This Article is From Jun 08, 2011

Ramdev effect: Trader converts Rs 24 lakh into 100-rupee notes

Ramdev effect: Trader converts Rs 24 lakh into 100-rupee notes
Mumbai: Besides throwing the ruling Congress party into a political quagmire, Baba Ramdev's abruptly-terminated fast-unto-death seems to have had a series of unintended consequences as well.

One of the more bizarre ones relates to a metal trader in Pydhonie, who was so afraid of currency notes of 500 and 1,000-rupee deno-minations going out of circulation that he converted his savings amounting to Rs 24 lakh to notes of Rs 100. He even paid an agent Rs 24,000 to help him do so.

It may be recalled that one of the yogi's demands was the withdrawal of Rs 500 and Rs 1,000 notes from circulation to make bribery more difficult.

The incident took place on Saturday evening, when, according to sources from Pydhonie, the metal trader panicked on hearing the list of Baba Ramdev's threats and demands.

"He thought the government would accede to this demand immediately and he would lose Rs 24 lakh out of the money he kept stashed away in cash as savings, because it was in denominations of Rs 500 and Rs 1,000.

He approached an agent to get it converted to notes of Rs 100 and smaller, who charged Rs 1,000 for every lakh," said a person close to the trader.

Alpana Killawala, spokesperson for the Reserve Bank of India, said these kinds of transactions aren't illegal and even banks offer the facility of exchanging notes of higher denominations for those of smaller ones.

"There is no irregularity till the time only currency notes are being exchanged. There are many banks that offer this facility as well.

But, for higher amounts, the banks are supposed to note down PAN card numbers and also deposit the money," she said.

A source said many people prefer to get this done via agents instead of banks, to avoid the Income Tax glare.

Mahindra Angara, president, Metal Traders' Association, said, "I haven't heard of anything of this sort. This must be a one-off case."

Baba Ramdev had called for the abolition of currency notes of higher denominations, claiming that the move would reduce corruption.

He had stated that when the notes are of higher denominations, the bundles made out of them are thinner and easier to hide.

He had contended that the exchange of bigger bundles and in greater numbers would attract attention and dissuade people from giving and accepting bribes.

Ramdev had, however, stated at the beginning of the strike that he was putting this particular demand on the backburner.