MUMBAI/NEW DELHI, May 23 (Portal) – Indians are increasingly buying essentials and even premium branded items, using the soon-to-be-retired 2,000 rupee notes ($24.46) to avoid the need to exchange or deposit with banks.
India’s central bank announced on Friday that the country’s largest denomination banknotes will be phased out by the end of September. While the reason for the move was not given, it comes ahead of the country’s state and general elections, when analysts say cash burn tends to skyrocket, often on unbooked deals.
The currency exchange is expected to be far less disruptive than a move in 2016 to demonetize 86% of the country’s currency in circulation overnight.
Since the weekend, people have been thronging to outlets to spend the 2,000 rupee note to avoid the hassle of queuing at banks to exchange it or paying large amounts to be checked by the tax authorities to force.
For their part, Indian shops have eagerly embraced the note, using it as an opportunity to boost sales, several of them said on Tuesday, the first day the exchange was allowed.
“A lot of people have been using 2,000 rupee notes to pay for mangoes since Saturday,” said Mohammad Azhar, 30, a mango seller near the Crawford Market area in India’s financial capital Mumbai.
“I now get 8-10 bills a day. I accept it. I have no choice, it’s my business. I will deposit all at once before September 30th. There is no fear as the ticket is valid.”
Michael Martis, branch manager of a Rado branch in a mall in central Mumbai, said his branch has seen a 60-70% increase in Rs 2000 banknotes since the withdrawal announcement.
“This has increased our watch sales from 1-2 to 3-4 a day,” Martis said.
Grocery delivery company Zomato (ZOMT.NS) said on its Twitter account on Monday that 72% of “cash on delivery” orders have been paid for in Rs.2,000 notes since Friday. However, when asked for details, the company spokesman clarified that the tweet was a hoax and not based on fact. The company refused to give actual figures.
Not all shopkeepers were willing to accept the bills.
“I do not accept; I will not accept. I don’t want to go through the trouble of depositing it in my bank,” said a restaurant owner in south Mumbai.
Unlike in 2016, when customers rushed to banks to exchange discarded bills, bank branches in Mumbai and New Delhi were largely silent and a handful of people waited in queues.
The counters of India’s largest lender, the State Bank of India (SBI.NS), were extremely busy as the bank did not require documentation to exchange a maximum of 20,000 rupees at a time.
($1 = 81.7800 Indian Rupees)
Writing Swati Bhat; Edited by Muralikumar Anantharaman
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