Don't hoard currency, sufficient notes in supply: RBI

  • Don't hoard currency, sufficient notes in supply: RBI

Don't hoard currency, sufficient notes in supply: RBI

The cash-crunch was triggered by a government move to staunch the flow of counterfeit currency and block the rampant bribe system in the country.

Modi dropped a bombshell on November 8 by abolishing 500 and 1,000 rupee notes that accounted for 86 percent of cash in circulation.

People have a limited time to exchange the notes for smaller denominations, but will have their fingers marked. "The government should have taken proper steps before putting the new policy in place".

Businesses routinely use cash to avoid paying taxes. "That money is sloshing around the economy and the cash part is what the government is after". The move was aimed at cracking down on the shadow economy but has brought India's cash economy to a virtual standstill. A government bank's manager said, "Many ATMs are in the process of recalibration where a new cassette of Rs 2,000 has to be installed and the Rs 1,000 bin has to be removed".

"Members of public are requested not to panic or hoard currency notes", the central bank said. There are also limits on the amount that can be withdrawn from accounts and ATMs.

Modi acknowledged the transition to the new currency might be briefly hard, but said the government "spent long hours trying to figure out how to minimize the inconvenience". Banks have also been asked to waive transaction charges on debit and credit cards.

"Do you see anyone with black money here?" demanded Chote Lal, 59, who had taken the day off from his office job to wait in line. The family didn't have smaller denomination notes with them for the fare.

The first people showed up at the bank long before dawn, forming a line in the cold and the smog and silently waiting for the chance to withdraw their own money.

Home ministry officials said that enough cash is not in circulation and that's leading to chaotic situations outside banks and ATMs. "I will never let anyone loot money that belongs to India's poor".

"The poor are sleeping peacefully, while the rich are running around trying to buy sleeping pills", Modi said in a speech he delivered on Monday.