Battling demonetisation with gold coins, debit, credit cards

As soon as the decision on demonetisation of Rs 500 and Rs 1,000 notes was announced on Tuesday night, large crowds gathered outside some jewellery stores in the city to convert their money into gold. "It took me at least one hour to pay the money at the counter. I purchased two gold coins worth Rs 39,000 each from a shop in Rajawadi, Ghatkopar without a bill," said a resident of Ghatkopar, who did not wish to be named.

With images of people rushing to jewellery shops circulated on social media, others also attempted to convert their cash into gold on Wednesday morning as well. "I am saying the same thing to all those who are calling me. I will not even take Rs 100 for now. Only debit card, credit card and cheque transactions will be done with bills and taxes applied," said a jewellery shop owner from Zaveri Bazaar, as he juggled incessant calls from people inquiring about converting their money into gold.

Asked about some jewellery stores in the city touching record sales for a day, Surendra Mehta, secretary of Indian Bullion and Jewelers Association, an umbrella body of bullion dealers, however, said, "These are rumours and no such transaction has taken place. In Borivali and Ghatkopar some shops did open their cash counter, but according to our information, not more than Rs 50,000 worth business was done as per our knowledge. The crowd in the market is thin and transactions are carried out only if there is card or cheque payment or denominations that are still legal. In fact we feel that there will be fall of 150 tonnes in bullion sales because people with black money will not be able to buy any more. The overall bullion sale will drop from 850 tonnes every year to around 700 tonnes."

"Buyers are most welcome if they want to buy anything from coins to jewellery. Mostly coins are preferred. We will sell them if they give us right denomination or cash or card payment. If they have Rs 500 and Rs 1,000 notes, we are not taking those," said Depeak Tulsiani, proprietor of Dwarkadas Chandumal and Sons also at Zaveri Bazaar.

With people being turned away from jewellery stores, those who were out shopping were also left annoyed.

Pratibha Gupta, a tourist from Benaras, who had gone shopping said, "I am a tourist. How am I supposed to get Rs 100 notes. People come here for shopping, and all of a sudden we cannot. I am not carrying my card. This move has come at a very bad time. They should have given us some time," said Gupta.

For jewellers, however, the demonetization was just the latest in a series of initiatives taken by the government to discourage cash transactions. "First, it was the making of PAN number mandatory for transactions of Rs 2 lakh, then came the one per cent excise which was a back-door way to scrutinise our books and now this ban on notes," said a leading Thane jeweler, who requested not to be named. "Thankfully, the move was timed after Diwali otherwise it would have been disastrous for jewelers," he said.

The real impact of the move, said some, will be felt at a business level between suppliers and jewelers. "Many cash transactions have taken place, deals have been struck for cash payments and gold has been delivered on the word of the buyers. Now, when these people will not have cash to keep their commitments, there will be chaos in the bullion market and I won't be surprised if some of the jewelers declare bankruptcy," the jeweller said.