India Withdraws 500 and 1,000 Rupee Notes from Financial System Overnight

Indian government has announced that the 500 ($7.6) and 1,000 rupee banknotes will be withdrawn from the financial system overnight.

The surprise move is part of a crackdown on corruption and illegal cash holdings, PM Narendra Modi said in a nationwide address on TV.

“Black money and corruption are the biggest obstacles in eradicating poverty,” he said.

New 500 and 2,000 rupee denomination notes will be issued to replace them.

Banks have been told to exchange existing high denomination rupee notes over the next 50 days.

The move is designed to lock out money that is unaccounted for – known as “black money” – which may have been acquired corruptly, or be being withheld from the tax authorities.

India – the seventh largest economy in the world – is overwhelmingly a cash economy, with most of its currency stored in 1,000 and 500 rupee notes.

Narendra Modi explained the thinking behind the move in an unscheduled speech on November 8.

“On one hand, we are number one in economic growth and on the other we are ranked 100 in global corruption rankings,” he said.

“Despite various steps, we have improved only to 76.”

It is seen as the boldest move by any Indian government to clampdown on tax evaders.

The 500 and 1,000 rupee notes are the highest denomination notes in the country and are extremely common in India. Airports, railway stations and hospitals will only accept them until November 11.

People will be able to exchange their money at banks between November 10 and December 30.

Narendra Modi’s ruling Bharatiya Janata Party came into power in 2014 promising to bring billions of dollars of black market money into the country’s financial system. His government is half way through its term of office.

The announcement comes just over a month after the Indian government raised nearly $10 billion through a tax amnesty for Indians to declare hidden income and assets.

Government guidelines say it is possible to exchange 4,000 rupees – but it is not clear if this is per day or in total.

Critics say the new rules may make it especially difficult for people who choose to keep their cash at home rather than in a bank account and for people with large rupee cash reserves who live abroad.

If there is a legitimate explanation for the cash, the authorities say, it will be possible to exchange it.

Cash points will close on November 9 and in some places also on November 10 – a development that it seems may cause cash blockages or queues at ATMs.

Clyde K. Valle

Clyde is a business graduate interested in writing about latest news in politics and business. He enjoys writing and is about to publish his first book. He’s a pet lover and likes to spend time with family. When the time allows he likes to go fishing waiting for the muse to come.

Recent Posts

Spain: At Least 158 Killed In The Country’s Worst Flooding Disaster

At least 158 people have died in Spain's worst flooding disaster in generations. On October…

2 days ago

Russia Fines Google $20,000,000,000,000,000,000,000,000,000,000,000, Surpassing Global GDP

Google has been fined two undecillion (a two followed by 36 zeroes) roubles by a…

2 days ago

Financing Your Home Remodel: 7 Tips for Success

Embarking on a home remodel is an exciting journey, promising enhanced comfort, increased property value,…

2 weeks ago

Donald Trump Serves Up McDonald’s Fries While Kamala Harris Celebrates 60th Birthday with Church Choir

The US presidential candidates continued to campaign across key swing states on October 20. Footage…

2 weeks ago

America PAC: Elon Musk Promises to Award $1M Each Day to Swing States Voters

Elon Musk has said he will give away $1 million a day to a registered…

2 weeks ago

Canada Expels 6 Indian Diplomats Amid Khalistan Row

India and Canada have decided to expel their top envoys along with other diplomats as…

3 weeks ago