Komala Lakshminarasaiah, the owner of an IndianOil fuel outlet at Yeshwantpur on Tumakuru Road, has put up posters for the benefit of those trickling in with their Rs 2,000 notes for a quick trade. The poster asks customers to make a minimum purchase of Rs 1,000 for every Rs 2,000 note they want to do away with.
Lakshminarasaiah told Moneycontrol that earlier they used to receive 20-30 pieces of Rs 2,000 notes daily but since the Reserve Bank of India’s (RBI) order to withdraw Rs 2,000 notes was announced on May 19, the number has jumped to 150-180 pieces a day.
“Since the implementation of RBI’s order, we have encountered customers attempting to pay for fuel valued at just Rs 100 using Rs 2,000 notes. This poses a significant challenge for us in providing the change due to a shortage of smaller denominations,” said Lakshminarasaiah.
On May 19, the RBI announced the withdrawal of Rs 2,000 notes while maintaining their legal tender status. Additionally, the RBI permitted individuals to exchange these notes up to Rs 20,000 at a time without requiring any ID proof or forms until September 30.
“Previously, 60 percent of transactions were cashless, and 40 percent were with cash. However, the situation has reversed now with more customers bringing cash. Hence, we had to display these posters. Despite that, customers still bring Rs 2,000 notes even for small fuel purchases,” Lakshminarasaiah said.
Many other fuel outlets in Bengaluru are similarly discouraging motorists from paying with Rs 2,000 currency notes. Few others have gone to the extent of displaying posters announcing a complete ban on Rs 2,000 notes.
The city already seems to have an ‘unofficial’ ban on Rs 10 coins, despite no official announcement. In most instances, Rs 10 coins are refused by shops and establishments despite there being no sound reason for the same. Given this context, it comes as no surprise that there is a lack of acceptance for Rs 2,000 notes following the call for withdrawal. Mohammed Jaffer, a resident, took to Twitter to share that even his LPG distributor in Chamrajpet is refusing to accept Rs 2,000 notes. There have also been complaints from individuals regarding certain automobile dealers declining these notes. For instance, a fruit shop in Jayanagar 4th block refused to accept a note from a customer, citing the inability to bear the burden of exchanging the note.
While RBI and banks continue to accept Rs 2,000 notes, many individuals prefer to spend them rather than visit bank branches and stand in queues, as they cannot afford to take time off from work.
KM Basavegowda, president of Akhila Karnataka Federation of Petroleum Traders, said, “Fuel outlets are often easy targets. Many people are either lazy, fearful, or anxious about going to the bank to exchange their Rs 2,000 notes. Instead, they choose to give it to us. Some customers purchase fuel worth Rs 100-Rs 200 and pay with Rs 2,000 notes, expecting us to provide the balance. Following the 2016 demonetisation experience, when fuel outlets received notices from RBI questioning the acceptance of old notes, there is a concern that a similar problem could arise this time. So this time around, dealers are being cautious.”
Touts offer to exchange Rs 2,000 notes for commissions
A tout outside the regional office of RBI on Nrupathunga Road approached this correspondent, who posed as a prospective client looking to exchange Rs 2,000 notes. Initially, the tout quoted a fee of Rs 100 per piece. After some haggling, he said he can readily provide smaller denomination notes without any delay and the commission can be reduced for a larger number of notes.
The RBI office attracts individuals from different parts of the city who flock to exchange their notes, making it a prime target for touts. These touts aim to lure potential customers by promising time-saving and hassle-free processes for the exchange of notes.
Traders discourage low-value transactions
Traders said they insist on high-value transactions for Rs 2,000 notes. Sajjan Raj Mehta, a trade activist from Chickpet, said, “The RBI has allowed the exchange of Rs 2,000 notes until September, so there isn’t a blanket ban on these notes. However, traders are not encouraging low-value transactions. For instance, you can’t give a Rs 2,000 note for a purchase of Rs 300 but it is acceptable if the transaction amount exceeds Rs 1,000. Nevertheless, the current situation is not as problematic as the demonetisation in 2016.”
The Bruhath Bangalore Hotel Association said there has been an increase in the usage of Rs 2,000 notes specifically in fine dining and bar restaurants. PC Rao, president of the association, said, “Previously, people used to pay by debit/credit cards or through UPI but after the RBI’s notification, they started using Rs 2,000 notes, especially in fine dining and bar restaurants. However, in small eateries, the increase is not significant as we cannot accept a Rs 2,000 note for a coffee- tea, or a plate of idli.”
LPG dealers have also observed a rise in the usage of Rs 2,000 notes. R Ramesh Kumar, secretary of All India LPG Distributors Federation (Karnataka circle), explained, “In Bengaluru, for instance, an LPG domestic cylinder is priced at Rs 1,105, and many customers usually give Rs 1,150 to the delivery boys. Now, many customers are giving Rs 2,000 notes but we cannot outright reject them since it is a legal currency.”
Jewellery shop owners in the city said there is no panic-buying. “There has been a 5-10 percent increase in sales with Rs 2,000 notes but customers still have time till September to exchange their notes, so there is no panic-buying. Currently, there is no significant rush compared to the demonetisation in 2016,” said Ramesh Davanam, a member of the All India Gems & Jewellery Domestic Council.
Confusion at banks
Representatives of banks said that there is no rush comparable to the demonetisation period, and people can exchange Rs 2,000 notes over the counter. However, there have been complaints that a few banks are insisting on identity cards and requisition forms as proof.
CH Venkatachalam, general secretary of the All India Bank Employees Association, said, “Despite the RBI clarifying that Rs 2,000 notes are legal tender, many banks are insisting on submitting identity cards and filling out forms. If it is a legal currency, why do they require these documents? Irate customers are engaging in arguments with employees at many branches. While regular genuine customers may have fewer Rs 2,000 notes, the real question is how the hoarded Rs 2,000 notes by businessmen or politicians will return to the system. Since they have time until September, a clear picture might emerge soon.”
