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There has been a complete turnaround in trade involving exchanging demonetised currency with new banknotes. 
 
People who were charging 30-40% premium to convert black money into white are now willing to pay an interest on exchanging the notes. 
But, the catch is the owner will have to lock in the money for a year or more. 
 
Many traders and businessmen were charging a premium of as much as 40%, which dropped to 20-30% in the following weeks and settled at 10% a week back. 
 
Now, there has been a total flip. If you have Rs 5 crore in cash, there are people willing to take the money off your hands and give you an interest of 6-8% after a year. 
 
"The decrease in the payment of premium for exchange of black money and interest being offered to get people to invest their black money is probably a reflection that the black money has easily entered the system,” an economic analyst, on condition of anonymity, told ET. 
 
Many people hoarding black money got rid of it by paying outstanding dues, debts, labour contractors, cement and steel companies, etc. Some have even distributed six months salaries in advance. 
 
Dr Saumya Kanti Ghosh, chief economic adviser (economic research department) at SBI, told ET, “People are always finding out ingenious ways to launder black money, innovative ways are being tried out. There are always people trying to take advantage, even in the financial crisis of 2008. We can expect the government would come up with ways to tackle it.”

You can now earn interest on exchanging old notes but there is a catch

The <a href="http://www.businessinsider.in/searchresult.cms?query=Reserve+Bank+of+India&amp;sortorder=effectivedate">Reserve Bank of India</a> (RBI) received several requests for exchanging <a href="http://www.businessinsider.in/searchresult.cms?query=demonetized+notes&amp;sortorder=effectivedate">demonetized notes</a>, even after the deadline of Dec 30, 2016 was over. Out of many, the RBI received a request from a man whose dead father left him Rs 50, 000 notes in <a href="http://www.businessinsider.in/searchresult.cms?query=old+currency&amp;sortorder=effectivedate">old currency</a>. 
 
The case came into light when <a href="http://www.businessinsider.in/searchresult.cms?query=Bhopal&amp;sortorder=effectivedate">Bhopal</a>-based Mastan Singh Maran found old notes left by his dead father while cleaning the room. Singh, whose father passed away on December 26, 2016, even produced certificates ranging from hospital bills to death certificate of his father at the RBI branch in <keyword id="6355556" type="COMPANY" weightage="100" keywordseo="bhopal">Bhopal</keyword>. Singh and his family claims that his father had lost memory before he died, forgetting to tell anyone about the cash he had with him. 
 However, the RBI turned down the request. The RBI officials denied accepting the old notes, saying only <keyword id="58225" type="ORGANIZATION" weightage="100" keywordseo="NRIs">NRIs</keyword> are eligible for exchanging old currency notes now till March 31, 2017.

Here’s what happened when a man requested RBI to exchange old notes left by his dead father

The government has suspended over-the-counter exchange of old notes from today midnight. 
 
It said that the Rs 500 notes will be allowed till December 15 in places where it is already being accepted. 
 
Rs 1,000 notes will not be eligible for exemption, the government announced. There is a complete ban on the usage of these notes from today midnight. 
 
Rs 1000 notes will not be accepted at petrol pumps and government hospitals. 
 
Foreign citizens will be permitted to exchange foreign currency upto Rs 5,000 per week. Entry to this effect will be made in their passports. 
 
Old Rs 500 notes will be allowed for government school and college fees.

Demonetisation: Today is the last day for over-the-counter exchange of old notes

On most Sundays of an ending month people would list out their grocery needs and other plans for next month. However, this time it’s different. Thanks to <keyword id="6354642" type="PERSON" weightage="20" keywordseo="Modi">Modi</keyword>’s decision to scrap <keyword id="2055438" type="UNKNOWN" weightage="20" keywordseo="old-notes">old notes</keyword>, people in urban India are still trying to figure out if they would keep buying grocery from online stores or ask the neighbourhood shopkeeper to deliver stuff on cash-on-delivery as always. 
 
So what’s happening in the other parts of the country?

Demonetizations digest: cheaper
home loans and under banked India making headlines

Just like any other citizen, Prime Minister<a href="http://www.businessinsider.in/searchresult.cms?query=narendra+modi&amp;sortorder=effectivedate"> Narendra </a><a href="http://www.businessinsider.in/searchresult.cms?query=narendra+modi&amp;sortorder=effectivedate">Modi</a>'s 97-year-old mother <keyword id="3077014" type="UNKNOWN" weightage="100" keywordseo="Heeraben-Modi">Heeraben Modi</keyword> too visited a bank at her village in <keyword id="6356847" type="CITY" weightage="100" keywordseo="gandhinagar">Gandhinagar</keyword> to exchange old notes in view of the <a href="http://www.businessinsider.in/searchresult.cms?query=demonetisation&amp;sortorder=effectivedate">demonetisation</a> of the high currency notes to curb <a href="http://www.businessinsider.in/searchresult.cms?query=black+money&amp;sortorder=effectivedate">black money</a>. 
 The frail lady reached a branch of the <keyword id="111832" type="CITY" weightage="100" keywordseo="Oriental-Bank-of-Commerce">Oriental Bank of Commerce</keyword> in a wheelchair to exchange currency worth Rs 4500 this morning. She was accompanied by relatives. 
 
After coming to the bank with 500 notes, she filled the mandatory form, put her thumb impression on it and successfully exchanged her money. 
 
After receiving the new Rs 2,000 note, she also displayed it in front of the media. In the process, Heeraben also unknowingly set an example for the rest of the citizens, with many on the internet applauding her simplicity. 
 
Image credit: ANI

Prime Minister Narendra Modi's mother sets an example by exchanging old notes at Gandhinagar bank

The Prime Minister Narendra Modi-led Indian government stopped exchange of old Rs 500 and Rs 1000 notes in bank counters and has only allowed the exchange to happen at the counter of the <keyword id="6354335" type="CITY" weightage="20" keywordseo="reserve-bank-of-india">Reserve Bank of India</keyword> (<keyword id="30067" type="ORGANIZATION" weightage="20" keywordseo="RBI">RBI</keyword>). 
 
The government extended the deadline of exemptions till December 15, which means petrol pumps, state-run hospitals will continue to accept the old notes till then. You can also pay your water and electricity bills till December 15 with old banknotes. 
 
Although the exchange has stopped at the bank counters, you can only deposit old banknotes till Dec 31. The current limit of withdrawal of upto Rs. 24,000 per week per bank account remains unchanged. 
 
You can withdraw upto Rs. 2,500 a day per card from the ATMs. 
 
The RBI has doubled the limit on digital transactions through e-wallets like Paytm to Rs. 20,000 per month.

Demonetisation: You can exchange old notes only at RBI counter till Dec 31

If you have money, they have the way. That’s what the agents of illegal money <keyword id="6370089" type="CITY" weightage="20" keywordseo="exchange">exchange</keyword> claims. <keyword id="6362150" type="UNKNOWN" weightage="20" keywordseo="demonetization">Demonetization</keyword> might have hurt the common men hard as they need to stand for hours in queue to withdraw money. But for a bunch of people running illegal business across the country, it’s a boon. 
 
The illegal exchange of demonetized old notes of Rs 500 and Rs 1000 with freshly minted Rs 2000 has gone rampant. But don’t think this comes real easy. Black trade that started after the government’s good will of curbing black money has a lot of conditions associated. Firstly the money meant to exchange needs to in <keyword id="6354911" type="UNKNOWN" weightage="20" keywordseo="crores">crores</keyword> and not some few thousands. Also there is a commission associated, which is steep. The <keyword id="6474066" type="COMPANY" weightage="20" keywordseo="economic-times">Economic Times</keyword> spoke to a number of people in the trade of exchanging old notes with new. "If you have Rs 1 crore in cash, we can exchange it in one hour, anywhere in the country," said <keyword id="2655564" type="PERSON" weightage="20" keywordseo="Jiten">Jiten</keyword>, one of the people claimed to have been involved in the trade. "Of course, you would have to pay a commission." 
 
Jiten said he can exchange up to Rs 5 crore a day - but with a condition. "You have to be referred to us by someone who has already exchanged the money," he told the ET. 
The commission is 10%. So for Rs 5 crores to exchange, the commission would be Rs 50 lakhs. 
 
The banks may allege that they are targeted without reasons, the investigation by the financial daily found that managers to cashiers at many bank branches, both private and state-run, are part of the racket. There have been several cases where bankers have been booked for diverting funds and laundering black money for private gains. 
 
What is worrisome is not just the easy manner in which the new notes are being exchanged illegally, but also the deep inroads the black money exchangers have made into the system.

Here’s how Crores of old notes
are getting exchanged without queuing up in banks

The <a href="http://www.businessinsider.in/searchresult.cms?query=RBI&amp;sortorder=effectivedate">Reserve Bank of India</a> has allowed non-resident Indians to exchange the defunct Rs 500 and Rs 1,000 notes till June 30. This facility will be available through <keyword id="30067" type="ORGANIZATION" weightage="100" keywordseo="RBI">RBI</keyword> offices in Mumbai, Delhi, Chennai, Kolkata and Nagpur. 
 In a notification issued late night on Saturday, the RBI said that resident Indian citizens who failed to deposit <keyword id="2055438" type="UNKNOWN" weightage="100" keywordseo="old-notes">old notes</keyword> and were abroad between November 9 and December 30, 2016 can avail themselves of this facility up to March 31, 2017, and NRI citizens could do the same till June 30, 2017. 
 While there is no limit set for exchange when it comes to resident India, the limit for <keyword id="58225" type="ORGANIZATION" weightage="100" keywordseo="NRIs">NRIs</keyword> will be Rs 25,000 per person. This facility however can be availed once per individuals upon submission of identification documents and evidence showing that they were abroad during the period.

NRIs can still deposit old notes at RBI branches till June 30

Why was not the conversion of old currency notes allowed till March 31, 2017 for Indians as assured by Prime Minister Narendra Modi in his speech on November 8 announcing demonetisation? 
 
The Reserve Bank of India (RBI) has refused to answer the question under the Right to Information (RTI) Act claiming the query does not come under the definition of "information" as per the transparency law. 
 
The Prime Minister in his speech on November 8, 2016, announcing demonetisation, had assured countrymen that they could convert the notes of Rs 1,000 and Rs 500 till March 31. 
 
Later, it was decided that the window till March 31 will be kept only for Non-Resident Indians who constitute a major support base for the ruling BJP. 
 
The issue about the time limit for converting old currency notes is also being heard by the Supreme Court where Attorney General Mukul Rohatgi has reportedly submitted that the law will prevail over the words of the Prime Minister. 
 
In its response, the RBI refused to share file notings on the decision to limit currency conversion window till March 31 only for NRIs saying it would be against the economic interests of the state. 
 
The applicant had sought reasons, as "recorded" in the files of the RBI, behind the decision to not allow conversion of currency till March 31 for Indians as assured by the PM. 
 
"The question is in the nature of seeking reasons or justification from CPIO which is not defined as information as per Section 2(f) of the RTI Act," the response form Suman Ray, Central Public Information Officer, said. 
 
The Supreme Court has clarified the issue in one of its noted judgements saying if opinion or advice is available in the records of the public authority, it will come under the definition of the "information" under the RTI Act. 
 
Former Information Commissioner Shailesh Gandhi said that section 8(2) of the RTI Act allows disclosure of information, even if it is exempted, if it is in larger public interest. 
 
The RTI Act defines "information" as "any material in any form" held by or under the control of a public authority. 
 
The definition covers "any material in any form, including records, documents, memos, emails, opinions, advices, press releases, circulars, orders, logbooks, contracts, reports, papers, samples, models, data material held in any electronic form and information relating to any private body which can be accessed by a public authority under any other law for the time being in force". 
 
The bankers' bank has stonewalled almost every RTI query pertaining to demonetisation citing one or the other reason. 
 
It had refused to respond if the views of Finance Minister Arun Jaitley or Chief Economic Advisor were taken before demonetisation was announced, it had also refused to disclose reasons behind the sudden move, among others. 
 
It had also refused to allow access to minutes of the meetings held to decide on the issue of demonetisation of Rs 1,000 and Rs 500 notes. 
 
After the deadline to exchange the scrapped notes expired on December 30, 2016, the government issued an ordinance saying only those who were abroad, the armed forces personnel posted in remote areas, or others who could give valid reasons for not being able to deposit the cancelled notes, can do so till March 31.

Now RBI refuses to give
explanation on why people weren’t allowed to exchange old notes till March 31

<ul><li>The case for <keyword id="741038" type="PERSON" weightage="60" keywordseo="negative-interest-rates">negative interest rates</keyword> in the US has strengthened, according to a note from <keyword id="6361649" type="UNKNOWN" weightage="60" keywordseo="Goldman-Sachs">Goldman Sachs</keyword> published on Tuesday.</li><li>While Fed Chairman Jerome Powell has stuck to his position that negative <keyword id="6371181" type="UNKNOWN" weightage="60" keywordseo="interest-rates">interest rates</keyword> are off the table, negative interest rates to help ease financial conditions would be a helpful tool in a prolonged downturn, Goldman said.</li><li>The UK is the latest country to see the benefit of negative interest rates. The country issued negative yielding debt for the first time ever today.</li><li><a href="https://www.businessinsider.com/?hprecirc-bullet?utm_source=markets&amp;utm_medium=ingest?utm_source=markets&amp;utm_medium=ingestm=ingest" target="_blank" rel="noopener">Visit Business Insider's homepage for more stories</a>.</li></ul>The case for negative interest rates in the US has strengthened, according to a note from Goldman Sachs published Tuesday.The bank said that a deep and prolonged recession would warrant negative interest rates, as asset purchases and forward guidance from <keyword id="3024189" type="PERSON" weightage="60" keywordseo="the-fed">the Fed</keyword> would likely not "fill the gap," unless it started to buy risky assets like stocks.The argument for cutting interest rates below zero is the same as cutting interest rates above zero: to stimulate demand for <keyword id="6354680" type="UNKNOWN" weightage="60" keywordseo="credit">credit</keyword>, which in effect helps stimulate the economy. "Lowering interest rates eases financial conditions, boosts demand, and reduces debt burdens, helping the economy return to full employment more quickly," Goldman said.In previous the recessions, the Fed cut interest rates by over five percentage points. So in a recession that sees the unemployment rate at its highest level since the Great Depression, investors would expect the Fed to cut interest rates by more than five points. But because interest rates were so low to begin with, the Fed was only able to cut rates by around 1.50 points.Still, the Fed and Jerome Powell have been steadfast in opposing negative interest rates.Minutes from a late 2019 Federal Open Market Committee meeting reported, "All participants judged that negative interest rates currently did not appear to be an attractive monetary policy tool int he United States."Read more: <a href="https://slack-redir.net/link?url=https%3A%2F%2Fwww.businessinsider.com%2Fhedge-funds-saw-more-than-80-billion-redemptions-in-march-2020-5%3Fr%3DUS%26IR%3DT?utm_source=markets&amp;utm_medium=ingestgest" target="_blank" rel="noopener noreferrer">Tens of billions in redemptions, hundreds of billions in losses: Here's a look at how the hedge fund industry hemorrhaged money in March</a>Still, they did leave the door open for negative interest rates, saying in the minutes, "... participants did not rule out the possibility that circumstances could arise in which it might be appropriate to reassess the potential role of negative interest rates."So what would it take for the US Fed to consider negative interest rates?According to Goldman:"For the Fed to reconsider, the recession would have to reach the point where weak demand rather than the virus is the main economic problem, the fiscal response would have to fizzle while the unemployment rate is still very high, and a further step-up in asset purchases would have to lose appeal for one reason or another."The UK is the latest country to discover the benefits of negative interest rates. Earlier today, the country issued negative debt for the first time ever.Read the original article on <a href="https://www.businessinsider.com/negative-interest-rates-argument-us-strengthened-goldman-says-below-zero-2020-5">Business Insider</a>

The argument for negative interest rates in the US has strengthened, Goldman says

Additional liquidity that is coming into the banking system following demonetisation will not go away in a "hurry" and may pull down interest rates further, the country's largest lender <keyword id="13222" type="CITY" weightage="20" keywordseo="SBI">SBI</keyword> said, as per a news report by agency. 
 "The recent government's move on demonetisation is a welcome one. A huge amount of money is coming into the savings and current accounts. This huge amount of deposits has turned the system liquidity into surplus and we believe that this extra liquidity will not go away from the system in a hurry, which may push down the interest rate further," a top SBI official told in an interview to <keyword id="6367495" type="COMPANY" weightage="20" keywordseo="PTI">PTI</keyword>. 
 
On November 8, the government surprised the nation by declaring Rs 500 and Rs 1,000 currencies invalid to check black money and fake notes, giving a 50-day window to exchange these old notes within a cap or penalty provision for unaccounted money. 
 
Thus, SBI's cash deposits have swollen by over Rs 1.27 lakh crore as on November 17 because people are compelled to put their money in bank accounts due to invalidity of these high-denomination currencies and the note exchange policy. 
 
Also, SBI expects inflation in November to slip below 4 per cent. In October, retail inflation was at 4.20 per cent while wholesale inflation eased to 3.39 per cent. 
 
"Our expectation is that the inflation in November will be below 4 per cent. Also, the recent demonetisation will support easing inflation by affecting consumer demand adversely. Hence, we are still expecting another round of repo rate cut by 25-50 basis points (0.25-0.50 per cent) in 2016-17," the official said. 
 In its last monetary policy in October, the <keyword id="50847" type="CITY" weightage="20" keywordseo="Reserve-Bank">Reserve Bank</keyword> had cut the key repo rate -- at which it lends to banks -- by 0.25 per cent to 6.25 per cent. 
 
RBI has cut repo by 1.75 per cent since January 2015. 
 State <keyword id="6355303" type="CITY" weightage="20" keywordseo="Bank-of-India">Bank of India</keyword> (SBI) trimmed its fixed deposit rates on select maturities by up to 0.15 per cent last week on account of cash flush due to invalidity of high-value notes. 
 
"Cash being deposited at SBI branches belong to customers, as such customers are at liberty to use it the way they want. Interest will be paid on the balance outstanding as per the applicable rates (SB or Term Deposit A/c)," the official said. 
 
Asked about where the bank plans to invest the surplus, SBI said these funds will be invested in reverse repo and T-Bills in the short term. 
"Subsequently, the funds will get deployed as commercial paper (CP) and for addressing credit requirements of customers depending on the availability and duration of funds," the official added. 
 
Listing the pluses of the government's move to make these notes invalid, SBI said more and more people will come to the banking channels to exchange and deposit their higher denomination notes.

You Searched For "interest on exchanging old notes" and got 11 results

You can now earn interest on exchanging old notes but there is a catch

BI India Bureau

Here’s what happened when a man requested RBI to exchange old notes left by his dead father

BI India Bureau

Demonetisation: Today is the last day for over-the-counter exchange of old notes

BI India Bureau

Demonetizations digest: cheaper home loans and under banked India making headlines

BI India Bureau

Prime Minister Narendra Modi's mother sets an example by exchanging old notes at Gandhinagar bank

Poulomi Das

Demonetisation: You can exchange old notes only at RBI counter till Dec 31

BI India Bureau

Here’s how Crores of old notes are getting exchanged without queuing up in banks

BI India Bureau

NRIs can still deposit old notes at RBI branches till June 30

Poulomi Das

Now RBI refuses to give explanation on why people weren’t allowed to exchange old notes till March 31

BI India Bureau

The argument for negative interest rates in the US has strengthened, Goldman says

Matthew Fox

Interest rates may go down, says SBI

BI India Bureau

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