The Future Group-owned Big Bazaar has announced that from 24 November, customers will be able to withdraw Rs 2000 from its outlets using debit cards. This facility will be available at 258 Big Bazaar stores in 115 towns and cities across the country.
"We are trying hard to ease any difficulties faced by customers due to the demonetisation of some currency notes," said Kishore Biyani, Chairman, Future Retail, while making the announcement on Tuesday.
State Bank of India has helped Big Bazaar activate this facility through the bank's cash at POS machines. Obviously, this couldn't have happened without the government's permission.
The Modi government has consistently pursued policies that benefit big retail outfits - the restrictions on online sellers is a case in point.
But by making Big Bazaar into an ATM, SBI and the government are boosting footfalls and directing potential customers towards it. In all likelihood, its sales will also increase. The brand value this exercise adds to Big Bazaar is, of course, immeasurable.
This raises the following questions:
Where is the cash coming from? Even if an average of 500 people use each Big Bazaar as an ATM every day, every outlet would need at least Rs 10 lakh cash daily. This comes to Rs 25.80 crore for all the 258 outlets put together.
Is the cash coming from from the savings of SBI depositors? Or will the RBI or government provide it?
The government and RBI are struggling to ensure that money reaches banks and post offices in rural areas. Banks like SBI are also finding it difficult to replenish their rural branches. At such a time, should money be disbursed to private entities like Big Bazaar?
On what basis is the government or SBI striking a deal with Big Bazaar and subletting its functions to a private retail entity?
Does Big Bazaar require a banking license to perform such functions?
Why was Big Bazaar chosen and not other retail entities?
SBI particularly has a lot to answer in this regard. It's chairperson Arundhati Bhattacharya was among the strongest advocates of using indelible ink to mark people who had already exchanged their old notes for new ones.
It is strange that chairperson of a bank which calls itself "Banker to every Indian" doesn't trust common people with small sums of money, but is willing to give away crores of rupees in cash to a private retailer.
Perhaps the answer lies in the political clout the Future Group enjoys.
Chandrababu Naidu's family have a stake
On 7 November this year, incidentally one day before Prime Minsiter Narendra Modi announced his demonetisation policy, Future Group said that it has signed a definitive agreement to acquire the retail and allied businesses of Hyderabad based Heritage Foods Ltd.
It was announced that in return, Heritage Foods will get a 3.65% stake in Future Retail through a fresh issuance of shares. Future Retail said that it will issue 1.78 crore equity shares to Heritage Foods.
The promoters of Heritage Foods happen to be the family of Andhra Pradesh Chief Minister N Chandrababu Naidu, an ally of the BJP.
His son Nara Lokesh, wife Nara Bhuvaneshwari and Lokesh's wife Nandamuri Brahmani are all listed as directors. Lokesh was present with Biyani when the announcement was made in Hyderabad. As a result of the terms of acquisition, Naidu's family will now have a direct stake in Future Retail.
Therefore, in effect, the SBI's move of dispensing cash through Big Bazaar helps the family of an important BJP ally.
Future Group's deal with the Rajasthan govt
In his statement on Tuesday, Kishore Biyani said that the group "supports the government's initiative in meeting its objective". This isn't the only time Biyani or the Future Group have done business with the BJP.
In August 2015, the Future Group signed a deal with the BJP government in Rajasthan to launch the Annapurna Bhandar Yojana.
State ration shops, or public distribution system outlets, which earlier stocked only subsidised foodgrains, sugar and kerosene began selling processed foodstuff, home care and hygiene products supplied by Future Group.
This gave the Group access to a huge untapped market across rural and semi-rural parts of Rajasthan, using the government's infrastructure. It got access to not only the four crore PDS beneficiaries in the state, but to anyone who wished to buy from these outlets.
The main competition for large retail chains like Big Bazaar comes from the local kirana shop. Experiments such as Annapurna Bhandar Yojana are attempts to eliminate that competition.
Now with Kirana shop owners across the country facing a crisis due to demonetisation, the retail chains want to go for their jugular. What better way to win over consumers than by becoming a quasi-ATM?
The Baba Ramdev connection
As consumers enter a Big Bazaar store - to withdraw cash or purchase items - they would come across an array of products from Patanjali Ayurved.
Patanjali, as we all know, is promoted by Baba Ramdev, who is known to be close to the BJP. He has been a sort of a mascot for the pro-BJP brigade on the black money issue and claims that PM Narendra Modi's demonetisation policy was his idea.
In October 2015, Patanjali entered into an exclusive partnership with Future Group to make its entire range of products available in Big Bazaar outlets across the country as well as the group's other food based chains such as Easyday, KB's Aadhaar and Nilgiris.
Giving the deal an ideological spin, Ramdev had proudly announced that Patanjali had entered a partnership with a "Swadeshi" retail chain.
The partnership worked like magic.
In less than a year, Patanjali became the third largest Fast Moving Consumer Goods (FMCG) seller at Future Retail, after giants like Hindustan Unilever and P&G.
Biyani said that Patanjali sales are growing at close to 20% every month. He also announced that Future Retail was in the process of launching products by Sri Sri Ravi Shankar and his Art of Living. Sri Sri, like Ramdev, is also known to be close to the BJP.
Tie-up with Paytm
One of the biggest gainers out of PM Modi's demonetisation policy has been Paytm. The company says that since Modi's announcement, it has served over 45 million users and signed up over five million new users. It welcomed the decision with a full page ad the day after the PM's announcement.
Future Retail was a beneficiary of this as well as it had signed a partnership with Paytm in August this year, for selling its products on the app. This is part of its larger strategy to build an alliance with Chinese e-commerce giant Alibaba, the largest stakeholder in Paytm.
Partnership with Aditya Birla Group
In 2012, the Aditya Birla Group entered into an agreement with the Future Group and infused Rs 1,600 crore into Future Group entity Pantaloons Fashion and Retail. It acquired a majority stake in Pantaloons, which has now been renamed Aditya Birla Fashion and Retail.
Incidentally 2012 is the same year in which, according to allegations levelled by Delhi Chief Minister Arvind Kejriwal, the Aditya Birla Group supposedly paid a bribe to Narendra Modi, then chief minister of Gujarat.
Whether there is merit in Kejriwal's allegations needs to be inquired into, but what is clear is that the Future Group has enjoyed a close business relationship with the BJP and its associates like the Naidu family and Baba Ramdev.