The Reserve Bank of India (RBI) announced that it would withdraw the Rs 2000 denomination banknotes from circulation.
Just like before this news created a wave of panic and confusion among the public and it’s causing people to rush to banks and ATMs in an attempt to exchange or deposit their high-value currency.
People are not just rushing to banks, they’re also opting for cash on delivery while shopping from direct-to-customer (D2C) platforms.
Ilesh Ghevariya, Founder & CEO of French Crown, a D2C fashion brand, says that in its latest figures for the last week of May 2023, there has been a sales hike by about 15 per cent since many of its buyers are currently opting for cash on delivery in Rs 2000 notes denominations.
“This number may increase as people feel the pressure to exchange currency before September ends. However, we firmly believe that this is just a passing phase,” he said.
The brand also recognises another trend that some individuals are returning their parcels if the courier personnel inform them that they have a limitation to use Rs 2000 notes.
“In such cases, our courier boys have no option but to accept the currency, because by law, we cannot refuse it; it’s still a legal tender,” Ghevariya said.
Meanwhile, the jewellery industry is experiencing an interesting shift in consumer behaviour.
“Cash transactions have sharply risen and we are definitely witnessing some rush situations in the market,” said Eshwar Surana, Managing Director, Raj Diamonds.
The phasing out of 2000-rupee notes has created a sense of urgency among the people to safeguard their monetary value by investing in jewellery, he said.
“People will aim to sidestep the need to exchange or deposit Rs 2,000 notes at banks and will come forward to spend on luxury items such as diamond jewellery,” he added.
Surana believes that there will be a short-term increase in demand as people try to offload their Rs 2,000 notes.
“We expect a 20-30 per cent increase in sales in the near future. It will also help grow a bit because consumption is expected to go up. However, we will continue to maintain strict KYC norms,” he said.
People can exchange or deposit the 2000 notes in their bank accounts by 30 September. The central bank’s regional offices and other banks has started taking Rs 2,000 notes for exchange with lower denomination ones from 23 May.
According to RBI, they will remain legal tender despite the central bank’s decision to withdraw them from circulation.
