On 8th November 2016, the Government of India announced that all the Rs.500/- and Rs.1000/- notes in circulation would no longer be considered as legal tender anymore. This step is one of the many steps that the Government of India has taken in the last 2.5 years to end the circulation of black money as well as the fake currency in the market. With a single strike, the whole Indian currency system is now free from the fake currency. Those who have hoarded black money and didn’t declare their income even after repeated requests from the Finance department are now in big trouble. However, the sudden move has bought up a lot of problems as well.
Problems faced by the common man
First of all, there is a cap of Rs.2000/- on daily withdrawal from any ATM from 10th Nov 2016. In a week only Rs.10000/- can be withdrawn. The new Rs.500/- and Rs.2000/- notes will come in circulation from 11th Nov 2016 but they will be in under strict surveillance, and no one will be allowed to stack more than Rs.3 lakh at home. The shortage of currency will create some issues for middle and lower income groups as they mainly deal in cash transactions. Now, you can use the currency you have to buy day-to-day groceries, and for the rest of the payments, you can go completely cash free. The following are the few methods that you can use to go cashless.
The technology of plastic money is not new. We are using credit cards and debit cards for quite some time now. There are a lot of stores that accept card payments, and as the Government has imposed a lot of restrictions on cash in hand, more shops and stores will start using card machines for payments.
Electronic fund transfer is basically a technology that allows you to transfer money from one bank account to another. It can be an account in the same bank or some other bank. In the case of another bank, you need to add details like IFSC code in addition to name and account number. NEFT and IMPS can initiate transfers up to 2 lakh rupees. For higher value, you can use RTGS. NEFT is open on banking days only. IMPS and RTGS are real time transfers and are available 24×7.
There are a lot of companies that are offering cashless services. Most of the banks are offering eWallets which you can use to make the payments. At the moment the most famous and government approved eWallets are PayTM, ICICI Pockets, and Reliance Money, etc. Some other service providers like Mobikwik and Freecharge also offer good deals and have a good reputation.
In August 2016, 19 Indian banks launched a new payment system under the name UPI (unified payments interface). In this method, you do not have to give out your account details to anyone. All you need to give a virtual ID which is directly connected to your bank. You can make any number of Virtual IDs under your bank account and can use them to receive payments from different sources. The service does not charge anything at the moment and transfers money in real time.
Apart from the systems mentioned above, there are several other options which different banks provide. Like Kotak Mahindra Bank allows you to transfer money via SMS. In this system, you do not need the account number, and the receiver adds all the details himself. There is a panic in general public about the new ruling which is totally absurd. The GoI has made sure that the general public does not have to suffer. So all you need to do is stay calm and go cashless!