Page 42 - Banking Finance December 2016

FEATURES

12. For immediate cash needs, the old banknotes of value of Andhra Pradesh Nara Chandrababu Naidu. Former Chief
up to Rs 4,000 per person could be exchanged for the Election Commissioner of India S. Y. Quraishi said
new Rs 500 and Rs 2000 banknotes as well as Rs 100 demonetisation could lead to long-term electoral reforms.
banknotes over the counter of bank branches by filling Indian social activist Anna Hazare hailed demonetisation as
up a requisition form along with a valid ID proof. a revolutionary step. The President of India Pranab
13. Exceptions were given to petrol, CNG and gas stations, Mukherjee welcomed the demonetisation move by calling
it a bold step.
government hospitals, railway and airline booking
counters, state-government recognised dairies and
ration stores, and crematoriums to accept the old Rs The opinion of the masses varied both ways on micro-blogs
and social media sites like Twitter. In general, the move to
500 and Rs 1000 banknotes until 11 November 2016,
demonetise and try to hinder black money was appreciated,
which was later extended to 14 November 2016 and
once again to 24 November 2016. but the manner in which it was carried out by causing hard-
ships to common people was criticised.
14. International airports were also instructed to facilitate
an exchange of notes amounting to a total value of Rs
The Governor of the Reserve Bank of India, Urjit Patel, and
5000 for foreign tourists and out-bound passengers.
Economic Affairs secretary, Shaktikanta Das has explained
15. Online transactions, credit card, debit card, cheque, in a press conference that while the supply of notes of all
DD, e-banking etc has not been effected. denominations had increased by 40% between 2011 and
2016, the Rs 500 and Rs 1000 banknotes increased by 76%
Finance Minister Arun Jaitley said that demonetisation and 109% respectively in this period owing to forgery. This
would clean completely the economic system, increase the forged cash was then used to fund terrorist activities
size of economy and revenue base. against India. As a result, the decision to eliminate the notes
had been taken.
Several bankers like Arundhati Bhattacharya (Chairperson
of State Bank of India), Chanda Kochhar (MD & CEO of ICICI Patel also informed that the decision had been made about
Bank) and Deepak Parekh (Chairman of HDFC) appreciated six months ago, and the printing of new banknotes of de-
the move in the sense that it would help curb black money. nomination Rs 500 and Rs 2000 had already started. How-
Businessmen like Anand Mahindra (Mahindra Group), Sajjan ever, only the top members of the government, security
Jindal (JSW Group), Kunal Bahl (Snapdeal and FreeCharge) agencies and the central bank were aware of the move.
also supported the move adding that it would also acceler- However, media had reported in October 2016 about in-
ate e-commerce. Infosys founder N. R. Narayana Murthy troduction of Rs 2000 denomination well before the official
praised the move. announcement by RBI. This statement has led to much
debate, because the Reserve Bank governor six months
Chief Minister of West Bengal Mamata Banerjee called the before the announcement was Raghuram Rajan, while the
new declaration "drama". Indian National Congress spokes- new banknotes have the signature of the newly appointed
person Randeep Surjewala welcomed the move but re- governor, Urjit Patel.
mained skeptical on the consequences that would follow.
Former World Bank Chief Economist, Kaushik Basu, said that Narendra Modi has appealed to the people to support the
the 'damage' is likely to be much greater than any possible demonetisation of Rs 500 and Rs 1,000 notes, asking them
benefits. It has also been noted in the media that black to bear the 'pain' for '50 days' to help him deliver the "In-
money holders keep only a small fraction of their ill-gotten dia of your dreams". He also reiterated his warning that
wealth as cash, hence targeting this cash may not be a several other "projects" were in the pipeline to check cor-
successful strategy. ruption, including action against benami property.

Chief Minister of Bihar Nitish Kumar supported the move. "Maine sirf pachas din mange hai… December 30 tak mujhe
The demonetisation also got support from Chief Minister mauka dijiye… Agar December 30 ke baad, koi meri kami

42 | 2016 | DECEMBER | BANKING FINANCE

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