People across India were in deep trouble on Wednesday as the Narendra Modi government in New Delhi abolished INR (Indian Rupees) 500 and 1000 currency notes at 12am (midnight).
On Tuesday evening, Prime Minister Modi announced his decision to ban INR 500 and 1000 notes, saying that it was his government’s first move towards fight against the black money. Speaking at a media conference in the capital, the PM said that the government had no other option, but to denominate INR 500 and 1000 currency notes as it became important to stop terror funding and recover the ‘undisclosed’ money.
The PM further urged people not to panic, stressing that the existing INR 500 and INR 1000 notes would be accepted till November 11 at state-run hospitals, pharmacies in state-run hospitals, railway counters, buses, milk booths and crematoria. He informed the people that branches of all major banks would remain closed on Wednesday and people could not use Automated Teller Machines (ATM) on Wednesday and Thursday. “Banks will be closed on Wednesday. It will cause some hardship to you…..Let us ignore these hardships….In country’s history, there comes a moment when people will want to participate in the nation building and reconstruction. Very few such moments come in life,” added the PM.
At the same time, the premier assured Indians that banks and post offices would remain open for extended hours from Friday. According to Modi, people can only withdraw INR 2000 per day per card from ATMs till November 18 and INR 4000 per day per card after this. People can also withdraw INR 10,000 per day and INR 20,000 per week from banks till November 24. Thereafter, the limit will be raised.
Prime Minister Modi further announced that the Reserve Bank of India (RBI – the Central Bank) would introduce freshly designated currency notes of INR 500 and INR 2000 with chips in them on Thursday. He told people through the media that old currency notes of INR 500 and INR 1000 could be deposited in any branch of a bank or a post office till December 31, but with a proof of identity. Banks will transfer the equivalent amount to the depositor’s account and the limit of such deposits will be INR 4000 per day till November 24. However, the PM warned people against exchanging other people’s unaccounted cash at banks. Cameras will monitor transactions at branches and the exchange will be recorded, he said.
Soon after the PM made the announcement (at 8pm on Tuesday), people rushed to ATMs and petrol pumps at major Indian cities to get INR 100 denomination notes and get rid of their INR 500 and INR 1000 bills. As people rushed to draw INR 100 notes, the ATMs ran dry within hours. The situation deteriorated on Wednesday morning when the Indian Railways and state-run hospitals refused to accept INR 500 and INR 1000 currency notes. People are waiting for Thursday when the exchange procedure of the old currencies will begin.