Lauren

When Rs 500 & Rs 1000 Notes Are Void

Just when I thought the 8th of November could shock no more, the Prime Minister of India, Narendra Modi, announced something that left the subcontinent speechless. In four hours, at the stroke of midnight, Rs 500 and Rs 1000 notes (86% of the cash in circulation!!) would be void. I must have spent that entire day with my jaw on the floor. Everyone crowded around the television, listening to the commentary on this radical move towards fighting corruption. That buzzy feeling of history being made, electrifying the air.

As soon as we found out, we (along with the rest of India) checked our wallets to see how much legal tender we had left. We thankfully had enough Rs 100 notes to tide us over. To add an extra twist, the first day of the notes being withdrawn from circulation was a bank holiday. When the banks did open, and the old notes could be exchanged, there were long queues and a general sense of panic.

For a week after the announcement, there were concessions (originally to the 11th, extended to the 14th) to try to avoid chaos and disaster and give everyone the opportunity to get some cash. Rs 500 and Rs 1000 notes would be accepted in hospitals, public transport, petrol stations, burials grounds and milk booths. Well, being unable to have chai, a disaster in itself.

Many are outraged by the inconvenience, restrictions on how much one person could withdraw daily and the waiting times at the banks. Many Tourists, who do not have Indian bank accounts, struggled to exchange their notes at airports. Those abroad with voided currency started to panic (if you are one of them, read this). Sadly, rumours and misinformation have spread like wildfire, leading to innocent victims.

Why take Rs 500 and Rs 1000 out of circulation, and why such short notice?

This was a bold move to tackle black money gained through corruption, tax evasion and to wipe out the fake currency from circulation. Last year, we withdrew a Rs 500 note, only to discover it was fake! The timing was strategic, so no one had time to invest their black money elsewhere.

I am no economist or political analyst, but this feels like a positive leap in the right direction, eliminating so much black money in one fell swoop. Yes, it’s been chaotic and inconvenient, and I am glad I wasn’t a tourist in India on the 9th of November. Our Rs 100 notes didn’t last long, yesterday we only had Rs 20, but our local daily needs shop gave us credit. Right now, all we can do is support each other, reassure anyone who has been misinformed and help those who can’t make it to the bank.

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29 comments

  1. This happened 1 day before I left India. I remember we all were so shoked yet really proud of PM taking this bold move. We had just made withdraw of around 10 thousand rupees(all 1000 rupees notes) for our journey to UK (i like to keep some rupees with me in UK so when I go back to India I have money to spend on Indian airport if needed.) we had planned to pay by cash to taxi to airport the next day. When this news was announced we also had a bit of initial panic but then we called the taxi company and paid for our journey online so it was all sorted quite easily. One of my father’s friend had quite a few 100 rupees notes that he gave us around 2000 rupees for our journey to UK.

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  2. I respect Modi for daring to make such a dramatic move. He said that he would fight corruption and he is! He must have known that it would cause chaos but felt that it was a necessary step to take. Having said that, I’m glad I wasn’t in India when it happened! It must have been a very stressful and panicked day for everyone.

    I have 4 500 rupee notes at home in Australia that neither money changers or banks will touch! Hopefully I’ll be back in India just after Christmas so I should be able to change them.

    I really hope Modi’s plan works! I wonder if there was any strategy involved in choosing the date, or whether is was just coincidence that the announcement was made on the same day as that other awful announcement?

    Little Rohan is experiencing history in the making already!

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    • It must have been strategic, I wonder if anyone has worked out why he chose to do it the same day as some really bad news. I hope you can make it to India before the deadline! Rohan was definitely born a very historic year! XX

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      • Hi Lauren, thank you so much to share your experience. I wonder how people will cope with the new 2000rs note since it was already a problem to buy anything with a 500rs or 1000rs note.

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      • what was the other bad news on 8th Nov…? Yesterday i was watching parliament session, Mr Sitaram Yechuri said well and i agree with him “before parliament session BJP govt try to hijack attention every time. they do not want parliament to function. instead off passing important bills which are pending they want opposition to react and halt the session.

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  3. Who are you kidding. The area where I live has a few wholesale gold dealers. This morning they were still taking the old notes. Its just a shame that the deadline is in December. It gives people too much time to manipulate the system.

    On the other hand, have you not seen the news where at least three people have killed themselves because they were stuck with black money after selling property.

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    • the old notes have to be deposited in the banks if they want to cash it in new notes in near future other wise it is all just paper.so i guess the gold dealers thought that they can cash it through some poor peoples bank account with deposites less than 50000 rupees and then immediately withdraw it via atm in new cash or 100 rupees bills . But they are forgetting that every transaction via bank is recorded and i hope these kind of incidents will be brought to cognizance of income tax department after 30 december.

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      • but we also must not think that every gold dealer or businessman is crook or dishonest. what i want to say is that our legal and tax authorities are perfectly capable of taking care of every issue that comes with the current situation.we must believe in the govt. and help them to carry out this big cleansing operation for benefit of our nation.

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  4. “”””I am no economist or political analyst, but this feels like a positive leap in the right direction, eliminating so much black money in one fell swoop.”””””””

    well written thoughts…..it’s not possible wipe out black money from the world, but yes, we can control.

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    • That’s really sad. The hospitals and crematoriums should have still accepted the notes (on the day the article you shared was last updated). There should have been more information out there on the concessions 😦

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  6. I like our Prime minister. He takes risk and dares to explore the uncharted territory. He is a guy who has a vision for our country and is ready to do anything it takes to see it through. I am neither a “Modi Fan” nor a BJP supporter, I just want/need a leader to lead me and my country to a path of prosperity. If any other person shows such leadership qualities, I will surely give him/her a chance and if he/she does a better job, I’ll root for him/her. Nation always comes first.

    P.S- India will win the on going test series against England.😜

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  7. I never thought that the nation would be in a shock on the eve of my birthday 😀
    yes, to put an end to black money and counterfeit notes such drastic step was much needed. In a huge economy like India, where people are depended on cash for daily transactions, chaos is bound to happen. I carried some cash with me which I received as as gifts during my wedding, and my husband also had some money while travelling to USA from India. We are hoarding around 10000 cash with us and have no clue how to send them back for exchange. Back in India I am worried about my old parents who hardly can use ATMs and have to stand in long queues to exchange money. Shopping for my elder brother’s wedding,which is due in the first week of december,has also become stagnant due to shortage of cash.

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    • Oh no, I hope you are able to find someone who is visiting India before your deadline!
      Sending love to your parents!
      Has your bro been able to resume his shopping? xx

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      • Hello Lauren,situation is much better now. The arrangements have resumed though online shopping and the catering staffs agreed to accept cheques. Just hoping for the best! How is the situation at your place?

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  8. @Lauren

    At the stroke of midnight reminds me of the famous speech of India’s first Prime Minister Jawahar Lal Nehru’s delivered on the eve of India’s independence “At the stroke of midnight hour when the world sleeps, India will awake to a new dawn”. I hope it is a new dawn.

    As soon as the news came, I rushed to the nearest ATM to draw money in batches of Rs.400/- to get Rs.100/- notes. The next Saturday and Sunday was spent standing in long lines in banks to deposit and withdraw money. Four hours each at two banks makes eight hours of standing and a one or two hours at ATMs. Total of ten hours. My whole body was aching after two days. However, people like me and many others support the move if it manages to make a dent in the black money.

    No crowds at malls, restaurants, cinema halls, Everyone is out on the street looking for ATMs. Just when the spot an ATM, they rush. Day, night, does not matter. People possessed with the desire to get hold of cash. Our entire existence has come revolve around banks. Get up in the morning and rush.

    There are people changing 500 rupee note and giving Rs.300/- , innovative that we are. Some people bought gold as soon as they announcement was made and lots of this hanky panky is going on. But yes, cash earned from illegal trade and cash used for terrorism has been squeezed. It is a body blow to all kinds of disruptive activities. There have been talk about reforming the real estates and our Prime Minister has just now talked about state funding for elections, which are biggest generators of black money. I hope the Government has slew of such measures in offering.

    Last month we had smog in Delhi, right after diwali, which just didn’t go away, which made us realize that we cannot pollute the environment anymore. Now, there is a realization that we cannot put up with black money anymore because it ultimately hurts the common man for generations.

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  9. I think it was a great idea, especially because he kept it a big secret. There really were no other options. I think it was a very brave move. I just had 1000 rupee note leftover from last year, we normally keep a few notes for our journey. I think my daughter and her husband were glad they spent their wedding gift money while they were in India. Otherwise that might have been awkward. So well done India let’s hope it works!!

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  11. The real test of this policy is yet to come. Whilst many have suffered from housewife mattress hoarders to poor farmers who have no ID or bank account crores of black money has indeed been taken out the system. Sadly I think the big culprits of black money will have it hidden in other ways than stacks of black cash and the main group of people being caught out are the middle classes and relatively small players in the world of black money – those who have sold a bit of gold and not declared all of their cash takings in their small business (not that I am condoning not paying your tax bill!) There have been videos leaked of banks aiding people cleaning their black money and I’m sure if this is true they will have learnt a tidy sum themselves and those they helped will be the very rich who can afford to pay the fees required.
    A lot of foreign visitors to India have been left high and dry also with nowhere to change their holiday money and bank charges to be able to use ATMs only to withdraw small daily amounts. I saw one post from a frustrated friend telling anyone who has booked a ticket to India for a holiday in the next few months to cancel it and not come! Of course this is not necessary and tourists traveling here now just need to be prepared but certainly there should have been more provisions made for tourists who were here at the time of this happening.
    Whilst many see demonetization as a bold move and a step in the right direction (that was my initial thought) the move has been widely unpopular and this has been worsened by the lack of provisions to get new currency into circulation fast enough and provide extra ATM facilities/lengthen bank opening hours and provide aid to the needy. There are horror stories like that of an ill newborn child that died as the ambulance refused to take them to hospital as the parents only had old currency.
    Still the amount of black money turned in has been a mark of success. The real test I mentioned earlier is what will happen next. The public want to see that money turned into infrastructure, schools and other measurable and viewable improvements fast -in overcrowded cities with overstretched public transport and crumbling roads and in rural communities with no clean water and sanitation. I wait in hope with the rest of India…

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