500 and 1000 rupees currency notes are no longer legal tender
November 8, 2016:
The Indian government has banned the 500 and 1000 rupee notes today. In an unprecedented move, prime minister Modi in a televised address to the nation announced that this measure was taken to curb black money and hawala transaction. The move has put a lot of unaccounted money at stake. The old 500 and 1000 rupees notes can be exchanged for new ones at banks and post offices from the 11th November 2016. Banks will remain closed on the 9th and in some places on the 10th of November 2016. Cash withdrawal limits of 10,000 rupees per day and 20,000 per week have been imposed. New currency notes in the denomination of 500 and 2000 have been unveiled.
Prime minister Modi said there are provisions being made to exchange or deposit the old currency till 30th December 2016. He added that if for any reason the old currency is not exchanged after the 30th December 2016, people will be able to exchange them at the reserve banks by filling a form and providing identity documents such as Aadhar card, voter Id card, PAN card and passport. To minimize the inconvenience all international airports, railway ticket counters and bus stations will continue to accept the old notes for a few days. Travelers can exchange the old currency for up to 5000 rupees. Hospitals, pharmacies, emergency services will continue to accept the old legal tender for the next 72 hours. This bold move will effectively render any unaccounted money in these denominations useless.
What is the impact of replacing currency notes on NRI?
Anyone who has large amounts of money in these denominations and is overseas may be able to exchange them for up to 5000 Rs in the new currency as an immediate measure. However, There needs to be more clarity on the process for NRI, could they go to the overseas branches of Indian banks? Logically they should contact the Indian missions abroad for further information.
Will the INR exchange rate be affected?
It remains to be seen as markets open tomorrow. As of now, 1 am on the 9th November 2016, no dramatic change in exchange rate is observed. This is a smart move by the government of India to tackle the menace of fake currency and unaccounted wealth. So far there seems to be calm.
Banks closed on the 9th of November, 2016 in India.
The government has ordered banks to remain closed today and possibly tomorrow as well. It is important to highlight that any amount of currency can be deposited or exchanged for new notes provided the ID documents are presented and the money is legitimate. It’s still too early to comment on the political opposition or acceptance of this surprise announcement by the government of India. Pm Modi expressed confidence in the people of India and their ability to face this inconvenience for the betterment of the country and the society. While it’ll be an exciting day for many reasons, It is for the first time in many years that a government actually took up the issue of black money and fake currency seriously and did something about it. This move follows the amnesty offered to people declaring black money. If Modi and BJP continue working on the reforms, good days (Acche din) are a certainty in the near future. The present government is arguably the most proactive and action-oriented government in the history of independent India. It was successful in passing the GST law which was eternally pending in the parliament. Modi and his team are continuously at work to bring about a positive change in the Indian society. These steps will fundamentally alter the status quo in India which was plagued by slow reforms and nonexistent policies to tackle corruption.
Once again Modi has proved he isn’t just a talker.