India Drops 2 Largest Bank Notes to Stave Off Corruption

“In a master stroke, the government has attempted to tackle all three malaises now plaguing the economy – a parallel economy, counterfeit currency in circulation and terror financing”.

The impact of government withdrawing Rs 500 and Rs 1,000 currency notes from circulation was visible across Delhi with people facing inconvenience in buying milk, vegetables, medicines and other daily essentials and in commuting in auto-rickshaws and taxis.

The slide was also partially attributed to uncertainty sparked as Donald Trump claimed the USA presidency in a stunning upset. He is hopeful the ban of Rs 1000 and 500 notes, will bring about an economy more equipped to deal with corruption.

While there is no limit on the amount of cash one can deposit, the government has put a limit of Rs 4,000 on the amount that can be withdrawn from the bank (as of now).

Tuesday’s announcement was part of that promise but there are also political reasons. The sectors that could probably be hit the worst in the short-term could be bullion and real estate since they handle a lot of transactions in cash.

The idea is that Indians who have stockpiled undeclared income will now be forced to come out of the shadows. “All they have to do is exchange it or deposit it in the bank”, Finance Minister Arun Jaitley told public television. It also announced the launch of newer notes of Rs 500 and Rs 2,000 from November 10.

As of midnight Tuesday, all 500- and 1,000-rupee notes – worth about $7.50 and $15 – had no cash value.

The unexpected move is created to fight against corruption and money laundering, Modi said, calling them “diseases” and “obstacles” to the country’s economic success.

In Patna, chaos outside banks after customers made to wait in queue for over two hours, limited availability of forms also adds to inconvenience.

While the success of this measure is awaited, the Union government’s next task would be getting back the black money overseas.

The Government of India has declared that the five hundred and one thousand rupee notes are no longer legal tender, with effect from midnight on 8 November 2016.

Bankers say that it will be hard to meet the customers’ demands and that it might take a few days for things to settle down. It seems to me a puzzle. You can deposit the old notes at any branch till 30th of December and after that, you can change the currency from RBI specified offices only.

The old 500 and 1000 rupees notes can be exchanged at banks by showing the valid identity proofs.

Swapan Mandal, a labourer, wanted to withdraw 3,000 rupees from an ATM and send it to his family in Kolkata, in eastern India, but was unable to do so.

A sub-inspector in New Delhi said the police commissioner had issued orders to watch for disturbances, especially at key retail outlets like petrol pumps.