Q: What will happen if you go to deposit 500 or 1000 rupee note to bank and it turned out to be fake note, on which you have no prior idea about?
You would then have to account for how the money came. Once I had to transfer money between banks without NEFT. I withdrew from one bank and deposited in another bank. One of the notes turned to be counterfeit. It was a bit tense and since I was their privileged banking customer they were willing to listen.
I then told them where it came from and then had a staff from the receiver accompany me to the nearby bank 1 and got a statement from them. Since the bundle was unopened and I was insistent on my rights, I had no issues and moved on. However, if I could not account for how the money came to my pocket, I would be investigated and potentially could have even been arrested. It doesn’t happen that often though and if it is just a couple of notes, the banks & police would mostly be lenient.
As one of the commentors below pointed out, a person was given a 5 years imprisonment for depositing 17 counterfeit notes, until the High Court intervened recently. Bombay High Court ruled ‘mere Possessing counterfeit or forged currency, without knowledge, cannot constitute offence’ - If you could prove that it was without your knowledge and a genuine mistake, you could avoid trouble.
This is the same whether it is during demonetization or during regular times.
Q:Why won't people go back to hiding black money since new 2k and 500 notes are issued?
Let’s say there is this big dilapidated building. It has not been maintained in years and years of dirt has accumulated there. Somebody comes there, cleans up years of dirt and gives a fresh coat of painting. Rather than marveling at that, you are taking a nihilistic approach [EDIT: if you don’t understand what nihilism means refer to Nihilism before commenting] saying that the paint will wear out in a few years. Sure, the paint will wear out and things will get dirty. So what? Is that an excuse for not painting today?
Sure, the Rs. 2000 introduction is a controversial. However, there is still a need for high denomination notes for the foreseeable future until we all move cashless and paint the home once again [remove all the high value currencies]. RBI in fact wanted higher denomination notes [Rs. 5000] as there is heavy transaction costs involved for banks with lower denomination notes. Think of all the effort for them to move money [they need 20x more transport to move money in 100 rupees alone] in lower denominations and the extra time of cashiers to count 20x extra notes. That is an extra burden on our banks and other money handlers.
There is always a balance needed. You need to both ensure proper functioning of the economy [just the inflation would mean the Rs. 1000 notes introduced nearly 20 years ago is equivalent to over Rs. 8000 now] and that has to be balanced against the need for a clean economy. Clean and functioning. Both are needed. If Rs. 500 notes were needed 20 years ago, then we need a lot of Rs. 2000 now.
Now, getting back to black. By World Bank estimates 25% of India’s wealth is in black [http://finmin.nic.in/pre[removed]ss_room/...]. That is a low estimate, but let’s take that. India’s total wealth is nearly $4 trillion [note: this is not the GDP] or about 280 lakh crore rupees.
If a quarter of it is black that is nearly 70 lakh crore rupees. A lot of it will be in real estate, gold and some in cash. Assuming 10% of black is cash that is a whopping 7 lakh crore rupees of bad money sloshing around the system. Like a disease the black money only increases black money and bribery. The first goal is to attack this 7 lakh crores that is in cash. It is a mind boggling number. That is 3 times the India’s budget for national defense.
In parallel, there will also be an attack on the rest 63 lakh crore of black money, mostly in real estate. The attack on cash will bring down real estate values and that will evaporate a lot of this black money. As this wealth gets destroyed there will be a deflation and the government can then afford to print a lot of money, paying for some national spending programs. In a way there is transfer of money amounting to lakhs of crores from the black money holders to the government.
That is a humongous achievement. If this were the only thing the government did in 5 years, you can complain. But, they are in parallel attacking black money in different directions. Bringing GST is a way to bring everyone in tax net and cut black money. Aadhar card implementation is a way to reduce black money. Then there was the scheme to declare black money [Declare black money by September 30 or face action: PM Modi] that brought nearly 65000 crore rupees out.
Then there was the investigation teams for black money, the Jhan Dhan Yojana, the incentives for payment services, direct benefits transfer etc. Sure, these are programs the previous government started, but Modi administration is doubling hard on these and the combined effect would be to clean the nation. Again, there would be many such moves coming up. On the whole it is an attack on all fronts.
(The author(Mr.Balaji Viswanathan) is a Top Writer on Quora with 216,000 Followers .)
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