where

On 8th November 2016, India’s PM Shri Narendra Modi had stated that the country’s biggest denominations viz., Rs.500/- and Rs. 1000/- will not be legal tenders from the 9th of November

Why was this huge change made?

  • The raising issues over the fake currency of higher denominations in the country was the main reason for this step
  • The fake currency that was being rotated as the genuine one was mostly used for the illegal activities
  • High denomination notes, which aren’t legal tenders anymore, are the base of funds for terrorists and also the black money hoarders; these HDNs are the ones which are used to bribe (corruption)

Why was Rs. 2000/- notes introduced instead of the Rs.1000/- itself?

            Let’s say, for example Mr. X has Rs. 1,00,000/- black money in 100 Old Notes of Rs. 1000 each.
 
Mr. X divides those Rs. 1,00,000/- into 10 Equal Bundles, each comprising of 10 Old Notes of Rs. 1000 each and puts each Stack on a Table.

On Day 1, in the morning Mr. X would deposit the first Bundle i.e. 10 Old Notes of Rs. 1000 valued at Rs. 10,000 in the bank and on same Day 1 in the Evening he would withdraw 10 New Notes of Rs. 1000 again valued at Rs. 10,000 and put it in the Locker in his house.
 
Now the real Game starts.

On Day 2: Morning, Mr. X would deposit the second bundle of 10 Old Notes of Rs. 1000 valued at Rs. 10,000 kept on the Table. However, in his books of accounts submitted to Income Tax Department, he will show that he has deposited the same 10 New Notes which was withdrawn on Day 1: Evening (which is actually still lying in the Locker of House)
 
On Day 2: Evening, Mr. X would again withdraw 10 New Notes of Rs. 1000 valued at Rs. 10,000/- and keep the same in the locker. So at the end of Day 2, Mr. X has Rs. 80,000 on Table in Old Notes and Rs. 20,000/- in New Notes in Locker.
 
Now Day 3 will come in next week as a limit of Rs. 20000 per week.
 
The same exercise shall continue till Day 10 and by the end of Day 10, Mr. X shall have no Old Notes and Rs. 1,00,000 in 100 New 1000 Rupee Note in the Locker.
 
However, to the Income Tax Department, Mr. X has shown that he was having only Rs. 10,000/- as black money initially ( i.e. one bundle of 10 Notes of Rs. 1000 ) and he has rotated the same Rs. 10,000/- by depositing it into Bank account in the morning and withdrawing it in the evening and again redepositing the same on the next day and so on.
 
Thus, Mr. X has paid tax only on initial Rs. 10,000 whereas he has managed to convert all his Black money of Rs. 1,00,000 into new Notes.

Revenue is also helpless to catch Mr. X because the above scenario can also occur in genuine cases where you withdraw money from the bank to purchase something and then when you think that no good deal is available, you may again deposit the same money into your bank account and are not required to pay tax again.
 
Scenario B: Watch what happens when PM issues New 2000 Rupee Note instead of 1000….!

Mr. X deposits first bundle of 10 Old Notes lying on the Table in the Bank on Day 1: Morning and then he withdraws 5 New Notes of Rs. 2000 on Day 1: Evening and keeps it in a locker.

Now on Day 2: Morning when he goes to deposit second bundle of 10 Old Notes of Rs. 1000 each and wrongly shows the Income Tax Department that he has redeposited the same money, which was withdrawn on Day 1:Evening – Bingo!!!
 
He is caught red handed!! Because the Bank slip on Day 2 submitted to bank shows deposition of 10 Notes of Rs. 1000 each, whereas the Govt knows that Mr. X could never have withdrawn on Day 1 any note of Rs. 1000 because they were never printed!

Date Rule
8th Nov, 2016 (i)                 Rs. 500 and Rs. 1000 notes scrapped from midnight

(ii)               Notes could be exchanged for Rs. 4000 at bank branches

(iii)             New Rs. 2000 to be issued

10th Nov, 2016 Withdrawal limit set to Rs. 10,000/- per day and Rs. 20,000/- per week
13th Nov, 2016 (i)                 Withdrawal limit cap raised to Rs. 24,000/- a week

(ii)               No daily limit

(iii)             Cash exchange limit raised to Rs. 4500/-

(iv)              ATM withdrawals limit raised to Rs. 2500/-

14th Nov, 2016 (i)                 District Central Cooperative Bank customers can withdraw Rs. 24000/- per week; but cannot exchange or deposit old notes

(ii)               Current account holders can withdraw Rs. 50,000/- per week

17th Nov, 2016 Exchange limit changed for the third time – reduced to Rs.2000
18th Nov, 2016 Cash withdrawal through POS systems made uniform at Rs.2000/- per day per account
23rd Nov, 2016 Scrapped notes cannot be deposited in small savings accounts
24th Nov, 2016 Exchange at bank counters scrapped totally; people have to deposit the old notes in their bank accounts
25th Nov, 2016 Foreigners allowed to exchange up to Rs. 5000/- per week till 15th December

 

28th Nov, 2016 Withdrawals beyond stipulated limits would be allowed if someone deposits in the current legal tenders
19th Dec, 2016 Deposit of SBNs into accounts above Rs. 5000/- will be allowed only once; Any more would be subjected to the official scrutiny
22nd Dec, 2016 Roll back of the above said (19th Dec) order; fully KYC compliant accounts are exempted from this cap

The above shown table is just a brief and most important change made by the RBI in these crucial days (Reports that 60 Rules are changed in 43 days!!!)

Effect on public:

In Rural India (I do work in a rural branch):-

migrant-labourer-2As we all know that about 70% of our country’s population live in the rural and in rural around 80% of people depend on agriculture. And this is a very important time for the crop season, farmers need money to pay to their laborers and buy the essentials for farming. As digitalization hasn’t taken its shape yet in the rural (and, I find it merely impossible to make people digitally knowledgeable), it becomes pretty difficult in this period of time. You need cash for everything and at banks there are two options: banks do not have enough cash or they have Rs. 2000/- notes in plenty and the smaller denomination notes in lesser quantity.

Place where I work, people mainly depend on two sectors; one being the agricultural and the other being a dairy farm. In the dairy sector, people who have cows/buffalos get milk and sell it to a company with a good name and brand. In turn, the company pays these people through their Aadhar- enabled bank accounts. Sometimes people who have more cows hire some labors to get the work done and people have to pay them. And they too will get payed for their work. As it is rural, most of them still fear to open bank accounts, as they think that, either banks are going to waste their hard earned money or they think that only rich people can have their saving account. When we ask people to transfer money to their accounts, they say that, this is what they get for their daily needs; and if I transfer to them now (who have accounts), they have to stand in long queues again! Neither they accept to transfer money nor they accept the newly unfolded Rs. 2000/- notes. But, as they have no other option they started to accept the new notes.

In urban India:

demonetizationIt’s no different from the other part of the sub-continent. More population, more banks yet less cash! The real cash crunch has been faced in this period by every citizen in the country. Even in the urban India, digitization hasn’t been implemented in the full fledged and it is not so easy as it looks to make the whole country digitized in a shorter span of time – most citizens may be educated, but not every educated are tech-friendly. Though various steps are being taken by the government and even the banks to make (or even we can say push) the people go digitized, people find it difficult most of the times! The biggest problem in the semi-urban and urban areas was that, people had to remain away from their daily work or have to skip their office to stand in the never ending queues. At the end, when their turns come, they have to face either “NO CASH” placard or they will have the Rs. 2000/- notes which are of no use, merely (milkman, hotels, ironwalas and all the other regular payments we have to make, neither they need this Rs.2000 /- note nor they have the change for everyone!)

Effect on Bankers:

Life of bankers in a line:

As bankers, we got trolled by someone; sympathized by someone; pressurized and mentally tortured by someone else; and hanged by self!

We, bankers, aren’t the most superior ones in the nation, we do have bosses (RBI & Government) and we act according to them. No people understand that and we have to face the ire of the common people who never think that we also belong to the category of human beings! With the changing rules of the central bank and the central government, from both, the front end and the bank end officials from the banking industry are facing a great problem in understanding and developing the software in view with the changes! The bankers find it very difficult to make people understand the changing pattern of the rules and even harder to make them understand that the bank has run out of the cash (but not their bank accounts instead!).

 Some Major Flaws in  Demonetization Saga:

Whatever would have been the strategy of GOI, the implementation of this whole program was way too harsh and seemed to be unplanned. The GOI ordered to deposit money back in banks but it left the bankers and the general public helpless as there were no new notes to distribute. The GOI didn’t make any concrete strategy because of which we saw daily modifications in deposit and withdrawal ways. People of India still supported the move, some did for the betterment, some did as they didn’t have any other option.

Other than money issue, the state government were busy in opposing the move which made it worse. If only they supported, we wouldn’t have had heard any news related to deaths, thefts or violence. The state Govt should have arranged the crowd properly while the bankers were busy in taking and giving the notes. A normal tent, availability of water and snacks and place to sit and wait for turn would have pleased the general public much much more than pathetic interviews of ministers and news reporting of bogus and fake media.

The Saga is not over yet:

Many are in a belief that Modi is going to distribute black money in Jan Dhan Account and it is really surprising that they really believe so. People are waiting eagerly for cash and 1st January. Our PM is going to address the nation very soon and it might be the most awaited speech of his of 2016. Surely as Modi said before, this is not the end. This was just the beginning of transforming India. We can expect many changes in 2017 and we hope all those changes to bring fortune to our country.

Penned by – Hareesh

We Banking Mantras give a big thanks to our PM as he took this bold step, public for showing such immense patience and support and our bankers who were called deshbakht + magarmach as well, a big thanks to all the bankers of each and every bank, all those employees national, private bank or other financial institutions who made this move possible and ease the pressure of general public.

Thank You Hareesh (Cameo) for sharing your thoughts and experience with us.

  • @!<@$h $!nh@

    Thnk You BM:))

  • Aspirants
    After reading the above article. You can write your own thoughts regarding the Demonetization as if you have to write an article. Do write your thought in form of passage and surely it will help you in many ways.
    Keep Rising.

    • Sagar :))

      great _/_
      ye Hareesh sir kaun hai ??

      • Cameo

      • Ruchi :)

        Old User

      • Cameo.. :)

        Ji hum h

        • Sagar :))

          wah sir _/_ dhanyawad for this knowledgeable article :)

  • Garima

    Thnq BM :))

  • Prasanna ~ Synthwave

    Tq BM team..!!

  • Accuracy matters

    Thanks Team BM!! Good one !

  • Pheonix

    share ur strategy for clerk mains…

    • Accuracy matters

      its like roadies 😛 dn’t go for particular strategy or make ur own…:) (y)

      • Pheonix

        ok.. all d best for exam…:)

        • Accuracy matters

          s2u :)

  • ‘RESCUER OF EVERYBODY’

    great work man

  • DEEP

    Such a great article !!

    I support Our Pm Shi Narendra modi and move taken by GOI . It will be beneficial in future ..!

    Advantages of Demonetization –

    • Reduce corruption
    • Stop terrorism funding
    • control over black money
    • control over unnecessary pelting of stones
    • stupid and senseless campaign of baseless Political parties

    • This will lead to cashless society
    And it’s hightime we shouly execute this

    we always resist to change but if want to survive and want to be the Best then we have to accept the Change

    EXECUTION –

    • Not happy at all the way GOI implemented this process of demonetization
    • could be better then this sure !
    • Government should have been inform bankers and other related institutions regarding this .. but nothing from government side !

    •In Management u have to do first is – planning – staffing – directing- controlling and last proper implemention . But GOI couldn’t able to execute it well !..

    Bankers –

    • The way bankers did their work and handled this critical situation is seriously amazing

    •It motivates me allot to work for this sector
    • I personally feel it’s best time to enter in
    this sector Bec more opportunities , challenges and platform to showcase your talent (My POINT OF VIEW ) .. !

    (Ignore grammatical mistakes and focus on thought )

    Thank you Banking Mantras @saurabh
    @Abhishek Sir !

    _/_. :)

  • asd

    All the above lines written about a banker seems word by word true as i am working in the bank and that too i have cash counter in my hand also i work in that bank which is very popular these days :D. Due to working continuous for 20 days for 18- 18 hrs people still blames us,also due to so much of work pressure i lost several exams this year….but keeping the enthusiasm high i wish let 2017 brings us happiness and we will become a govt employee soon…WISH U ALL A VERY HAPPY NEW YEAR… :)

    • kohli

      happy new year

    • Cameo.. :)

      All the best bro

      • Smiley

        Thank you Hareesh Ji

        • Cameo.. :)

          _/_ pleasure ji

          • Smiley

            Hehe..

      • asd

        Thanks brothr…:)

    • @!<@$h $!nh@

      HAPPY NEW YEAR bro…

      • asd

        thnx bro…wish u the same…i used to see ur comments daily …lots of things r there which i can learn frm u….

        • @!<@$h $!nh@

          Ohhh gud to knw this…thnx for ur words…

  • Prince

    Hi achiever

    • Spam spam

      Hello princeee

  • Rashmi

    year 2016 has been full of regrets
    many times i humbled with results
    i wish new year will bring joy and glimmer of hopes in my life and for all of u
    happy new year to BM family
    and all the best for ibps clerk mains

    • Prince

      Same to u Rashmi

    • kohli

      all the best and happy new year

    • @!<@$h $!nh@

      It wil, for sure…All d best Rashmi:))

    • Spread happiness ^_^:):)

      wish u the same sis

    • lets start

      Hmm

      • kohli

        sbi joined ??

        • lets start

          Yess bro

          • kohli

            happy new year advance training completed bhai

          • lets start

            Hmm joined branch ..Same to u bro

          • kohli

            :))) all the best for new journey wish u a full of happiness bhai u are first in disqus who used to solve my doubts thank u so much byee tc

          • lets start

            My pleasure bro..Thanxx a lot..TC bro

          • i can

            bro home state posting or some where else?
            and congrats bro:)
            po /clerk?

          • gomathy priya

            any news regarding sbi clerk waiting list sir?

          • lets start

            Dnt know dear..Waiting list Nei aayega Kuch logo ko NXT yr direct mail aayega

          • gomathy priya

            ok sir.

      • !>@Ce!>

        congras bhai ji

        • lets start

          Old name??

          • !>@Ce!>

            hehhe jisko apne suggest kiya tha quant in mail:)

          • lets start

            Oohh got u..Preparation kese Chal raa he??

          • !>@Ce!>

            good little improvment in quant:)

          • ronnie (honey)

            sir merko bhi help kro

          • lets start

            Arey roonie Bhai AAP BHI sir maat bolo yaar..

          • ronnie (honey)

            happy new year bro ..have a grt year ahead

    • gomathy priya

      wish u the same rashmi

  • Great :)

  • kohli

    thank u bm

  • !>@Ce!>

    thanku sir ji:)

  • Cameo.. :)

    Thank you abhishek bro n mega mind bro_/_

    • Spread happiness ^_^:):)

      thank u sir _/_

      • Cameo.. :)

        Arey_/_

    • Ruchi :)

      Thanks Hareesh :)

    • !>@Ce!>

      wooow bro can i ask question on it?

      • Cameo.. :)

        Yes pls

        • !>@Ce!>

          Scenario B: Watch what happens when PM issues New 2000 Rupee Note instead of 1000….!

          Mr. X deposits first bundle of 10 Old Notes lying on the Table in the Bank on Day 1: Morning and then he withdraws 5 New Notes of Rs. 2000 on Day 1: Evening and keeps it in a locker.

          Now on Day 2: Morning when he goes to deposit second bundle of 10 Old Notes of Rs. 1000 each and wrongly shows the Income Tax Department that he has redeposited the same money, which was withdrawn on Day 1:Evening – Bingo!!!
          ye point
          he can also deposit 2000rs 5 note on second day also .y u take example of 1000*10=10000 1000rs note

          • Cameo.. :)

            Coz, he want that money to get exchanged! He can’t give back those 2000/- notes which he wants!

          • !>@Ce!>

            thanku bhai ji:) happy new year :)

    • kohli

      thank u so much bhai

      • Cameo.. :)

        Kohli bhai

    • Spam spam

      :))))

    • Abhishek

      Good Article written by you,Haressh :)

      • Cameo.. :)

        Thank you Bro…
        gratitude!!! _/_

  • Ritesh

    Superb !!
    Very well written and expressed :)
    Thank u @disqus_E27QJ6hSnl:disqus sir…
    Tommorow is xam so i am wishing u all ” Happy New Year 2017 ” and ” All the Best ” ..
    “Behind Every Successfull person , There are a lot of unsuccessfull years ”
    Bye !! Bye !! 2016 !!
    wlcome !! wlcome !! 2017 !!
    Time is less so not able 2 write about demonetization :/

    • kohli

      all the best bro happy new year

    • lets start

      All the best bro

    • Cameo.. :)

      Thank u bro

      • Target ippb

        very well written bro i think you are waiting from 8th to wrtie this 😛

        • !>@Ce!>

          bro came there

      • gomathy priya

        ty. nice article.

        • Cameo.. :)

          Thank you Gomathy ji.. :)

      • renu

        suggest me something to improve in comprehension.. am reading fast i can understand.. but i feel options are twisted in exams.. spending hours for this.. but :/

        • Cameo.. :)

          Lemme tell you something frankly, I never go with comprehension thing.. I just skip them, coz, I know about me that I can never do it! The only thing I do is go for antonyms and synonyms, that too at the last go!
          If you feel that you get confused with the options alone, then you have to work more on the comprehensions! get different questions from different sites or books and go for them. Go for higher levels (CAT levels). hopefully, these will help you.
          Remember my friend, never ever get lazy and give up! Keep practicing and keep rising!
          All the best… :)

          • renu

            yes bro..samething am dng now.. everone saying comprehension tough.. i am opposite attitude person… so unable to give up.. to practice comprehension.. now am dng cat comprehensions as much as i can :)

          • Cameo.. :)

            That’s great!! :)
            Keep pushing yourself up..! Coz, none is going to push nor you will get a hand to help you when you fall down… :)

          • renu

            yes.. happy new year bro :)

    • @!<@$h $!nh@

      All d best Ritesh:))

    • Abhilasha

      All the best Ritesh

    • Ginny :)

      all the best Ritesh

    • **Fledge**

      all the best risty :))

  • IPPB Achiever

    Thnkx Nice one

  • gomathy priya

    ty saurabh sir

  • gomathy priya

    gud noon bm

  • Spam spam

    Thank you haressh ji _^_ :)))))

  • All the best guys.
    Take care !!
    See u all next yr .
    !!!

    • @!<@$h $!nh@

      Thnku, same 2 u sir…

    • kohli

      all the best sir take care

  • @!<@$h $!nh@

    😛
    Itni dushmani 2016 se

    • kohli

      😛

  • DEEP

    :)

  • DEEP

    Break a leg guys !!
    Give ur best …

    _/_. :) :)

    • kohli

      all the best deep

  • Spam spam
  • “MISSION”

    Koi quiz

  • Abhilasha

    Thanx BM

  • ronnie (honey)

    ty bm

  • Ginny :)

    ty BM

  • !>@Ce!>

    ek guma ke mr

  • Abhishek

    SBI Specialist Cadre Officer (SO) 2016 -17 Notification Released

    http://www.bankingmantras.com/sbi-specialist-cadre-officer-2016-17-notification-released/

    • Anushree Ganguly

      Good afternoon sir….

      • Abhishek

        Good Afternoon, Anushree

        • Anushree Ganguly

          Sir can you please solve the sum which I have posted above?

  • Anushree Ganguly

    A big thank you to Hareesh sir and saurabh sir for the wonderful article….. It has been very nicely written….

    • Cameo.. :)

      Thank you bro!! _/_

  • Anushree Ganguly

    happy new year in advance to the whole BM family…..

  • Anushree Ganguly

    In an examination, six subjects A,B,C,D,E and f were available for a candidate of which only three had to be offered under the following condition:
    1. One who offered A had to offer B also.
    2. One who offered A could not offer E
    3. One who offered Cor D could not offer F.
    Q12. How many candidates appeared for the examination in all?
    answer:140
    Please explain it in the easiest way….

  • Anushree Ganguly

    Someone please solve the sum which i have posted below

  • Anushree Ganguly

    Where is everyone?

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