How people are getting rid of Rs 500 and Rs 1000 notes

In large metro cities like Mumbai, Delhi, Bengaluru, many of the large stores are accepting credit and debit cards without any charges, however in small towns with a population of less than 35000, most of the shopkeepers are charging 2% extra for credit and debit cards, so most people are used to paying by cash in these small towns and have kept cash ready for emergencies. This also the reason why some banks like Kotak Mahindra were offering credit cards for account holders in metro cities and not in small towns.
So the decision to scrap Rs 500 and Rs 1000 notes is a major problem in small towns, because most people have not activated or used their credit or debit card for a long time and are also short of cash. In small towns, villages the volume of business is very low for most retailers, so they cannot afford to get a machine for swiping a credit and debit card. So while depositing money in the bank account is the recommended option, there is always a fear of penalty and an income tax enquiry.

Though officially using Rs 500 and Rs 1000 notes is now illegal in India, and most people are surprised, it appears that there was a lot of manipulation going on, and those who were well connected were aware of the fact that the Rs 500 and Rs 1000 notes were going to be banned and had taken action accordingly. For example a gujarati newspaper on april fools day had published the news that the government was going to ban Rs 500 and Rs 1000 notes. The media also reported that the BJP in Kolkatta had deposited a large amount of cash in their bank account Rs 3 crore, some of the cash just before the Rs 500 ban was announced. It is clearly an unfair decision, that well connected insiders, especially BJP members have an unfair advantage, like insider trading in the stock market

Instead the ingeneous indian citizens are looking for different ways to get rid of their old Rs 500 and Rs 1000 notes with depositing cash in the bank being the last option.
According to investment advisors , the preferred option is going to be asking farmers to deposit the cash in their bank account . since agricultural income remains tax free in India, without any limit at all, the money can be withdrawn without any problem later and returned to the person who had stashed the Rs 500 and Rs 1000 notes
Another option is ask poor people with income less than Rs250000 to deposit the amount in their bank account and then gradually withdraw the amount in the new currency of Rs 500 and Rs 2000 or repaid by cheque. the amount can be shown as a loan, which will be repaid later.
A third option is purchasing high value small items. Gold and jewelry is the most popular purchase, however raids are being carried out on jewellers involved in gold trade with old currency. A newspaper reported that a retailer of high end luxury watches costing Rs 1 lakh or more each in Goa had done brisk business and was out of stock. Another retailer was reported as saying that he had done a lot of business, thrice the normal diwali sales. Some retailers are claiming that their bank manager told them to accept the old notes, as they can be deposited in their account.
It appears that smaller retailers who are politically or otherwise well connected are accepting Rs 500 and Rs 1000 notes, especially if they have very few customers, and slow moving stock. On the other hand, the largest retail stores, computer stores and other stores are not accepting old currency especially if they are in locations which are closely being monitored, as they cannot afford to incur the wrath of the government
The last option to get rid of Rs 500 and Rs 1000 notes remains getting the currency exchanged at any bank with a limit of Rs 4000 per person. Some of the banks like Kotak Mahindra are allegedly only exchanging currency for their existing account holders, while other banks are exchanging for everyone. In some banks like Bank of India, the person has to go to the managers cabin for withdrawing, in other banks like Oriental Bank of Commerce, there is less rush, and the process of exchange appears to be easier. However till November 11, 2016, all the banks in goa only had Rs 2000 notes, no Rs 500 notes are available which is creating a problem as it is difficult to make purchase with Rs 2000 notes because few shopkeepers have enough change for Rs 2000, so these notes are likely to be hoarded again.
Officially a person who has exchanged Rs 4000 is not allowed to exchange more money for the next 14 days, RBI is checking the identity of a person before the money is being exchanged. The form for exchanging the Rs 500 and Rs 1000 notes is the same across india
Out of the 2 lakh ATMs in India, only 1 lakh are operational, because the remain ATMs have to be recalibrated for the new notes which is going to take a long time. In 2016, most people are using ATMs to withdraw money, now everyone has to go the bank. It appears that the move to ban Rs 500 and Rs 1000 notes was very poorly planned, all aspects were not considered before taking a decision.

Retailers, service providers who are accepting Rs 500 and Rs 1000 notes are doing brisk business in India today. If you are aware of any retailers or service providers who are accepting Rs 500 and Rs 1000 notes, send an email to