Note ban: Cash-rich Ludhiana finds way out, but at a price

Ruchika M Khanna

Tribune News Service

Ludhiana, December 4

The ubiquitous jingle of money in this “once” cash-rich city may no longer be heard. Labour pangs and poor off take of all industrial goods manufactured here may have hit them hard, but the uber rich of the city still not seem to have lost their cash reserves, often stocked at home.

They are no longer flaunting their stockpiles of notes. But flaunt they must, this time round on how despite demonetisation, they have managed to convert their old notes into either other assets (gold and US/Australian dollars) or new currency notes.

And in true Ludhianavi entrepreneurial style, many in the city saw a huge business opportunity in the demonetisation.

An industrialist quipped: “Everything has a price. You have to be willing to pay it. Managers of five banks approached industrialists and exchanged old notes for a commission of 30 per cent. The premium customers of some banks were given new notes (a maximum of Rs10 lakh) for just 3 per cent commission. Each bank has the identity details of all customers. The photocopies of these details, especially of savings account holders whose accounts are not used frequently, were available at a price, and these were used to exchange currency notes in banks and some post offices. Many people also got these Aadhaar cards/PAN card copies from the state taxation department.”

Sources in the industry told The Tribune that the steel industry, reeling under losses, had managed to clear its dues with banks and their non-performing assets (NPA accounts) had been cleared post-November 8. This is because the industry has huge cash in hand running into several crores of rupees. “Their customers in other industries, who buy steel, have ‘adjusted’ money for all possible future sale to steel units who have deposited it in their own current accounts,” said another industrialist, who boasted of having gotten Rs2 crore, adjusted through this route.

Even labourers have seen a great business opportunity. After having gotten crores exchanged for their employers, many of them saw an opportunity to make money and are selling the Rs100, Rs2,000 notes by either withdrawing from their bank accounts; depositing Rs2.5 lakh in their own accounts for commission of Rs25,000; or selling the notes they already had at home. Others are willing to queue up for anyone for just Rs300! This explains why the queues outside all banks in the city comprise only of migrant labourers.

The biggest indicator of the city dwellers having “managed” their old currency is that the rate of gold has started stabilising. If gold sold here for Rs45,000 per 10 grams (against a market price of Rs32,000) during the initial days of demonetisation, the price of gold has now fallen to Rs33,500. Low demand has brought the price down. Even the US dollar, which was initially sold for up to Rs95 against Rs67, can be bought in old currency for Rs72-73 per dollar.

Who ‘benefited’ and how

Labourers made a killing: After having gotten crores exchanged for their employers, labourers saw an opportunity to make money and are selling the Rs 100 and Rs 2,000 notes by either withdrawing from their bank accounts; depositing Rs 2.5 lakh in their own accounts for a commission of Rs 25,000; or selling the notes they already had at home. Others are willing to queue up for anyone who doesn't want to stand in queues for just Rs 300! 

Steel industry clears dues

The steel industry cleared its dues with banks and its NPA accounts post-November 8. “Their customers in other industries, who buy steel, have ‘adjusted’ money for all possible future sale to steel units who have deposited it in their own current accounts,” said an industrialist, who got Rs 2 crore through this route.

How banks ‘helped’

“Managers of five banks approached industrialists and exchanged old notes for a commission of 30%. The premium customers of some banks were given new notes (a maximum of Rs 10 lakh) for 3% commission,” an industrialist said.