6 Aftereffects of the INR 2000 Note Withdrawal by RBI Following the RBI's decision to stop issuing INR 2000 notes, several businesses noticed that payments were now made in the withdrawn currency.
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Despite the fact that bank branches have the option to swap Rs 2000 notes for smaller denomination notes, it seems that many people have started using their INR 2000 notes as payment.
This behaviour is being done in order to avoid long waits at banks, which may occur if people tried to exchange these higher denomination currencies for lesser denominations.
Since the deadline is still four months away, RBI Governor Shaktikanta Das clarified on Monday that there was no need to fear. After the revelation, there was still a temporary panic as people hurried to dispose of their notes, which led to issues in numerous industries.
Zomato expressed the effects of the RBI's decision on Monday via Twitter. Their tweet indicated that a sizable 72 percent of their COD items had been paid for with INR 2000 notes.
since friday, 72% of our cash on delivery orders were paid in ₹2000 notes pic.twitter.com/jO6a4F2iI7— zomato (@zomato) May 22, 2023
Since many of its customers are now choosing cash on delivery in denominations of INR 2000 notes, according to the latest numbers from D2C fashion brand French Crown for the last week of May, there has been an increase in sales of roughly 15%. And this figure might rise as people feel the pressure to exchange currency before September ends.
"We also recognize another trend that some individuals are returning their parcels if our courier personnel inform them that we have a limitation to use INR 2000 notes. In such cases, our courier boys have no option but to accept the currency, because by law, we cannot refuse it; it's still a legal tender. Rest assured, we are closely monitoring the situation and exploring alternative payment options to ensure a seamless shopping experience for our valued customers," said the Founder and CEO Ilesh Ghewariya.
The withdrawal of INR 2000 denomination notes, according to Mukesh Kumar, Founder and Mentor of M-Sanvi Real Estate Pvt Ltd, has presented various hurdles for their industry.
"Firstly, the cash-dependent nature of our sector has been disrupted, as large cash transactions were common in our real estate deals. This has led to a decline in our property sales and transactions, as our buyers face difficulties in arranging large sums of cash. Secondly, the sudden policy change has caused uncertainty and a lack of trust among our buyers and investors, leading to a slowdown in the market. Lastly, our sector heavily relies on black money, and the demonetization has intensified efforts to curb unaccounted wealth, impacting the industry's profitability and liquidity," shared Kumar.
Meanwhile, Deepinjit Singh, Director of Big Bull Realtors and Investors Pvt Ltd, observed that consumers are now choosing to pay with real cash, primarily in the form of INR 2000 notes, rather than a cheque or an online transaction. The real estate market has been significantly affected by this cash withdrawal, which has increased property investments and transactions.
PP Jewellers by Pawan Gupta observed a notable increase of approximately 15-20% in inquiries for gold and silver jewellery. "We are receiving more cash as compared to online transactions. However, what is particularly striking is that people are not panicking as they did during the previous demonetization period. This time, there seems to be a more measured response, with individuals actively seeking out alternative investment options and taking proactive steps to secure their wealth," emphasised Gupta.
Overall, cash transactions have reduced in the last four years with digitalisation. But in the past four days, the jewellery store P N Gadgil and Sons have also seen people coming in with INR 2000 notes more than usual. "With declarations from the RBI on the 19th of May, we have started taking these notes. And with the new inflow of these notes, we expect some incremental sales," the CFO Aditya Modak stated.
Beauty and Wellness
According to Yes Madam, there has been an astounding 95% growth in cash-on-delivery (COD) order volume. Although the rise in COD is a passing fad, it could drive more customers to use digital payment methods in the near future, shared the Co-founder Mayank Arya.
Astro Tech and Spirituality Industry
Sidhharrth S Kumaar, Numerologist and Founder, NumroVani said that they have noticed a 90% rise in payments being made in cash for their services relating to astrology consultations, rituals, and precious and semi-precious gemstones. INR 2000 banknotes account for a sizable share of cash payments.
"Furthermore, being an astro tech startup, we have also received a handful of queries from potential clients asking if we can help them with any remedy or pooja that can help them in managing their INR 2000 denomination notes without any hassle. Prima facie, this seems funny to hear and witness, but a significant number of both existing clients and new clients have reached with such queries," Kumaar added.