Pink wads crawl out of woodwork amid the rush to dump Rs 2,000 notes

Surge in demand for gold, victuals, even as most sellers across the country decide not to argue with purchasers and accept Rs 2,000 notes

Wads of Rs 2,000 notes have been rushing in at Posta Bazar, North Kolkata, one of the largest wholesale markets for perishable commodities in east India, since the Reserve Bank of India (RBI) announced its withdrawal from circulation on Friday.

In the half day that it was open on Saturday, retailers turned up with only pink notes. Niraj Agarwal of Shree Shiv Oil & Pulses, one of the bigger wholesalers in Posta Bazar, said. “Some even want to make early payments and settle the account but in Rs 2,000 notes.”

The cash transactions in Posta Bazar are large and the credit period ranges between 15 days and one month. The market supplies a range of products from edible oil, salt, cereals and spices and food grains to roughly 30 per cent of West Bengal. And wholesalers here are expecting more of the pink notes in the days to come.

Yet, it’s nothing like what they had seen in 2016 during demonetisation of Rs 500 and Rs 1,000 notes. “There was a crazy rush then and everyone was in panic. This time the window is till September but we expect people to run out of the notes in ten days,” Agarwal said.

“The problem is that we will have to deposit it in the banks. But we can’t refuse the notes till September,” Posta Bazar Merchants’ Association general secretary, Biswanath Agarwala, said.

Legal tender

The central bank has said that the Rs 2,000 denomination notes will remain legal tender. Bank customers are allowed to deposit or exchange the notes from May 23 at bank branches till September 30.

But there is an urgency to use the notes – all the way from jewellers to wholesale markets, neighbourhood fruit vendors, malls and petrol pumps.

At least two jewellers told Business Standard that they have been seeing a surge in demand for gold since Saturday. “In some cases, jewellers are charging as much as 10 per cent premium for 10 gm gold for payments made using Rs 2,000 note,” one of them said. Small jewellers are also seeing more women buyers at their stores, claiming to use their saved Rs 2,000 note to buy gold or gold jewellery.

The “saved” pink note is being pushed everywhere. Retailers’ and traders’ bodies said the notes were legal tender and being accepted.

Viren Shah, president, Federation of Retail Traders Welfare Association, said, “At the retail level, we are accepting Rs 2,000 notes without arguments as we have to deposit in the bank . We do not argue with customers nor are we refusing payment with these notes.”  

Praveen Khandelwal, secretary general, Confederation of All India Traders (CAIT) said, no adverse impact was seen in trade for at least a week. “For now, traders are accepting the Rs 2,000 notes in small quantities from the public.” He also said that Rs 2,000 notes were anyway not in circulation in large quantities before this announcement was made.

Kumar Rajagopalan, CEO, Retailers Association of India (RAI), said retailers would accept the note as there was no restriction on deposits. “There are a few people who hesitated and were worried but that problem will be sorted in the next 3 to 4 days.”

“Since most modern day retailers take cash and deposit it in the banks, it’s not a problem. But if any of them do not wish to deposit the cash in the banks, then it becomes problematic but that is not the case with the modern retailers.”

On ground

But not everyone’s accepting the Rs 2,000 note; the hesitancy is palpable on the ground. Thenmozhi (full name not revealed), who runs a fruit store at Thiruporur in Chengalpattu district of Tamil Nadu, is at her wits’ end.

“After Covid, we had not seen a single Rs 2,000 note. Now suddenly, it has resurfaced. A lot of people are either asking for a change or trying to buy fruits with only Rs 2,000. I am not taking it.”

The story is repetitive across mid and small shops in Chennai with a majority declining the note and asking for digital payments.

In Bandra, out of the two fruit and vegetable vendors, one agreed to take the Rs 2,000 note but on the condition that fruits and vegetables worth the same amount be purchased from him. 

Local kirana stores in Bengaluru were also concerned about accepting the Rs 2,000 note from the customers. They said there is no clarity about the withdrawal of the Rs 2,000 notes from circulation and they won’t be accepting the currency, and it is better for customers to go to the bank and get them exchanged.

A premium retailer at an upmarket Kolkata mall said that there were instructions from the company to try and refuse the Rs 2,000 note from customers.

There is caution at petrol pumps too. State level associations in Delhi, Maharashtra, West Bengal and Jharkhand have asked members to remain vigilant and not accept Rs 2,000 notes in large quantities, people in the know said. Members are also free to turn away customers, they said.

"It is widely anticipated that from now, till the note exchange deadline, people will use the Rs 2,000 notes to buy fuel. Not everyone can be turned away but we will stop anyone from filling up cans and large jugs using the notes," Avdhesh Singh, a pump owner in east Delhi said.

Some pump owners in Gurugram, Hyderabad and other cities have put up notices saying they will accept the notes for fuel purchases only above a certain limit.

Representatives of The Chennai Hotels Association, which has around 2,500 hotels under its fold, are concerned. “We need time to convert these Rs 2,000 notes and the restricted amount should be Rs 60,000, instead of the current Rs 20,000. The government should allow the notes to be rotated freely in shops. Otherwise, small and medium shop owners and the middle class will be affected. Unless the limit is increased, the money rotation will come to a standstill,” said Rajkumar Rajan, vice-president of the association.

E-commerce

According to executives at various e-commerce firms, online retailers would accept Rs 2,000 notes from customers for cash-on-delivery (COD) orders as long as they are legal tender.

Unlike November 2016, the Rs 2,000 notes will continue to be a legal tender till September 30, an official at an e-commerce firm pointed out. “We have to accept the Rs 2,000 note as it is a legal tender.”

But some delivery personnel of Blinkit and BigBasket said while there was no order from the “top level” to not accept Rs 2,000 notes from consumers for COD orders, they were hesitant as they have to deposit the cash on their own.

(With inputs from Ishita Ayan Dutt, Shine Jacob, Shreya Nandi, Subhayan Chakraborty, Nikesh Singh, Pratigya Yadav, Peerzada Abrar, Sharleen D’Souza, Aneesh Phadnis )