Do you have too many currency notes stuffed in your mattress that were issued before 2005 and would not like to reveal your identity while exchanging them with new notes? Head towards Ahmedabad.
If bankers are to be believed, a discount market is running in Gujarat’s main city, where you can exchange your high-value notes at a discount of around 6%. This is expected to rise in coming months. Right now, you can settle for Rs.94 for Rs.100.
Somebody else will take the ownership of your currency note and exchange it at a bank counter.
In January, the Reserve Bank of India (RBI) announced that it was withdrawing from circulation all bank notes issued before 2005.
How does one identify such notes? Well, it’s fairly simple: they do not have the year of printing mentioned on them.
Such notes will have to be exchanged at banks from 1 April. To exchange more than 10 pieces of Rs.500 and Rs.1,000 notes from 1 July, if you’re not the customer of a bank, you will have to furnish proof of identity and residence to the bank branch in which you want to exchange the notes.
That’s the hitch. Those who have tonnes of such currency notes and do not want to be identified for hoarding such unaccounted for money are looking for others who will lend their identity at a price.
The discount market is quietly growing in Ahmedabad, once the hot bed of dabba trading. In due course, it will spill over to other cities and towns, bankers say.
RBI is withdrawing currency notes issued before 2005 to ensure that the notes in circulation are of similar design. Also, currency notes issued in recent years have stronger security features, which help check counterfeiting.
But these are official reasons. The real reason, it seems, is cleaning up black money ahead of general elections.
RBI governor Raghuram Rajan has said it was not an attempt at demonetization, nor had it anything to do with the forthcoming general elections.
After people with unaccounted cash exchange the pre-2005 currency notes with newer ones for a discount, the money will still remain black, of course, but at least they ensure they aren’t caught with illegal tender.
At present, currency notes in denominations of Rs.5, Rs.10, Rs.20, Rs.50, Rs.100, Rs.500 and Rs.1,000 are issued.
Going by the RBI data, 73.51 billion pieces of currency notes were in circulation on 31 March 2013. Of this, 14.6% were Rs.500 notes and 5.9% were Rs.1,000 notes.
