Surge of ₹2,000 Notes Overwhelms Zomato's Payment Processing, Courtesy of RBI's Currency Move
Zomato Battles Unexpected Deluge of ₹2,000 Notes as India Grapples with Currency Withdrawal
22 May 2023
Zomato faces a surge of ₹2,000 notes for cash-on-delivery orders, with 72% of such orders being paid using these high-value notes.
The Reserve Bank of India's decision to withdraw ₹2,000 banknotes has prompted individuals to rush and exchange or dispose of their notes.
Despite the challenges, Zomato reports positive financial performance, with a 48% decrease in net loss and a 70% increase in revenue from operations.
Zomato, one of India's leading food delivery companies, is grappling with an unexpected surge in ₹2,000 currency notes for its cash-on-delivery orders. In a recent tweet, the company revealed that a staggering 72% of their cash on delivery orders since Friday were paid using ₹2,000 notes. This surge can be attributed to the Reserve Bank of India's decision to withdraw the ₹2,000 denomination banknotes from circulation. As a result, Zomato has been inundated with these high-value notes, posing challenges for the company's payment processing.
The Reserve Bank of India's announcement to withdraw the ₹2,000 banknotes has sparked a rush among the public to exchange or dispose of their high-value notes. Individuals are flocking to fuel stations and jewelry stores, eager to rid themselves of the soon-to-be phased-out currency. To alleviate concerns, RBI Governor Shaktikanta Das assured the public that there is no need to rush to the banks immediately, as the deadline for currency exchange is four months away. The central bank also pledged to address any issues that may arise during the exchange process.
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Despite the challenges posed by the influx of ₹2,000 notes, Zomato reported a positive financial performance for the March quarter of FY23. The company's consolidated net loss narrowed by 48% year-on-year, amounting to ₹187.6 crore. Additionally, Zomato witnessed a substantial increase in revenue from operations, soaring by 70% to ₹2,056 crore compared to the same period last year. The company's food delivery business accounted for ₹1,530 crores of the revenue, while its quick commerce arm generated ₹363 crore. Furthermore, brokerage firms have revised their target prices for Zomato's stocks, anticipating improved profitability in the medium term.
In response to the currency withdrawal, the RBI has issued guidelines for banks, emphasizing the need for appropriate infrastructure to facilitate currency exchange. This includes shaded waiting spaces and drinking water facilities, considering the current summer season. The decision to withdraw the ₹2,000 denomination banknotes aligns with the RBI's clean note policy. Initially introduced in November 2016 after demonetization, these high-value notes were intended to address the country's currency requirements promptly. With other denominations now readily available, the objective of the ₹2,000 banknotes has been fulfilled, leading to their gradual phase-out.