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News The Great Indian Jugaad : Here's How people are trying to convert...

The Great Indian Jugaad : Here’s How people are trying to convert black money to White

Even as the Modi government on Tuesday declared that Rs 500 and Rs 1,000 would no longer be legally tender, the average Indian, with his prowess in the art of jugaad, found ways to beat the system, thanks to a 50-day window given for exchange of these banknotes.
Despite the panic visible across all cities, there always are some opportunists ready to take advantage of someone’s desperation. They always find ways to play the system.
And, in this case, they have turned religious places, non-government organisations (NGOs) and gold jewellers into laundering centres. At many places, even the retail shops have become money-exchange centres, they are giving Rs 400 in exchange for Rs 500 notes.
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Even some bank managers are getting offers for a 20 per cent cut in lieu of exchange of Rs 500 and Rs 1,000 notes. 

So, what are the ways and means the hoarders are employing to get rid of their old notes ? PagalParrot documents the ways that have come to light so far :

Buying gold

The Great Indian Jugaad : Here's How Some People Are Beating The Rs 500 & 1000 Note Ban


The modus operandi is simple. Old currency notes of Rs 500 and Rs 1,000 are still being taken by the jewellers, but with back-dated bills. For purchases worth under Rs 2 lakh, there is no need for PAN card. So, multiple receipts with amounts less than Rs 2 lakh can easily be created. Jewellers can deposit the money so collected in their bank accounts until December 30, 2016.

Little wonder then that jewellers were seen charging anywhere around Rs 40,000 for 10 grams of gold, even as the market rate was Rs 30,500 on Wednesday. 

Paying salary in advance

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A Vadodara real estate developer has reportedly paid in advance six months’ salary to its 100 employees, most of them labourers. According to a report in the Economic Times, the workers were given a 2 per cent salary hike as an incentive. The idea behind this move was that the employer would either deduct money monthly or really hopes the staffers are so loyal that they will not run away with the cash. In another instance, a Mumbai shopkeeper has asked 25 of his employees to deposit Rs 40 lakh in their bank accounts and return the money in a couple of months. Many of these employees don’t pay income tax.

Praising the lord

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In many instances, people are turning to the God Almighty, literally. They are going to religious places and exchanging the Rs 500 and Rs 1,000 notes they hold for Rs 100 notes. In fact, hurried donations made to nearly 100 temples and trusts and a sudden spurt in cash reserves in nearly 1,000 cooperative banks and credit societies in Maharashtra have come under the government’s scanner. Some people have tried to secure their unaccounted cash by donating it to temples by taking its management into confidence and making receipt of such donations as anonymous donors.

Banking on the Jan Dhan Yojana

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Some money-changers are using people below poverty line to operate their Jan Dhan Yojana accounts. According to a report in the Times of India, businessmen are taking this ‘sarkari’ route like they did with various chit-fund accounts. By identifying a group of people with Jan Dhan accounts, a businessman can divide his money in all the accounts and ensure that the amount deposited in each doesn’t exceed Rs 2 lakh. In return, the person in whose name the money is parked gets a commission of Rs 10,000 to Rs 20,000, depending on the urgency. Once injected into the banking system, the person withdraws the money in instalments over a period of time and gives it back to the owner against the commission.

Falling back on the family

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Putting smaller amounts in different bank accounts divides a large amount, enabling a larger number of deposits. The government has announced that housewives will face less scrutiny; this implies they could soon see their bank accounts swell if extra household cash or piggybank savings in high-denomination notes are deposited in them.

Taking the hawala route


This illegal system uses agents and middlemen to send money even out of the country. In Mumbai’s Zaveri Bazaar, currency traders have been seen charging 60 per cent to swap the demonetised notes. In fact, according to a Mumbai Mirror report, the second-most-preferred way for getting money legitimised – next only to gold – was the dollar. On a day when the market was volatile because the US Presidential vote was under way and a dollar was trading at Rs 66.53, deals were being struck with currency smugglers at the rate of Rs 75 to Rs 87.

Offering a 20% cut to bankers

A flat 20 per cent cut was offered to a banker, who did not wish to be named, for getting the notes exchanged in due course. The modus operandi: The businessman would deposit money with the banker and then take back 80 per cent of the money after some time, with the balance 20 per cent remaining with the banker as a facilitation fee.

Getting luxurious at gyms, salons and bars

Various food joints, salons, and gyms in Delhi have come up with offers and discounts for those who want to bid goodbye to their old notes. Anytime Fitness Gym and popular bar Social sent messages to people that they were accepting old notes. For the upcoming Sunburn event to be held on Saturday, November 12, where international artistes would take the stage, a ticketing volunteer said they were accepting Rs 500 and Rs 1,000 notes for cash payments. In another instance, an East Delhi gym is reported to have announced that it is ready to accept demonetised Rs 500 and Rs 1,000 notes to attract new members. Hotel Saravana Bhavan, a Chennai-headquartered chain of hotels with 36 branches across the state, has chosen to accept Rs 500 and Rs 1,000 notes from its customer.
However even as black-money hoarders scurried to offload their cache via sales of cash, distress bullion buying and questionable currency swaps, the taxman soon played catch-up by conducting raids on jewellers and suspected hawala operators across Mumbai, Delhi and parts of Punjab through Thursday.

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