Prime Minister Narendra Modi's shock announcement to demonetise the ₹500 and ₹1,000 currency overnight was primarily aimed at catching those who hoard black and illegitimate money in these denominations off-guard. The sudden announcement and its implementation within four hours of the speech may have prevented flight or conversion of such money into other asset classes, but it has also resulted in a lot of collateral damage. In the three stories to follow, Business Today examines the cost of the decision to the banking system; how hoarders are devising innovative ways to skirt the ban; and the tax implications for those who would wish to deposit old currency into their bank accounts.
Imagine evacuating old currency notes of ₹500 and ₹1,000 from over 200,000 ATMs across the country. Replenishing with new notes of ₹500, ₹1,000 and ₹2,000 is not only a logistical challenge but also involves huge costs for banks. Hassled bankers, already struggling with low credit off-take and deteriorating asset quality, will have to incur these additional costs and at the same time profitably deploy the additional deposits coming their way.
Former finance minister P. Chidambaram was quick to give an estimate of ₹15,000-20,000 crore for the demonetisation process. The previous government didn’t opt for it as the cost-benefit analysis didn’t work.
“Economic destabilisation is far worse than any other event that could shake the country,” says Melwyn Rego, Managing Director and CEO of Bank of India. While bankers are tight-lipped on the costs and humming that national interest is paramount, they are quietly assessing the costs. The sudden decision has already pushed banks to deploy additional workforce and extend banking hours. “People from corporate and administrative offices have been deployed. The costs would include staff, overtime and logistics (topping up ATMs regularly),” says a banker, on condition of anonymity.
Esta historia es de la edición December 04, 2016 de Business Today.
Comience su prueba gratuita de Magzter GOLD de 7 días para acceder a miles de historias premium seleccionadas y a más de 9,000 revistas y periódicos.
Ya eres suscriptor ? Conectar
Esta historia es de la edición December 04, 2016 de Business Today.
Comience su prueba gratuita de Magzter GOLD de 7 días para acceder a miles de historias premium seleccionadas y a más de 9,000 revistas y periódicos.
Ya eres suscriptor? Conectar
"Moving to cloud helped us grow❞
What was the problem you were grappling with?
She's Got Time
MORE WOMEN ARE BECOMING WATCH CONNOISSEURS, SEEKING OUT BOTH JEWELLED AND TECHNICAL WATCHES FOR THEIR STYLE AND CRAFTSMANSHIP
RISING STAR
PARUL GULATI IS a name that's been steadily gaining prominence in the Indian entertainment industry after she appeared on season 2 of Shark Tank in 2023. She has become a multifaceted personality who effortlessly transitions between acting and entrepreneurship.
Building on a Legacy
WHEN ZAHABIYA KHORAKIWALA stepped into her role as Managing Director of Wockhardt Hospitals over a decade ago, she confronted formidable challenges that have since turned into achievements.
LEADER IN INNOVATION
AS FEDEX'S PRESIDENT (Middle East, Indian subcontinent and Africa), Kami Viswanathan has a lot on her plate.
WAITING IN THE WINGS
Here are those who missed out as they have not yet completed a year in office; they'll be strong contenders in 2025
A DECENT PROPOSAL
IN TODAY'S WORLD OF TRYING TO CREATE AN EQUITABLE SPACE, BOTH MEN AND WOMEN CONTRIBUTE TO THEIR HOUSEHOLDS. WOMEN ARE ENCOURAGED TO HAVE THEIR OWN SAVINGS POOL AND INVESTMENT ROUTINE. GIVEN THIS, HOW SHOULD FUTURE BRIDES APPROACH FINANCIAL PLANNING?
Women and the STEM Bias
EMPOWERING WOMEN IN STEM WILL NOT ONLY BENEFIT INDIVIDUALS, BUT ALSO STRENGTHEN THE ENTIRE INDUSTRY, DRIVING INNOVATION AND PROGRESS.
ROCKET WOMEN
WOMEN IN INDIA ARE NOT ONLY VENTURING INTO SPACE BUT ARE ALSO STARTING TO SPEARHEAD THE COUNTRY'S EFFORTS IN THE GLOBAL SPACE RACE.
ONE STEP FORWARD
THE NUMBER OF WOMEN INDEPENDENT DIRECTORS IS GROWING STEADILY, BUT IT'S A LONG WAY FROM GENDER PARITY. MUCH MORE NEEDS TO BE DONE TO BREAK THE GLASS CEILING IN BOARDROOMS.