Chaos is the currency; Jaitley calls for patience ('all for a good cause')
Finance minister Arun Jaitley on Saturday regretted the hardships being faced by millions as they struggled to exchange the demonetised 1000- and 500-rupee notes in a network of banks, post offices and ATMs never designed to take such a load.
- Published 12.11.16
New Delhi, Nov 12 (Agencies): Finance minister Arun Jaitley on Saturday regretted the hardships being faced by millions as they struggled to exchange the demonetised 1000- and 500-rupee notes in a network of banks, post offices and ATMs never designed to take such a load.
”It is a regret that people are being inconvenienced. Because a replacement of this magnitude will cause inconvenience as you have to go to the bank, you have to stand in a queue,” he said.
The volumes are mind-boggling: the public sector State Bank of India, the country’s largest commercial bank, has done almost 23 million transactions in two days.
As the crisis entered the weekend, Jaitley had more bad news: it could take up to three weeks for technicians to re-calibrate the 200,000-odd automated teller machines for the 500-rupee and 2000-rupee note-– India’s first-- printed in secrecy in a size that cannot be readily dispensed by the ATMs.
”ATMs could not have been calibrated (before the announcement) because of secrecy issue. Thousands of people are involved in recalibration exercise (and) secrecy could not have been maintained. Recalibration takes at least 2-3 weeks,” he said at a hurriedly called press conference, the second in two days.
Prime Minister Narendra Modi’s surprise November 8 demonetisation of 1000- and 500-rupee notes, touted as a strike at black money, was followed by a day’s bank closure and a two-day ATM shutdown ostensibly aimed at helping them stock up.
But, with 500-rupee notes not “high-value” in today’s economy, the demonetisation was followed by chaos on the ground.
Those exchanging the old 1000- and 500-rupee notes have to fill up a form and give photocopies of an ID, and have been set a limit. Meanwhile, ATMs are running out of cash almost as soon as they are refilled since they are now dispensing only 100-rupee notes.
Jaitley claimed that the RBI and banks have stacked up enough currency to replace the Rs 14 lakh crore worth of 1000- and 500-rupee notes that are no longer legal tender.
He said the government is constantly monitoring the situation as it is a “massive operation” in which 86 per cent of the currency in circulation is being pulled out and replaced.
Jaitley also urged people not to rush to the banks to exchange the now-defunct banknotes, asking them to stagger it over the 50-day window provided by the government for the purpose.
On Saturday, the chaos and queues seemed longer, with hardly 40 per cent of the ATMs operating, and then running out of cash. The new Rs 500 note was available only in Delhi and Mumbai.
The RBI, now facing a shortage of even 100-rupee notes, has started released “soiled” currency that had been pulled out of circulation.
In the short run, Jaitley said, some “obvious” disruption will be caused in the short term.
”But once the money is available both in the system and more so in the banking system, the advantages of that to the economy and businesses will be far more. The capacity of the banks with all this additional capital to lend and support businesses is going to be far higher.”
”And therefore medium term and long term advantages to the economy as against this temporary inconvenience or disruption, are far too many,” he said.
On the positive side, banks are now flush with cash. SBI has been stuffed with Rs 47,868 crore of deposits in the last two days, Jaitley said.
He said all the banks taken together had probably collected Rs 2-2.5 lakh crore.