Jio at war with other telcos over use of old Rs 500 notes for mobile recharges

The move could lead to money laundering at the retail level, says the Mukesh Ambani-promoted company

Mukesh Ambani-promoted Reliance Jio and other telecom operators are once again at loggerheads with Jio criticising the government's move to allow old Rs 500 notes to be used for pre-paid mobile recharges till December 15.

Reliance Jio contends that the move will be misused at the retail level.

The members of cellular operators association (COAI), however, disagree. They say, "government's decision to allow old Rs 500 notes to be used for pre-paid mobile recharges will address difficulties being faced by consumers, and allow them to continue using mobile services without disruption."

Some industry people have voiced Jio's concern as genuine, given the lack of clarity on the issue. They say the move can fuel money-laundering operations as retailers could run exchange services and earn commissions on multiple top-ups with old notes.

 

An industry executive told the Economics Times, "A truant retailer in a Tier 2/3 town or a village can easily prey on an ignorant customer by saying that the government is only allowing top-ups up to Rs 500, but that he is ready to offer multiple recharges for a commission to help them dispose of defunct cash".

Reportedly, some government officials also shared similar concerns, but relented since this move would help ease the cash crunch.

But Jio's user acquisitions could take a hit if prepaid users of incumbent telcos load up with talktime for a few months in advance. An industry executive said that such a scenario would reduce the immediate appetite for Jio’s offerings.

On November 29, the government allowed old Rs 500 notes to be used for pre-paid mobile recharges. As per industry estimates, the recharges and top ups for pre paid mobile services had fallen 30-50 percent as consumers struggle with less cash in hand in the aftermath of the government's move to scrap old Rs 500 and Rs 1,000 notes.

Reliance Jio has acquired more than 50 million subscribers in a short span of 3 months.  The company extended the welcome offer to existing and new Jio subscribers from the earlier date of 31 December, 2016 to 31 March, 2017.