With banks struggling to cope with the chaos at their counters and ATMs as people thronged them for legal-tender bank notes, the government on Tuesday moved in to check the operation of syndicates that might have exacerbated the situation. It introduced a system of marking customers exchanging scrapped high-value currency notes with indelible ink, while monitoring suspicious deposits in Jan Dhan accounts.
In the meantime, the Supreme Court refused to stay the demonetisation notification but asked the government to spell out steps taken to minimise public inconvenience.
“We will not be granting any stay,” a bench comprising Chief Justice T S Thakur and D Y Chandrachud said.
The government told the court that all feasible steps were being taken to reduce the hassles faced by the people. Fresh currency worth R50,000 crore has been printed lately and the currency presses are operating at full capacity, the apex court was told. However, in an indication that small-denomination currency supply is still constrained, the government requested religious institutions to deposit these in banks to augment supply to the public.
Kotak Mahindra Bank has reduced the interest rate on one-year fixed deposits (FDs) by 25 basis points (bps) to 7%, lower than the 7.05% offered by the State Bank of India (SBI) on deposits of the same tenure. It is the second lender after larger peer HDFC Bank to offer lower rates on one-year FDs than the country’s largest bank. SBI had effected a 10-bps cut on its one-year deposits, effective October 24, to push the rate down to a six-year low, following which HDFC Bank had slashed rates on one-year deposits by 25 bps to 7%, effective November 8.
“Indelible ink is only for exchange of old notes,” economic affairs secretary Shaktikanta Das said, briefing media persons about decisions taken in a late Monday night meeting chaired by Prime Minister Narendra Modi.
The decision was taken after it was found that people in genuine need were not getting a chance to change old notes in bank counters due to organised syndicates that have deployed people on a rotational basis at various branches to convert black money into white. “This suggestion was considered earlier internally, but we thought we will resort to this measure. But, then it was found that queues are not becoming shorter and the same people are coming back again and again for multiple withdrawals,” Das said. Bank staff have also been advised to report on such persons. “We are encouraging and impressing upon the places of religious worship which receive cash donations from devotees, most of it being in smaller denominations, to immediately deposit these notes of smaller denominations with the local bank branches,” the official said.
The government has again issued a warning to Jan Dhan account holders — 24 crore at the last count — to desist from being used to park illicit cash in their accounts on behalf of black money hoarders. Banks have been asked to monitor such no-frill accounts that have seen around R49,000 cash deposits after demonetisation kicked in. The maximum deposit limit in such accounts is R50,000.
Meanwhile, the government has boosted cash supply on a war footing to 1.3 lakh post offices to ease the difficulties of the rural populace, who have complained of no cash availability in many parts of the country.
A Cabinet secretary-led panel would monitor the supply of essential commodities in the country while another committee headed by the Cabinet secretary would monitor implementation of all the measures taken on the wake of demonetisation in the last few days. “Whatever more is required to ease pressure on (cash availability), will be taken,” Das said, adding that micro ATMs are widely being deployed in this regard.
The government has also set up a special task force to watch infusion of fake currency notes in vulnerable areas as well as on black money depositors. Another task force has been given charge to draw up a plan for transportation and safe keeping of old notes accumulated at bank branches.