MUMBAI/NEW DELHI, May 23 (Reuters) – Indians are stepping up purchases of daily necessities, even luxury branded goods, using the soon-to-be-drawn 2,000 rupee ($24.46) banknotes as they aim to avoid the need. exchange or deposit them in banks.
India’s central bank announced on Friday that the country’s largest denomination will be withdrawn from circulation by the end of September. Although it did not specify the reason for the move, it comes ahead of government and general elections in the country, where analysts said liquidity utilization usually rises, often in unaccounted for deals.
Currency exchanges are expected to be much less disruptive than the 2016 move to demonetize 86% of the country’s currency in circulation overnight.
Since the weekend, people have crowded the outlets to spend with the 2,000-rupee notes to avoid the hassle of queuing at banks to exchange them or calling the tax department for scrutiny by depositing large sums.
For their part, Indian stores eagerly accepted the note, using it as an opportunity to boost sales, several of them said on Tuesday, the first day the exchange was allowed.
“Many people have been using 2,000 rupee notes to pay for their mangoes since Saturday,” said Mohammad Azhar, 30, a mango seller near Crawford Market in Mumbai, India’s financial capital.
“On a daily basis, I get 8-10 banknotes now. I accept them. I have no choice, it’s my business. I will deposit everything at once before September 30th. There is no fear because the note is valid.”
Michael Martis, a store manager at a Rado store in a mall in central Mumbai, said his store has seen a 60%-70% increase in Rs 2,000 notes since the raffle was announced.
“This increased our watch sales to 3-4 pieces per day from 1-2 previously,” said Martis.
Food delivery company Zomato (ZOMT.NS) said on its Twitter account on Monday that 72% of ‘cash on delivery’ orders have been paid in Rs 2,000 notes since Friday. However, a company spokesperson clarified in response to an inquiry seeking details that the tweet was a joke rather than factual. The company declined to provide actual numbers.
Not all shopkeepers were eager to accept the notes.
“I don’t, I won’t. I don’t want to get in trouble for depositing it in my bank,” said a restaurateur in South Mumbai.
Unlike in 2016, when customers rushed to banks to exchange canceled notes, bank branches in Mumbai and New Delhi were mostly quiet with only a handful of people queuing.
Maximum crowds were seen at the counters of India’s largest bank, State Bank of India (SBI.NS), as the bank chose not to require any documents to replace up to the maximum allowed Rs 20,000 at one time.
($1 = 81.7800 Indian Rupees)
Writing by Swati Bhatt; Editing by Muralikumar Anantharaman
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