Don’t worry, I am not going to talk about demonetization’s pros and cons but it is something different. Something which I think no one has come across. This experience happened when I travelled back to my native place in the last month of November, barely 15-20 days after the announcement of demonetization. There are total 3 incidences where I felt the flames of demonetization’s fire. Let’s see one by one.
This happened at our own medical shop, whenever I visit native, I spend few hours in our shops just to observe how people behave. Our shop is inside lane away from the main market so we don’t expect much business out of that shop but my mother told me it has changed since demonetization move. I was surprised and asked how’s that possible? She replied, “If you don’t know, government has asked all medical shops to accept old Rs. 500 and Rs. 1000 notes.” I asked her that why all the people are getting sick these days? She laughed and said, I have sold two jars of Vicks in last 10 days. People are coming to buy OTC products and giving old banned notes. But this led me to the curiosity of why are you accepting? How are you going to exchange with the bank when you know there is only two banks in nearby 10 villages? She replied with pride that medical stores have a responsibility to serve people at their bad times and we are doing the same. Everyday your father deposits collected cash to the bank. When you decide to serve people, you have to take some extra efforts as well.
Second incidence happened when I visited my grandparent’s place. This is place where only 6 shops are there two medicals, 3 kirana shops and one saloon. Majority of people lives on agricultural business and farming. When I was having a discussion with my grandfather, he happened to tell me one interesting factor which I think is very serious. He told me that just now people are done with sending their sugarcane production to nearest factory for the further processing. That factory pays 2200/tonne to the farmer. Generally in sugarcane production farmer gets money in hand at once but before that he has to pay the costs from his own pockets. As this demonetization has arrived, factory has made it mandatory to have an account to transfer the money directly to the farmer’s account. Though Jan Dhan Yojana was there last year, people still didn’t open their bank accounts. Now imagine you have only two banks in 10 villages, if all the farmers decide to open an account in a bank at this point, how will it happen when all the rush is going on in bank? Farmers have already spent all of their cash in producing sugarcane, now they are unable to get cash in hand. Though few have got account in bank, but due to withdrawal limit it is not possible to take out money for daily survival. The impact of it resulted in huge credit at kirana shops and other places where daily survival things are being sold. People are struggling to live.
Third incident I came across at the bank. This bank is newly opened bank at our place, my father has asked me to visit the bank and open account as the manager has requested to do so. I went there and did all the formal activities which are need to be to open a bank account. I met branch’s manager who interestingly took interest in my MBA. So I started asking questions related to demonetization and its impact on bank side. He explained me how it has affected the number of accounts opened in last 15 days, total deposits, total withdrawal etc. I asked how this money logistics works, to which he explained in tiny details. He said when we receive money at remote branch; we transfer it to the main branch with proper security. Now these 500 & 1000 notes are not a legal tender, RBI is going to replace this with new currency. So all these notes collected from all the branches will go to the main branch of the bank. Banks have their separate currency department which deals with RBI for currency exchange. The currency department for that bank is situated in Goa and main branch is in Mumbai whereas RBI is also in Mumbai. So when we look at the logistics part, it is going to cost us a huge amount as compared to the normal currency movement because RBI is going to give new currency. This will bring logistics cost up as currency transfer or distribution will take place in slots and will require time to reach branches in Rural areas. That’s why this limit of withdrawal is there and is going to be there till January as far as rural area bank branches are concerned.
So what I learnt from these 3 incidences? These were very normal instances anyone could have faced but when you see the intensity of this matter which is going to stay. Lastly, people forget what you say but they don’t forget how you make them feel. It’s again a very interesting side of tolerant India.
Happy Observations!
I am writing 