Panic buying of Gold by hoarders of Rs 2000 notes

New Delhi: Soon after the Reserve Bank of India announced the withdrawal of Rs 2,000 currency notes from circulation, the hoarders of the highest value notes Saturday flocked to jewellery shops across the country.

From local to branded jewellery outlets, hoarders of Rs 2000 notes made a beeline to buy Gold.

A Tanishq outlet in NCR witnessed 50% more footfall on Saturday than on other regular weekends.

“This rush is significant because several buyers are spending in the range of Rs 10-50 lakh in cash,” a sales representative of one of the Tanishq outlets told NewsDrum.

NewsDrum correspondent witnessed people reaching jewellery outlets with bundles of Rs 2000 currency notes.

A representative of an organised jewellery brand from the Southern part of the country told NewsDrum that they have not received any communication from their management regarding when they have to stop accepting the Rs 2,000 notes.

“On the face of it, this looks like entirely black money but it is coming into the system via this route. We keep a record of each and every penny received in cash from every customer including their PAN number. What could be unaccounted for becomes accounted for when they buy jewellery from us,” said the representative.

In a surprise move, the Reserve Bank on Friday announced withdrawal of Rs 2,000 currency notes from circulation but gave public time till September 30 to either deposit such notes in accounts or exchange them at banks.

Unlike the November 2016 shock demonetisation when old Rs 500 and Rs 1,000 notes were invalidated overnight, the Rs 2,000 notes will continue to be a legal tender till September 30.

In a statement, the Reserve Bank of India (RBI) said it has asked banks to stop issuing Rs 2,000 notes with immediate effect.

While the RBI did not specify a limit for depositing the Rs 2,000 currency notes in bank accounts, exchange of a maximum of Rs 20,000 (10 notes of Rs 2,000) for other currency notes will be allowed at a time.

Former Reserve Bank Deputy Governor R Gandhi on Friday said the withdrawal of Rs 2,000 notes will help in curbing black money to a "great extent" because people are hoarding the high-value currency.

When asked about the impact of the Rs 2,000 notes withdrawal on the agenda of curbing black money, Gandhi said it will help to a "great extent", and reminded that one of the intentions of demonetisation was also to curb black money in the economy.