From buying gold, petrol to Zomato orders, users rush to pay in ₹2,000s

An almost promotional impact on the use of the high-denomination note in certain contexts seems to have followed the RBI announcement

A photograph of the ₹2000 denomination banknote (Photo Courtesy: RBI)
A photograph of the ₹2000 denomination banknote (Photo Courtesy: RBI)

Aditya Anand

In response to the Reserve Bank of India's (RBI) recent announcement to withdraw ₹2,000 banknotes from circulation, users across various sectors have been making payments using these high-denomination bills. The RBI's move has prompted various industries and consumers to adapt their payment methods. Notably, users have been utilising the ₹2,000 banknotes for transactions ranging from purchasing gold and silver to settling bills for fuel and even placing orders on popular food delivery platforms like Zomato.

Food-delivery giant Zomato disclosed on Monday that a staggering 72 per cent of its cash on delivery orders were paid using ₹2,000 banknotes since the Reserve Bank of India (RBI) announced the withdrawal of the note on Friday. This revelation sheds light on the immediate impact of the RBI's decision on consumer payment behaviour.

Various news reports suggested that at least six dealerships in Delhi, Uttar Pradesh, Haryana, Jharkhand, and Maharashtra have reported a sudden surge in cash transactions. These dealers, who requested anonymity, revealed that many customers have been using ₹2,000 banknotes for their purchases. To manage this unexpected trend, several fuel stations across different regions of Uttar Pradesh have displayed notices specifying that ₹2,000 notes will only be accepted for petrol or diesel purchases amounting to ₹1,000 or more. Hindustan Times reported that it had independently verified a few of these notices, shedding light on the evolving payment landscape amidst the withdrawal of ₹2,000 banknotes.

On Friday, the RBI declared that ₹2,000 notes would no longer be circulated, although they would still retain their status as legal tender. The central bank specified that these notes could be deposited in banks during regular business transactions until September 30, subject to an upper limit of ₹20,000 at a time. Additionally, individuals will be able to exchange the ₹2,000 notes for smaller denominations starting from May 23.

Jewellers in India, the world's second-largest gold-consuming country after China, have reported a surge in inquiries for purchasing gold or silver immediately after the RBI's decision. Amit Modak, the CEO of P N Gadgil and Sons, a renowned gold and silver jewellery shop with a global presence based in Pune, has announced that they will continue to accept ₹2,000 denomination notes from their customers.

“However, to safeguard our business against potential scrutiny from government departments in the future, customers making purchases with ₹2,000 banknotes must fill out a form containing their names and other necessary details,” Modak said while emphasising that this precautionary measure was to protect their business and ensures compliance with future regulatory requirements.

“By implementing this form, P N Gadgil and Sons seek to proactively address any potential issues that may arise due to the withdrawal of ₹2,000 banknotes and maintain the smooth operation of their business,” he said.

The withdrawal of the ₹2,000 notes has stirred discussions on the impact it will have on day-to-day transactions, with businesses and consumers alike navigating the transition to smaller denominations. As the deadline for depositing or exchanging these notes approaches, individuals are urged to comply with the guidelines set by the RBI to avoid any inconvenience or complications.

Jewellers in Mumbai indicated that nearly 30 per cent of their customers continue to use cash as a payment method. Most purchases have transitioned to electronic or Unified Payments Interface (UPI) payment modes, reflecting digital transactions' growing popularity and acceptance. This shift aligns with increasing reliance on convenient and secure electronic payment methods across various industries.

According to experts, the number of ₹2,000 denomination notes in circulation (or stocked in lockers) is a little small. “The number of Rs 2,000 notes in circulation is not huge. Unlike the demonetisation of ₹ 500 and ₹ 1,000 notes, which happened in 2016,” Harish V, Head of Commodities Research, Geojit Financial Services, was quoted by IANS as saying. According to him, there are other avenues of investment and a limit to using hard cash to buy gold.

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