Bengaluru: Prime Minister Narendra Modi's sudden announcement on demonetisation of higher currency; of Rs 1,000 and Rs 500 denomination has thrown the parallel economy, which according to official estimates constitutes 25 to 30 per cent of the Indian economy, out of gear at least for now, say officers of the Revenue Intelligence.
“Hawala operators have lost their game and are out of job because the old currency is rubbished and cannot be used. The unaccounted money, which was fuelling smuggling of gold and foreign currency, is dud money now. It is the end of the road for smugglers and hawala operators for now. They will have to look for an exit route or their accomplices overseas will have to recruit them for operations outside India until they find another means to hoodwink law enforcement agencies,” said an officer on condition of anonymity.
He added that the bigger players may still find an 'alternate' income route but the small hawala operators, who thrive in the city, will have to go.
The volume of hawala operations in Bengaluru can be assessed from the fact that the Directorate of Revenue Intelligence alone has seized 140 kgs of smuggled gold in the city this year. “The volumes (of hawala operations) are high. One kilo of gold is Rs 30 lakh and these figures are only of the DRI seizures. The seizures by Customs Department and other enforcement agencies will bulk it up even more. The black money was greasing the illicit businesses and hawala was at the back of these operations," said the officer.
Not just bullion, the illegal narcotic drugs and illegal arms trade also rest on payments through hawala. "All illegal trades within and outside the country run on hawala and this is common knowledge. Demonitisation of Indian currency will hit the illegal narcotic drugs and arms trade as well," he added.
Former additional director general of DRI Venkatramana said the demonetisation of higher currency is an excellent move to stem out black money and corruption, but it should be backed by stringent laws. Auditing of political parties, regulation of realty and gold trade are some of them, he said.
I have stashed it, can you make it legal?
The Central government’s decision to demonetize Rs 500 and Rs 1,000 denomination currencies has alarmed those who have stashed money and they are now looking at possible ways to turn it into white or legal.
They have already started looking for trusted people owning multiple bank accounts, so as to deposit money in their account. The challenge is to ensure that these people do not cheat and the mode of return.
A person from Hosakote on condition of anonymity said that he and his business partner had kept Rs 2 crore for real estate business to form layout. Soon after the news of demonetization was announced and the mode of bank payment, these people have already started to zero in on those they can trust. Initially, the limit of deposit of money into the bank was Rs 20,000 and now cash of Rs 2.5 lakh can be deposited into an individual’s account and the bank or income tax department would not question or harass them.
Likewise people who have accepted black money for the property sold are also in a fix to get it converted to white. Interestingly, large number of people turned up on Thursday to deposit cash in banks.
‘Interest free’ loans: A few powerful politicians have been offering interest free loans to their aides in old currency by entering their details. The beneficiaries have been told to return the money once the new legal tender comes into the market.
Cash frenzy will take the life out of ATMs
Offering hassle free and uninterrupted ATM service is a nightmarish task for the next one week, said a SBI official on condition of anonymity.
Already, banks have had meeting with software providers to upgrade the software so as to dispense new currencies and Rs 2,000 currency in lieu of Rs 1,000.
Since the new currencies should be fed into the systems, as there will be a huge demand for high value currencies. The only solace is that a maximum of Rs 2,000 will be dispensed for a person per day. Nevertheless, there will be huge demand for new currencies notes of Rs 100 denomination.
Even on normal days ATMs often crash and go out of service, hence we need to make sure that they function more efficiently to offer better service to our consumers. As per the directions from the Reserve Bank and Union Government, the software or programme needs to be upgraded to dispense more money.
Getting constant cash to meet the requirement is also challenge. Even if the ATM machines are ready to function, lack of cash would defeat the purpose. For next week it will be an uphill task for bank officials in charge of ATMs.
Hundreds of people thronged the house of MLA Bhairathi Basavaraj in Kothanuru on Thursday, following rumours that he was distributing money to people. It all started since morning when people started coming in small groups and the family was not at home. By evening a large number of people had gathered and they started creating ruckus. The Kothanur police rushed to the spot and chased the people. Security was deployed for the property of the MLA and crowd control.
