Demonetisation and its Aftermath

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I paid around 3700/- as transaction fee to SBH when I paid my flat registration changes online through the state's property registration website. The builder thought me a fool for paying online since there is no such fee if I went to the bank to pay the Challan amount directly. So yeah, online transactions would cost money to the customer even if they don't cost much for the bank. Even worse, when there is no alternative to online transactions, they could also increase the charges.

The bottom line is that forcing all the cash into banks will allow the govt to hold people's money hostage and get more control over the people. Banks already have no obligations or guarantees to give back the money to the customer and they can refuse to honor any transaction made by you. The liability of a bank even if it goes bankrupt is also limited to max 1 Lac. Further, govt can also freeze accounts and deny people their money when they chose to. This has already happened in Greece.

Also when, all the money is in banks, they would not have to pay any interest and instead force customers pay fees to hold the accounts. This is normal in other countries like USA. Even my sister till recently, paid to the bank for holding her account and if they haven't waived off the fee's, she would still be paying. This is why even a country like US is still not cashless. Many people there especially in the country side do not even hold bank accounts and keep everything in cash.

Even if the customer is not spending any money, the banks and consequently the govt could periodically keep taking from it in the name of charges or taxes. It would also be possible to put a limit on all (offline/online) transactions from saving accounts and force loans to be the only means for high value transactions and charge interest on it. So, if you want to buy a flat worth 40 lac, even if you have 40 lac in your accounts, you can be forced to take a loan and pay interest on it.

95% cashless is a great idea. 100% cashless is a bad idea.

Also about Aadhar cards, one of the reasons many bodies that originally supported the program during the testing phase stopped their backing for it was that the draft bill for it supposedly contained clauses that allowed not just credits into linked bank accounts, but debits as well. I am not sure if these clauses made into the final bill that was approved in the houses, but assuming that it did, coupled with this move to get all cash into bank accounts could wreak havoc in future. For instance, if you get a wrong bill for 25K on electricity or phone or even tax calculation. You could presently refuse to pay it and contest it. But the Aadhar linking would allow the govt or affiliated third party would be able to debit the charge from your linked account without your permission.
 
If the govt can start a competent payment gateway and not charge the user anything for it, the transition towards a 95% cashless economy can become a lot easier.
Even today no seller who deals in electronics can afford to pay 2-3% transaction charges and offer a competent price to a buyer who is already very discount oriented.
I feel that the additional taxes they will receive, both because of VAT/GST because everything is invoiced and income tax on the profit of the businesses, should be more than enough to pay for the maintenance costs of running the gateway.
 
^^ Forget payment gateways, most people in India don't even have internet banking facility presently. For example, my mom has her pension account with Andhra Bank and they refuse to provide internet banking facility on pension accounts (supposedly as per their regulations) and their reason for that is to to prevent abuse. My mom doesn't have a problem because she is living with me. But Imagine a senior citizen who lives alone with their only income source being their pension and that account and not having any digital access and ATM's and banks not giving out any cash.
 
UPI is a good alternative of POS device and currently costs nothing. A fixed rate transaction fee might be better for RuPay etc for the long run and especially for a country with 1.3b population. I do agree cashless economy gives major power to the Banks and the Government, and it will be too dangerous for a country governed by corrupt politicians. The only thing that might make sense is to have a reasonable limit for withdrawal from ATM and to make people go to bank to deposit/withdraw more money so that the cash is traceable as well as forcing people to use bank transfer/cheque/DD for high value transactions.
On a personal note, I've been to 7 ATMs since yesterday and all were out of cash except a state bank which had a big queue. This is terrible after 19 days since the banks opened.
 
I genuinely thought it would start getting better (normal) after a week or two. Three weeks in it is actually getting much worse. Most ATMs in my locality are now permanently closed. They havent been opened/filled in a week. The few ATMs I do see working usually have a queue of 40 odd people outside of them. 2-3 more weeks like this and the middle class as well is gonna start feeling the pinch. Especially with Payday for most people coming up next week.
 
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Apparently 2k notes printing have been stopped.
http://toi.in/h3bPxb/a18eg

Which will add some more pain to the existing one.

Looks like they're trying to avoid b2w conversion happening at low level.

It's time you need to get used to E-wallets and prepare your Bandi waala/small establishment to get used to them until this cash crunch is over. Which will obviously take 2months more.
 
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^^ And who is going to supply all of them with smartphones or computers? It may be convenient for the middle class people with access to e-wallets to force those people as well to accept payment into e-wallets, but how are they going to use that money without having to spend money on phones and internet first. There are some small scale business folk who do have smartphones thanks to china, but that coverage is not that high. I see a lot of people still struck on dumb phones even at my work, let alone the people selling breakfast or daily necessities in my street. And that still leaves the people who cannot even afford to have smartphones, internet, e-wallets or net banking. You cannot expect an average daily wage worker to spend a small fortune on those things.

Also, this cash crunch is not going to end in 2 months. Even the most optimistic estimates would be 6 months if they manage to print necessary currency 24/7 and without any defects.

Overall, while this move did not do a damn thing about corruption (except maybe increasing it), it sure is reorganizing the economic classes in the country. The black money hoarders, the rich and the upper middle class with access to credit cards and digital wallets are the have's while every body else are the new have-not's (regardless of how much money they have in hand or banks). The govt's stance on the later group seems to be for them to just drop dead already and stop being an inconvenience for their own agenda.

I actually went to a couple of banks yesterday/today (of course no luck getting any money) and the general mood in the queues was pent up anger and frustration waiting to be released on somebody. There were people who have been coming every day for last 10 days and still not able to get any money. People are almost ready to attack the bank staff. If this situation continues, it would not be long before people start attacking ATM vans and banks.

Vennkaiah Naidu was apparently bragging about the all party protest being unsuccessful which of course would be the case because people with problems are not interested in those kind of pointless political show-off exercises, but let him try to come to one of the bank or ATM queues without security and he would be lynched to death. That's the kind of atmosphere I am seeing.

Also suggest any BJP Bhakts and middle class elites who need to go the banks or ATM's to keep their mouths shut and keep any pseudo patriotic thoughts limited to the internet if they value their life. I heard that one guy apparently had to run fearing for his life from the SBI bank near my house after trying that stuff that in a queue of 120+ angry and frustrated people. People especially at SBI banks are well past their tolerance limits and pseudo patriotic drivel from anybody could very well result in that person getting martyred on the spot.
 
sabby said:
UPI is a good alternative of POS device and currently costs nothing. A fixed rate transaction fee might be better for RuPay etc for the long run and especially for a country with 1.3b population. I do agree cashless economy gives major power to the Banks and the Government, and it will be too dangerous for a country governed by corrupt politicians. The only thing that might make sense is to have a reasonable limit for withdrawal from ATM and to make people go to bank to deposit/withdraw more money so that the cash is traceable as well as forcing people to use bank transfer/cheque/DD for high value transactions.
On a personal note, I've been to 7 ATMs since yesterday and all were out of cash except a state bank which had a big queue. This is terrible after 19 days since the banks opened.
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All the ATM's near my house are shuttered or out of service since this nonsense started. Only way for me to get money was to go to bank with cheque book and stay in line to withdraw money. When banks themselves dont get money then how can they fill up ATM machines?

cellar_door said:
I genuinely thought it would start getting better (normal) after a week or two. Three weeks in it is actually getting much worse. Most ATMs in my locality are now permanently closed. They havent been opened/filled in a week. The few ATMs I do see working usually have a queue of 40 odd people outside of them. 2-3 more weeks like this and the middle class as well is gonna start feeling the pinch. Especially with Payday for most people coming up next week.
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This will go on for another 6-8 months according to newspapers. There's not enough capacity in printing press to print out so many notes which were removed out of circulation in this month. Even running 24 hrs continuous it will take the press 6 months to print the amount that was removed. Acche din I guess. Modi ****ed up every Indian's lives for a year now.
 
^^ Even if we assume that 100% of the money does not need to be replaced and making some concessions, I guess we would still need about 75~80% of the money to be replaced to get into a comfortable position. As per my understanding the estimate of 6~8 months was based on the premise that Rs 500 and 2000 notes would be printed, but in present situation what people need most are the 100's and 50's more than Rs 500's. No machinery can run 24/7 and there would be obvious screw-ups due to rushing. We already have Rs 500 notes with a variety of defects.

It is going to be laudable accomplishment for RBI and the printers if they could get the necessary currency into circulation in 6~8 months time.
 
Now, they have a new income declaration scheme. What was the use of this whole move?
 
I have a doubt. Earlier (Prior to PM's declaration) I had withdrawn a certain sum via a cheque from my account and then some more from ATM to buy a PC. Whatever was left with me I kept it for daily usage. Thanks to the ATMs I had this in the denomination of 500 Rs Notes. After the declaration I deposited them back into my account.

Now I just realized that I can only withdraw what was there in my account when the announcement was made so the deposit I made later is not a part of it eventhough I withdrew the money from my account itself.

My doubt arises from one statement - "You can use what was in your account before the declaration". Is this related to withdrawing in cash or overall usage because I have to pay my LIC Premium, PPF etc., which I always do in the month of December after I get my salary but if they lock me out of any money deposited to my account post the declaration then how do I pay these or even my bills because if none of the deposits post announcement count then I am staring at a pot with a hole sealed on top.

Or is my understanding of the statement totally wrong and the limit is only on cash withdrawal and I can pay my PPF, Bills etc using Netbanking or cheques.

To cut my monthly losses - I called up my credit card to see how many EMIs I have remaining and if I can close it but they told me there would be a 3% foreclosure penalty charge + Service tax so I definitely won't go down that route and if my first understanding is wrong then I would be left with even less money.

Please advice as generally these expenses in the month of December are pre-planned and suddenly I am not sure about what is going on and what am I to do.
 
^^ I am not sure where you even heard something so absurd.

There are limits on cash withdrawal which have nothing to do with how much you have in your account and were imposed simply because there is no cash to provide. Any account to account transfers, ECS. etc should not have any impact.

Cheques too issued for this sort of purpose are marked as Account Payee which means they are simply deposited into the accounts. However the problem with cheques is that the banks are so busy presently that they may not be able to process them in time. For example, my sister requested for a paid bank statement more than 10 days ago and its still not sent which normally would have been done in 2 days.

Banks, insurance providers and service providers do not give any immunity from penalties for delays in cheque clearance. They usually advice that you deposit cheques well ahead of time to ensure that they get cleared in time. That means that if you pay a bill through cheque before the last date and the cheque does not get cleared in time at the bank due to the work pressures, you would still be liable for late payment fees unless the service provider decides to explicitly waive it off based on present circumstances. My suggestion would be to make any such payments through net banking and other such immediate digital means wherever possible.
 
Lord Nemesis said:
^^ I am not sure where you even heard something so absurd.

There are limits on cash withdrawal which have nothing to do with how much you have in your account and were imposed simply because there is no cash to provide. Any account to account transfers, ECS. etc should not have any impact.

Cheques too issued for this sort of purpose are marked as Account Payee which means they are simply deposited into the accounts. However the problem with cheques is that the banks are so busy presently that they may not be able to process them in time. For example, my sister requested for a paid bank statement more than 10 days ago and its still not sent which normally would have been done in 2 days.

Banks, insurance providers and service providers do not give any immunity from penalties for delays in cheque clearance. They usually advice that you deposit cheques well ahead of time to ensure that they get cleared in time. That means that if you pay a bill through cheque before the last date and the cheque does not get cleared in time at the bank due to the work pressures, you would still be liable for late payment fees unless the service provider decides to explicitly waive it off based on present circumstances. My suggestion would be to make any such payments through net banking and other such immediate digital means wherever possible.
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Thanks a lot man. I was really getting more and more jumpy when I thought about it.

I pay the LIC premiums through net banking so that should be okay. My PPF is with post office and they only take cash or cheque (never asked them about DD) and I already gave them a cheque last Saturday.

What I was worried about was after their clearance despite and salary coming in I would be locked out due to me interpreting the said statement wrong.

Glad you cleared that up :blush:
 
How on earth can they now justify troubling so many people when they have come out with another amnesty offer?
It was promised that people with unaccounted income who failed to declare it earlier will be charged a 200% penalty and undergo prosecution, and for that other honest people should brave out these few months.
Feels like BJP can't just stop digging their own grave.
 
First it was surgical strike against black money, then it was against counterfeiters and terrorists, now it is move towards digital India.

This thing has more narrative twists than Westworld.
 
rdst_1 said:
How on earth can they now justify troubling so many people when they have come out with another amnesty offer?
It was promised that people with unaccounted income who failed to declare it earlier will be charged a 200% penalty and undergo prosecution, and for that other honest people should brave out these few months.
Feels like BJP can't just stop digging their own grave.
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They are getting charged 200% and if they don't declare it's even more. 200% doesn't mean if they found 10 on you they would ask for 20. What they meant is if they found 10 on you and 10% is the tax rate they will charge you 2 instead of the normal 1.
 
prabs said:
They are getting charged 200% and if they don't declare it's even more. 200% doesn't mean if they found 10 on you they would ask for 20. What they meant is if they found 10 on you and 10% is the tax rate they will charge you 2 instead of the normal 1.
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Where in my comment did you get the feeling that I didn't know that?
And actually, the penalty is on top of the tax so they would have been charged Rs. 3 in your example.
Most of the people with unaccounted income would be in the 30% tax bracket. So that means with a 200% penalty on top of the tax, they would have been been charged 90% as tax and also prosecuted.
But with the new amnesty offer, they only get charged 50% and they even get away.
So now, after putting so many people in daily trouble, the government is not ready to perform it's duty and punish the offenders as promised earlier. And that is just not acceptable, especially because of the turmoil they have created.
 
6pack said:
All the ATM's near my house are shuttered or out of service since this nonsense started. Only way for me to get money was to go to bank with cheque book and stay in line to withdraw money. When banks themselves dont get money then how can they fill up ATM machines?
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I'm blaming the RBI and whoever in the Govt made the plans. I strongly believe they should have printed 100 and 500 notes instead of focusing solely on 2000 notes. Its true that in terms of value it would be worth less but 100 and 500 notes would circulate much more than the 2k notes.
 
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