LocalCircles surveyed people who said they find it difficult to spend the biggest denomination of cash, despite many reports that petrol pumps, jewellery stores, and even e-commerce delivery people are being flooded with 2000 notes. According to the central bank of India, this note will cease to be circulated, but it will remain legal tender in India.
Despite the fact that Indians can deposit or exchange it at banks starting May 23, with a four-month deadline, early indicators indicate that Indians would rather spend it away. Retailers are reluctant to accept 2,000 banknotes, so that spree doesn’t seem sustainable.
As many as 91% of those who attempted to use the 2000 notes stated that “they have encountered difficulty” in using it after the RBI announcement. Retail stores, chemists, hospitals, service providers, and petrol pumps all faced problems, according to the survey.
According to the survey from LocalCircles, the Reserve Bank of India’s assurance that 2000 notes will remain legal despite plans to withdraw them has fueled fears about whether they will remain so after September 30 and fears of loss if they are not accepted as legal currency. Government officials have said that demonetisation will take place by the end of the year.
Additionally, Kotak Institutional Equities reported that its legal tender status would boost consumption. In fact, notes which are not deposited by individuals – undisclosed income, deposits above certain limits – could move into high-value expenditures such as gold and jewellery, high-end consumer durables, and real estate, which in turn reach bank deposits.
The gold rush versus KYC-2000 notes
As there is four months left, there is no need for people to rush to banks. According to reports, many people have been trying to exchange 2,000 rupee notes for gold and silver instead. Nevertheless, jewellers say that there hasn’t been a panic in gold buying either, just as banks haven’t seen a rush.
A lot of inquiries have been made about purchasing gold or silver for 2,000 notes, which is why there have been more footfalls. In spite of this, the All India Gem and Jewellery Council (GJC) chairman, Saiyam Mehra, told PTI, “KYC (know-your-customer) norms have resulted in fewer actual purchases.”
According to a survey of small jewellers in various cities, the All India Jewellers and Goldsmith Federation maintains that “no jeweller accepts rupees 2,000 for gold in premium cases.”
Those wishing to exchange their banknotes for notes of other denominations may do so at any bank, up to a limit of 20,000 at a time. The PAN requirement for deposits of 50,000 or more in bank accounts will also apply to people holding banknotes of 2,000 or less.
What is the average amount of cash held by people?
Approximately 64% of LocalCircles survey respondents said they do not hold notes in the 2,000 rupee denomination as of March 31, 2023.
There are only 6% of respondents who said they have more than 1 lakh rupees in the form of 2,000 rupee notes.
Moreover, 15% said they had up to 20,000 rupees – which they could exchange at banks easily.
There are also 7% of respondents who say they have between 20,000 and 40,000 rupees. Only 2% have between 2 and 10 lakh rupees, and another 2% have between 10 lakh and 20 lakh. There are also 2% who “don’t want to disclose.”.
While citizens face hardships, 64% of survey respondents support the government’s decision to withdraw the 2,000 rupee note from circulation.