Indian banks in China not to accept scrapped bank notes

These highdenomination notes form about 2 per cent of the total currency in circulation but account for 86 per cent of the value.

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Modi dropped a bombshell on November 8 by abolishing 500 and 1,000 rupee notes that accounted for 86 percent of cash in circulation.

There are around 4,400 such “currency chests” of various banks spread all over India where the RBI sends the cash boxes for onward distribution. Wells Fargo & Co. also said it can’t supply rupees at this time, while Bank of America Corp. said it has never accepted the currency for exchange.

The withdrawal of the big notes is aimed at “black money” and targets people who have been dodging taxes by holding stockpiles of cash.

Shruti Solanki, an Ernst and Young employee, said: “I had exchanged the old currency of Rs 1,500 a week ago”. Because we were regulars there for the last week, they allowed us to put our meal and drinks on a tab, so we can pay them back when we have some cash.

But in a country where 90% of transactions are conducted in cash, the initiative has caused huge disruption.

In a teary speech in Goa recently, Modi asked people to support him for 50 days as frustration and anger built up among people queuing up at banks to withdraw or exchange cash.

Thursday marks nine days of millions of Indians queuing up outside banks and post offices to exchange old banknotes or withdraw rationed money from their accounts.

“The government has chose to permit the farmers to withdraw up to Rs 25,000 per week against the crop loan sanctioned and credited to their accounts, subject to the limits.and this will also apply to Kisan Credit Cards”, he said. “Earlier I was expecting a rate cut in February”, said Ashish Vaidya, head of trading at DBS Bank in Mumbai.”But now I expect a rate cut in December given that the demonetisation move is fiscal and inflation positive”. The panic among people is yet to be addressed as most of the ATMs have run out of cash.

Brazilian Octavio Franco who is travelling to India with his mother, says, “The “cambistas” (money exchangers) are out of cash and queues at ATMs are very long”. He expressed regret at the political opposition over the move but ruled out a roll-back. State Bank of India chairman Arundhati Bhattacharya said, however, that not all machines need these parts.

And public anger has begun to rise as low earners, and farming communities, see their incomes plunge.

It said that such unprecedented measures are undertaken only during exceptionally bad conditions “such as in Germany after the second world war, or the former Soviet Union – or in the throes of hyperinflation”, and not by a country like India that is growing at upwards of 7 percent.