RBI cash restrictions attempt to crush J&K economy: Kashmir Inc

Says high time for J&K Govt to ask centre to revoke order

Srinagar, Publish Date: Dec 13 2017 11:38PM | Updated Date: Dec 13 2017 11:38PM
RBI cash restrictions attempt to crush J&K economy: Kashmir IncFile Photo

As banking regulator Reserve Bank of India (RBI) has started to restrict cash flow to Jammu and Kashmir by choking supply of high denomination fresh currency notes to banks operating in this region, various Kashmir-based business leaders on Wednesday said it will  leave an adverse impact on the already fragile economy of the state.

Several banking functionaries on Tuesday had said that RBI has cut down cash supply to the banks in the state which has started pinching their customers especially ATM users. This step is apparently being implemented by RBI in “various border states”, the banking officials had said wishing anonymity.

Restricting cash supply is a “conspiracy against business community and people of Kashmir” which has been reeling under a slump and failed successive tourism seasons, said Muhammad Yaseen Khan, chairman, Kashmir Economic Alliance. Khan who is also president of Kashmir Traders and Manufacturers Federation ( KTMF) said a sudden hurdle in free flow of cash will hamper business activities across the state and threatened to launch a stir incase regular supply of cash is not restored.

“It is high time that state government should act fast and ask Government of India to revoke this order. Our business had already been hit by demonetization, GST and prevailing situation in the Valley and now the latest ploy is the cash crunch. Restricting high denomination notes is an illogical step which they can’t even dare to implement in any other state,” Khan said.

Kashmir Chamber of Commerce and Industry (KCCI), which is an apex body of trade bodies in Kashmir, has also reacted strongly to the development saying it would approach the RBI and ask for revocation of  this order. KCCI president, JavedTenga said putting brakes on cash supply would affect the entire state especially trade and commerce in Kashmir that has already been in doldrums.

“J&K is already suffering on economic front due to various reasons. Restrictions on cash flow will mean liquidity crisis, which will also impact purchasing capacity of the people. If such restrictions continue for more time, it will further stop J&K’s economic growth,” said Tenga. Tenga said there are severe problems being faced by common people and business community due to shortage of high denomination currency notes at ATMs.

President of his faction of KTMF, Bashir Ahmed Rather said “sudden disappearance” of high denomination currency notes from the markets has lead to a slump in trade activities. Rather said businesses which have been facing a downturn since 2014 floods are hit badly due to the lack of high denomination currency notes. 

“Business was already down due to GST and now shortage of Rs 500 and Rs 2000 notes has come as a shock to the markets. Winter season is already slack business and now this cash shortage is adding to the woes. Customer footfalls will go further down if this cash cut is not stopped,” Rather said.

President, Kashmir Economic Forum, Showkat Chowdhury said the government's claims of black money in Kashmir has already fallen flat after the much hyped demonetisation failed to show any impact on the ground here. " These are dirty tricks in the name of putting brakes on illegal activities but in reality it will break the back of a common Kashmiri especially a businessman. Due to 2014 floods and 2016 unrest our economy is already in tatters. The negative portrayal of Kashmir has hit our tourism badly and now the cash stoppage is yet another move to cripple us," Chowdhary said. 

Meanwhile, bank customers on Wednesday continued to complaint of shortage of high denomination currency notes from ATMs. “I had to withdraw Rs 10,000 from an ATM and dispensed the entire amount in Rs 100 notes. This is quite frustrating and a step which will make matters worse in days to come,” said Mubashir Shah, a bank customer.

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