Now, Get Interest on Exchanging Old Notes but there’s a Catch
There has been a complete turnaround in trade involving exchanging demonetised currency with new banknotes.
People who were charging 30-40% premium to convert black money into white are now willing to pay an interest on exchanging the notes.
But, the catch is the owner will have to lock in the money for a year or more.
Many traders and businessmen were charging a premium of as much as 40%, which dropped to 20-30% in the following weeks and settled at 10% a week back.
Now, there has been a total flip. If you have Rs 5 crore in cash, there are people willing to take the money off your hands and give you an interest of 6-8% after a year.
"The decrease in the payment of premium for exchange of black money and interest being offered to get people to invest their black money is probably a reflection that the black money has easily entered the system,” an economic analyst, on condition of anonymity, told ET.
Many people hoarding black money got rid of it by paying outstanding dues, debts, labour contractors, cement and steel companies, etc. Some have even distributed six months salaries in advance.
He added that it was probably a mistake to think that black money was static. “Black money gets converted into white and then into black several times a day. For instance, suppose you are a salaried individual with no black money; when you pay a bribe to a cop, it becomes black money. However, if he eats in a restaurant and the money paid becomes white again. This money has been intermingling all the time, which is where the problem has arisen,” said the analyst.
How have huge sums of money been converted into white? Those involved said there are different ways. “Many builders had huge debt; they have used black money to pay off their debts, labour contractors, cement and steel companies; they also paid them in advance for the next six months. This is just one example of how the cash has come back into the system,” said a businessman. Others said they are using black money to show cash in hand.