Demonetization of Old High Denomination (OHD) Notes

The demonetization of OHD notes by the government w.e.f 9^th November 2016 was a bold step towards curbing the menace of black money in our country. This move was welcomed by a large section of society even though it created a lot of inconvenience to them.

The decision to withdraw the OHD notes was announced after banking hours by giving a few hours to black money holders to do something. Banks were given time to customize their Core Banking Solution (CBS) and ATM Switch. Everything went perfect till this point. But when the Banks reopened for business after this, there was not enough legal tender currency in the system to meet the requirements of general public. Only new two thousand rupee notes were pumped into the economy adding fuel to the situation. People were struggling to get change for two thousand notes. Five hundred rupee notes are still not available in many branches. If five hundred notes were released along with two thousand, situation would not have been worsened this much.

Adding to the woes of rural population, Reserve Bank has denied the exchange of OHD notes in cooperative banks. Still a major chunk of rural population is dependent on cooperative banks for their banking requirements. At least the provision of exchange of notes would have been given to those cooperative banks where CBS is implemented. Also the unavailability of enough cash in cooperative banks, especially in village cooperative banks is affecting the rural economy. Reserve bank and government should take immediate steps to sort out the cash crunch in cooperative banks to save the rural economy.

In spite of all the hardships, majority of people have welcomed the step to curb the black money circulation. Even though there are some short term disturbances in the economy, this step will be beneficial in a long term. Inflation should come down which will give more comfort to the common man. Also this would give a huge push towards digitizing the economy.

Bank employees across the country, especially in the branches have done an appreciable job in dealing with the situation.

The opinions mentioned above are purely of the author and does not have  political or any other interests.