PM Modi's Currency ban is a Rs 60,000 crores scam?

After the ban of Old High ADenomination (OHD) currency notes on 8 Nov, 2016, there are widespread allegations of leakage of this news much before it was announced.

- Preeti Sharma Menon

If the allegations are correct, it presents a clear case of front running based on the insider information to make easy money from this move.

Lot of people have lost money overnight while some have made money post this decision. Anyone who had prior information of this would surely be on the profiteering side. Hence we will have to analyse set of people who are making money by this decision to separate out people who had no prior information of this and second set of people who had insider information with them.

People are making profit by accepting OHD at discount or selling their assets at very high price in lieu of OHDs. We are hearing news of gold selling at Rs. 50000 per 10 gram in exchange of OHD and old 500 and 1000 notes selling at 20-30% discount (Old Rs. 500 notes being exchanged with new currency of Rs 350 to 400). At a time when people want to get rid of old notes, a fundamental question comes to mind – who are these people accepting the old notes and what will they do with such old notes.

They are the agents (with or without prior information) who will ultimately earn huge profit by depositing it in the banks for full value. There are two ways in which large sum of these notes can be deposited in the banks by these agents:

Cash deposit method number 1: OHD up to Rs. 2.5 lakhs can be deposited by any individual without getting any tax demand. Hence, these agents will scout for poor people who will deposit the black money in their almost non functional bank accounts to earn a 10-20% commission on the amount deposited. Later these poor people will slowly withdraw the money and hand it over to the agents after deducting their commission.