 "Gold Rush: How jewellers are benefitting from RBI’s decision to withdraw Rs 2000 notes")
Many Indians are experiencing déjà vu. The decision by the Reserve Bank of India (RBI) to withdraw the Rs 2,000 note from circulation on Friday prompted many to rush to petrol pumps and jewellers to exchange their pink notes – similar to what happened in November 2016 when the Narendra Modi-led government demonetised the currency, scrapping the Rs 1,000 note. On Friday, the RBI announced that it was withdrawing from circulation the
Rs 2,000 currency notes
introduced seven years ago after demonetisation and asked people to exchange them at banks by 30 September. The decision sparked panic among the people owing to which RBI Governor
Shantikanta Da
s said on Monday that there was no need to panic or worry. “There is no reason to rush to banks now. You have four months, till 30 September,” he assured. He also asserted that even after 30 September, the deadline set by the central bank to deposit the notes, they would continue to be legal tender. As the window to exchange the pink notes begins, we take a look at how this process has spurred sales in gold, silver and even real estate. Pink wads for gold? A day after the RBI announced the withdrawal of the Rs 2,000 note from the market, there was a gold rush across India. Hordes of people turned up at jewellery stores acquiring the yellow metal in cash. Some were even willing to pay a premium for the precious metal, in an attempt to get rid of their pink note. In Noida, a salesman at a jewellery store was quoted as telling Times of India, “Subah se yeh pink note ne tehelka macha diya. (This pink note has created havoc since morning).” The scene was similar elsewhere in the country too. Footfalls at jewellery stores have increased – in some places, almost doubled. According to Siddharth Jain of Jambu Jewellers at Chowk Sarrafa in Kanpur, there was a 10 per cent to 20 per cent increase in the sale of jewellery since Saturday and he anticipated the demand to remain high until September – when the deadline for the Rs 2,000 note comes closer. [caption id=“attachment_12635382” align=“alignnone” width=“640”]
A customer gives Rs 2,000 rupee currency notes to the shopkeeper at a jewellery shop in Mumbai. The RBI has announced for withdrawal of Rs 2,000 currency notes from circulation. PTI[/caption] Vinod Maheshwari, a bullion dealer at Lucknow’s Chowk Sarrafa market, echoed similar sentiments. Speaking to Hindustan Times, he said, “The sale of bullion has shot up after the withdrawal of ₹2,000 currency notes was announced.” He further stated that traders were selling gold and silver at 10 per cent higher rates to those paying with Rs 2,000 notes. In Kolkata too, there was a rush of people at jewellery stores over the weekend, with people buying jewellery and gold in cash. It was the same in Jaipur too. Kailash Mittal, president of Jaipur’s Sarafa Traders Committee was quoted as telling Hindustan Times that the gold jewellery market has picked up and business had risen by 20 per cent.” There have also been reports of jewellers charging a premium on the precious metal for accepting the currency note that will soon go out of circulations. The Economic Times reported that on Saturday, in Mumbai’s Zaveri Bazaar, gold was being sold for around Rs 67,000 (per 10 grammes) when paid for with Rs 2,000 notes, compared with the official rate of Rs 63,800 (including GST). A source within the market told The Economic Times that the boost in sales would be temporary. “It’s a knee-jerk reaction. The premium has gone up since Friday evening when the announcement came, but I think it will come down in the next few days. People would try out other ways. There’s time.”
Also read: India scraps the Rs 2000 note: Will this affect the economy?
However, the national secretary at India Bullion and Jewellers Association Ltd Surendra Mehta said there was no yellow gold boom. “There’s no huge rush, only a marginal increase in customers. The demand isn’t like 2016 because it’s not a note ban but a slow phase-out of the (Rs 2,000) notes,” he told NDTV. Rise in land deals? While many sought the gold route to offload their Rs 2000 note, there are some who are looking at land as another option. According to real estate brokers and experts, people may opt to use their Rs 2,000 notes either to purchase land in small towns or buy residential stock from the real estate market. A real estate expert told Moneycontrol, ““One may witness a spurt in land deals going forward in upcoming locations and even in ready-to-move-in inventory held by builders. Also, the impact would be more in the secondary market rather than the primary market.” Another real estate broker said that some may even decide to deploy these notes in the purchase of commercial properties in Tier 2 and 3 cities from developers who may charge a premium for absorbing the currency. However, overall, there won’t be much change to the real estate sector. This is because the use of
black money
or unaccounted cash in land deals has reduced drastically since demonetisation. As Prashant Thakur, senior director and head - Research, ANAROCK Group, told Moneycontrol, “This move on the Rs 2,000 note is a clear indicator that the government wants to further tighten the noose on unaccounted money. If anything, it will bring more transparency to the resale market. Neither land nor luxury housing will be impacted in any significant manner.”
RBI-FAQ by Roshneesh K’Maneck on Scribd
How to exchange the notes? The RBI has asked people not to panic and deposit their Rs 2000 notes at banks until 30 September. The window to deposit the notes begins today and the process is fairly simple.
People can visit any bank and exchange 10 notes of Rs 2000 notes at a time with currency notes of other denominations. One can also exchange the notes at the 19 Regional Offices of the RBI or exchange them through Business Correspondents (BCs), up to a limit of Rs 4000 per day for an account holder. On Monday, RBI Governor Shantikanta Das also hinted that the central bank would extend the deadline of 30 September if required, but asserted that most of the high-value notes are likely to be back with banks by the deadline. He scotched rumours that the Rs 1000 note would be reintroduced and insisted that this entire activity was part of their clean note policy. With inputs from agencies Read all the Latest News , Trending News , Cricket News , Bollywood News , India News and Entertainment News here. Follow us on Facebook , Twitter and Instagram .