500,1000 Rs Note no longer legal tender!!

[Akshay_Fenix]

these incentives could have been given without de-monitization so that people would be encouraged to switch over to digital mode of payment, but why after de-monitization ?

First find out why demonetisation had to be done.

 

[vayuu1]

So govt expected some 25-30% black money to not come back. Already 80% + is back according to RBI's yesterday's briefing. All knowing govt-0, dumb SGU- 1!!

You are not getting the point,the money that is coming into back doesn't mean suddenly all the black into white, one will be too naive to think there is no black money in India, u still have to show the accountability of it, it's going to be taxable if it is unaccountable, even yesterday a guy got caught with 90 crore money with 70 crore new note and 100 kg gold, why do you think govt. Is after gold and benaami, becoz it know the ways guy get their dirty jobs done. It's not only limited to black money, it is also about digital economy and accountability.

Sent from my SM-N900 using Tapatalk

 

[tharun]

So govt expected some 25-30% black money to not come back. Already 80% + is back according to RBI's yesterday's briefing. All knowing govt-0, dumb SGU- 1!!

Can you provide me the link of rbi regarding this statement

 

[Khagesh]

@tharun,
apparently this was the impression given in some trade bodies. That is how the question landed up on the desk of Mr. D. Subbarao, Ex. Governor, and you know how D Subbarao ji responded. Other Ex. RBI senior management had also said similar things from time to time. In fact some commentators/expert guests, in the Media including in Zee network business programming, began to say the same thing. Then there is the evergreen promise of ache din due to demonetisation.

@vayuu1
What will the IT department do if I for example do the following :
deposit 10 lac rupees black money in my bank account but go on to show 7.5 lac of it as loan from my mother, father and wife, each earning exactly 2.5 lac for the first time in their lives.

Now in a country of 125 crore there must be at least 25 crore families and that is 25 lac crore worth of circular loans in stage 1 itself. This can go on and on and on like a chain reaction.

And this is just the start.

The problem with Modi and his supporters has been that they are can get very excited about nonsense. Demonetisation was not a bad idea per se. It could have been started better. But given the limitations, I would say the bureaucracy has been trying its best to make it a success. The worst part of it is that the Modi and his supporters have irrevocably attached so many unrelated promises to this exercise that it all begins to look like a great big joke on the whole country. Cashless and LessCash is not an invention circa November 8, 2016. Printing currency or importing or manufacturing extra paper is not something that cannot be managed in privacy if there is intent. For godsakes India kept the Pokharan tests secret which involved a battalion worth of personnel. Cooking up production numbers in the printing presses to throw off any spying is not unmanageable. Indian Nuke power plants have given low uptime numbers for ages (something that can hide low burn up fueling), printing presses production could have been hidden too the same way.

And all this showshe bazzi will ultimately force the whole system to make even more mistakes of several different types.

 

[vayuu1]

@tharun,
apparently this was the impression given in some trade bodies. That is how the question landed up on the desk of Mr. D. Subbarao, Ex. Governor, and you know how D Subbarao ji responded. Other Ex. RBI senior management had also said similar things from time to time. In fact some commentators/expert guests, in the Media including in Zee network business programming, began to say the same thing. Then there is the evergreen promise of ache din due to demonetisation.

@vayuu1
What will the IT department do if I for example do the following :
deposit 10 lac rupees black money in my bank account but go on to show 7.5 lac of it as loan from my mother, father and wife, each earning exactly 2.5 lac for the first time in their lives.

Now in a country of 125 crore there must be at least 25 crore families and that is 25 lac crore worth of circular loans in stage 1 itself. This can go on and on and on like a chain reaction.

And this is just the start.

The problem with Modi and his supporters has been that they are can get very excited about nonsense. Demonetisation was not a bad idea per se. It could have been started better. But given the limitations, I would say the bureaucracy has been trying its best to make it a success. The worst part of it is that the Modi and his supporters have irrevocably attached so many unrelated promises to this exercise that it all begins to look like a great big joke on the whole country. Cashless and LessCash is not an invention circa November 8, 2016. Printing currency or importing or manufacturing extra paper is not something that cannot be managed in privacy if there is intent. For godsakes India kept the Pokharan tests secret which involved a battalion worth of personnel. Cooking up production numbers in the printing presses to throw off any spying is not unmanageable. Indian Nuke power plants have given low uptime numbers for ages (something that can hide low burn up fueling), printing presses production could have been hidden too the same way.

And all this showshe bazzi will ultimately force the whole system to make even more mistakes of several different types.

May be u are right, but I was saying is that still it need to be verified as was mentioned by jaitley, money getting into the system doesn't automatically makes black into white one needs to verify it ,do you think govt has not thought about it, we will see the clear picture after 30th December.

Sent from my SM-N900 using Tapatalk

 

[Spindrift]

This has nothing to do with black money\corruption. They are planning on something else. This exercise is classic example of Hegelian dialectic.

There are better ways to tackle the black money\corruption and in order to effectively and efficiently tackle this one needs to figure out the root cause of the problem and the availability of 500 and 1000 rupee notes is not the root cause.

 

[tharun]

apparently this was the impression given in some trade bodies. That is how the question landed up on the desk of Mr. D. Subbarao, Ex. Governor, and you know how D Subbarao ji responded. Other Ex. RBI senior management had also said similar things from time to time. In fact some commentators/expert guests, in the Media including in Zee network business programming, began to say the same thing. Then there is the evergreen promise of ache din due to demonetisation.

Until unless RBI gives those numbers...i don't give a damn numbers given by trade organizations or any one else

 

[ezsasa]

This has nothing to do with black money\corruption. They are planning on something else. This exercise is classic example of Hegelian dialectic.

There are better ways to tackle the black money\corruption and in order to effectively and efficiently tackle this one needs to figure out the root cause of the problem and the availability of 500 and 1000 rupee notes is not the root cause.

Not disagreeing,but put forth some methods you think can curb black money.

For better discussion purposes.

 

[Sakal Gharelu Ustad]

You are not getting the point,the money that is coming into back doesn't mean suddenly all the black into white, one will be too naive to think there is no black money in India, u still have to show the accountability of it, it's going to be taxable if it is unaccountable, even yesterday a guy got caught with 90 crore money with 70 crore new note and 100 kg gold, why do you think govt. Is after gold and benaami, becoz it know the ways guy get their dirty jobs done. It's not only limited to black money, it is also about digital economy and accountability.

Sent from my SM-N900 using Tapatalk

When they could not catch it, then why make everyone stand in a queue? Still, All knowing govt-0, dumb SGU- 1!!

 

[Sakal Gharelu Ustad]

Can you provide me the link of rbi regarding this statement

http://www.livemint.com/Industry/0L...-lakh-crore-in-banned-notes-returned-RBI.html

..................................................................

 

[Khagesh]

Until unless RBI gives those numbers...i don't give a damn numbers given by trade organizations or any one else

I may have given you a slightly wrong impression. Even trade bodies have no numbers. Because much of this seems to have been treated like good faith but informal guidances.

The fact that the Attorney General Mukul Rohatgi gets reported in newspapers, saying that only 10 lac crore was expected to be collected in the banking system, in his submission before Supreme Court was a confirmation that something could have been done about the rest of the money.

Here is one Jahangir Aziz an economist with J P Morgan, part quoted here. People were talking to each other and ctoss-confirming things. And we have had several Ex-Officials of RBI speaking against simple payout of reclassified liabilities. The reason these people were speaking was because somebody was asking questions through correspondents. May be this was merely rumour among educated people but at least nothing was done by GoI or RBI to quash it all by a simple clarification. Such non communication has its other unintended consequences.

Will demonetisation be really successful in additional revenue and therefore in curbing fiscal deficit? Is there any case for higher capital infusion for banks?

We all made those calculations in the first few days or probably the first few hours when we heard about the demonetisation when people started throwing numbers around that the savings rate for the government would be 3%, 4% of GDP and that could all be used for bank recapitalisation and other such good thin ..

Read more at:
http://economictimes.indiatimes.com...ofinterest&utm_medium=text&utm_campaign=cppst

Anyways, I am not against windfalls being recirculated either. And windfall gains can be obtained from ordinary activity too. Ask Paytm . If you have to balance Assets side (not affected by Demonetisation) against Liabilities side (deeply affected by demonetisation) in the RBI Balance Sheet (real thing) then the reclassification of liabilities is going to happen. And even if put in Reserves, any increment in Reserves (which implies general reserves and not capital reserves) is Owners Funds (ergo GoI ownership). It would not be wrong to use these again in future and future includes January 1, 2017 or for that matter April 1, 2017.

Here is C. Rangarajan, Ex. Gov. RBI also viewing the liability extinguishment as non-distributable.

Q: The Reserve Bank’s balance sheets says in FY16 that it has Rs 17 trillion that is the notes it has issued that is it liability, if citizens destroy about Rs 2-3 trillion then the liability goes down. Will that be accounted for as an increase in reserves of the Reserve Bank and will it therefore be able to declare some dividend to the government, a special big dividend?
Rangarajan: To me this is a liability which is getting extinguished therefore on the liability side of the issue department it is coming down and therefore what will happen is a some amount on the asset side or equivalent amount on the asset side will have to come down. Therefore this is basically a balance sheet problem and it is not a profit in any sense of the term. The reduction in the liability side will be matched by the reduction in the asset side.

Q: There is no question therefore of the RBI being able to declare any special dividend. Separately Article 47 of the RBI Act says that surplus after meeting current expenses can be transferred, it doesn't seem to allow the RBI to touch reserves any comments on that?
Rangarajan: The interpretation is correct. I think the profits that are made by the RBI are essentially out of the current transactions. There is no capital gain or capital loss as far as the RBI is concerned. Therefore I would really say that there is no scope for any extra dividend to be declared to the government. Basically it is a simple adjustment on the balance sheet.

Read more at: http://www.moneycontrol.com/news/ec...angarajan_7954641.html?utm_source=ref_article

However there are three catches in his arguments:
1) It is actually the Capital Profit or Loss that is distributable or Contributory, in real life. Had that not been the case people and corporates would simply have paid up dividend from the capital. Something which is a strict and unequivocal no-no across the world, except in very special circumstances which again are highly controlled. Dividend can only be from the General Reserves and Surplus. Now once you have demonetised a liability which in common parlance can only be attributable to black money the reclassification is not a capital reserve entry. Issue Department is very much a general activity of RBI and any disavowed / extinguished liability would be an ordinary activity and hence general profits. Merely the fact that the figure is too big does not makes it extraordinary / Capital in nature. It would be capital in nature if a corresponding asset is appreciated / depreciated on account of sale/revaluation of assets which is done otherwise than in ordinary course.

2) C. Rangarajan ji says he only sees a re-statement of assets. Now it would have been much easier if he had also pointed out what assets can be re-valued or re-stated on account of demonetisation. At least I can think of no assets that can be touched if a big creditor or debenture holder (which is what general public holding the currency is) decides that they don't want to press for their claims. It is the govt. that is the capital holder (in the position of promoter/director) and had the Government relinquished its own funds (general surplus) then it would have been a capital entry and thus not distributable.

3) If extinguishment of liability is not distributable then you (RBI) have to state what good reason is it to be applied for. Capital Reserves which are not distributable in ordinary course have obligations or promises attached to it. What good obligation is attached to a demonetized currency if all the procedures are correctly followed and the process of demonetisation is legally conducted. At this point RBI simply cannot hide behind its promise to pay which the GoI on RBI's recommendation has disavowed. Either you claim that the disavowal was correct or you claim that disavowal was wrongful and we should continue to honor vows even after notified demonetisation. If this state of affairs is allowed to continue then it only means that the purpose of demonetisation was to take money our of Indian hands and allow some foreigners money to chase Indian goods and assets (which would be treasonous).

 

[Sakal Gharelu Ustad]

I may have given you a slightly wrong impression. Even trade bodies have no numbers. Because much of this seems to have been treated like good faith but informal guidances.

The fact that the Attorney General Mukul Rohatgi gets reported in newspapers, saying that only 10 lac crore was expected to be collected in the banking system, in his submission before Supreme Court was a confirmation that something could have been done about the rest of the money.

Here is one Jahangir Aziz an economist with J P Morgan, part quoted here. People were talking to each other and ctoss-confirming things. And we have had several Ex-Officials of RBI speaking against simple payout of reclassified liabilities. The reason these people were speaking was because somebody was asking questions through correspondents. May be this was merely rumour among educated people but at least nothing was done by GoI or RBI to quash it all by a simple clarification. Such non communication has its other unintended consequences.





Anyways, I am not against windfalls being recirculated either. And windfall gains can be obtained from ordinary activity too. Ask Paytm . If you have to balance Assets side (not affected by Demonetisation) against Liabilities side (deeply affected by demonetisation) in the RBI Balance Sheet (real thing) then the reclassification of liabilities is going to happen. And even if put in Reserves, any increment in Reserves (which implies general reserves and not capital reserves) is Owners Funds (ergo GoI ownership). It would not be wrong to use these again in future and future includes January 1, 2017 or for that matter April 1, 2017.

Here is C. Rangarajan, Ex. Gov. RBI also viewing the liability extinguishment as non-distributable.


However there are three catches in his arguments:
1) It is actually the Capital Profit or Loss that is distributable or Contributory, in real life. Had that not been the case people and corporates would simply have paid up dividend from the capital. Something which is a strict and unequivocal no-no across the world, except in very special circumstances which again are highly controlled. Dividend can only be from the General Reserves and Surplus. Now once you have demonetised a liability which in common parlance can only be attributable to black money the reclassification is not a capital reserve entry. Issue Department is very much a general activity of RBI and any disavowed / extinguished liability would be an ordinary activity and hence general profits. Merely the fact that the figure is too big does not makes it extraordinary / Capital in nature. It would be capital in nature if a corresponding asset is appreciated / depreciated on account of sale/revaluation of assets which is done otherwise than in ordinary course.

2) C. Rangarajan ji says he only sees a re-statement of assets. Now it would have been much easier if he had also pointed out what assets can be re-valued or re-stated on account of demonetisation. At least I can think of no assets that can be touched if a big creditor or debenture holder (which is what general public holding the currency is) decides that they don't want to press for their claims. It is the govt. that is the capital holder (in the position of promoter/director) and had the Government relinquished its own funds (general surplus) then it would have been a capital entry and thus not distributable.

3) If extinguishment of liability is not distributable then you (RBI) have to state what good reason is it to be applied for. Capital Reserves which are not distributable in ordinary course have obligations or promises attached to it. What good obligation is attached to a demonetized currency if all the procedures are correctly followed and the process of demonetisation is legally conducted. At this point RBI simply cannot hide behind its promise to pay which the GoI on RBI's recommendation has disavowed. Either you claim that the disavowal was correct or you claim that disavowal was wrongful and we should continue to honor vows even after notified demonetisation. If this state of affairs is allowed to continue then it only means that the purpose of demonetisation was to take money our of Indian hands and allow some foreigners money to chase Indian goods and assets (which would be treasonous).

You guys are unnecessarily worried. 80%+ currency is already returned and there is still enough time left for rest to come back. So, it will just come back into the system. RBI will have no monkey balancing act to do.

 

[tharun]

http://www.livemint.com/Industry/0L...-lakh-crore-in-banned-notes-returned-RBI.html

..................................................................

I did asked for RBI's official transcript or statement regarding your claim.....not some media report

 

[Sakal Gharelu Ustad]

I did asked for RBI's official transcript or statement regarding your claim.....not some media report

Go see his speech dude. RBI governor when he speaks, it means official.

 

[tharun]

Go see his speech dude. RBI governor when he speaks, it means official.

I'm neither trolling you nor poking you..i'm saying if RBI governor speaks officially every thing is transcripted and will be available on RBI's website....i didn't find it so i asked you for it....

 

[indiatester]

I did asked for RBI's official transcript or statement regarding your claim.....not some media report

I saw the press conference. RBI deputy governor did indeed say that.

 

[Nicky G]

Interesting dimension if true. Certainly possible considering how woefully and utterly corrupt the previous governments were.

Also clarifies why some of previous RBI governors seem so 'concerned' by this move.

 

[Bharat Ek Khoj]

News is plastic notes might be coming soon.

 

[Khagesh]

You guys are unnecessarily worried. 80%+ currency is already returned and there is still enough time left for rest to come back. So, it will just come back into the system. RBI will have no monkey balancing act to do.

Oh! my worries ended on 13.11.2016 after the Goa Town Hall meeting.

And you may like to reconsider if the monkey business was has ended or only just begun. 5-10 lawyers supported by experts from the executive helping a bench of the judicial system form a legal basis for recognition of windfall was the easiest thing to achieve.

Only thing is that the windfall would have required some real cash in the till. Obviously no body can do fractional banking when there is not even the silly fiat currency available. That cash in the till was indicated by Attorney Generals reply to SC. That would have formed the basis for fractional banking to follow, but via the hands of the Government of India.

Now if the Attorney General says something before the court then he must have been provided that assessment from some credible source in the Govt.

And if the Govt had that kind of considered assessment then surely somebody inside the government must also have begun thinking of distributing the wind fall. And if that distribution was planned upon then there would be a lot of people outside with promises in their hands but nothing else. People who were imagining Indian Govt. expending money on their pet projects.

Demonetization has brought copious cash back into the fractional banking system but all of it now for the common people of India. Nothing gets into the hands of the Government.

Wither! the 300 Single engined aircrafts.

Modi should just buy the LCA now.

 

[Akshay_Fenix]

What of the ‘extra’ money with the RBI?

By Kushagra Nayan Bajaj

GoI claims demonetisation to be a crackdown on black money and to stop counterfeiting of banknotes. But what if the motive was to checkmate all previous governments that may have arm-twisted RBI to print more currency than accounted for in its books?

GoI has valued India’s cash economy at Rs 14 lakh crore in Rs 500 and Rs 1,000 notes. What if RBI, on any government’s insistence, had printed, say, Rs 18 lakh crore? So, currency above Rs 14 lakh crore, while not on RBI’s books, remains official and has a serial number. This can’t be ‘fake’ or ‘black’ money.

Let’s call it ‘extra’ money. Over the years, this ‘extra money’ has been in circulation through the banking channels. Every government’s statistics report shows that 0.028 per cent — about Rs 400 crore — is fake currency. How can one then explain the difference between this and the much higher volume of currency moving in the economy? If there is an asset-liability mismatch on RBI’s books, how will it hide it? For, if all this ‘extra currency’ comes into PSBs and they deposit it back at RBI, RBI then has to pay extra interest also on this extra liquidity.

It’s a different matter that GoI has a windfall gain and interest rates will collapse. But this could cast serious doubts on the integrity of previous governments and RBI.

http://blogs.economictimes.indiatimes.com/et-commentary/79357/