As of midnight tonight, current Indian Rs 500 and 1000 notes are no longer legal tender, replaced with new notes

Recommended reading, economic debates, predictions and opinions.
Post Reply
Hammerer
Contributor
Contributor
Posts: 628
Joined: 21 Oct 2008 00:09

As of midnight tonight, current Indian Rs 500 and 1000 notes are no longer legal tender, replaced with new notes

Post by Hammerer »

http://economictimes.indiatimes.com/new ... 315932.cms

In a seemingly well-kept secret, India is taking a big one-time stance on hoards of "black" cash:
As of midnight tonight, current 500 Rs and 1000 Rs are no longer legal tender, with a few exceptions that are getting 72 hours to accept them. These two notes, the largest available, work out to US$7.5 and US$15 respectively. One's only option is to exchange them at a bank for new 500 Rs and 1000 Rs notes before the end of the year.

So if you have shoeboxes of these bills from untaxed/corrupt transactions, and don't have a good story for why you have them, you have a big of a problem.

ATMs are being emptied of lower denomination notes, and will have a limit going forward. Jewellery stores and other shops are getting very busy tonight.

It's interesting to think about all this: Lots of poor and middle-class people will reap a windfall by exchanging, say, 90x 100 Rs notes for 10x 1000 Rs notes, since they can fall under the radar in exchanging them. The non-rich will quickly become friends with the wealthy that are hiding cash.

I'm surprised a 5-10% inflation rate wasn't enough to discourage keeping money under-the-mattress. I guess whomever does has a lot more explaining to do than the average Canadian/American hoarding cash.
User avatar
Mordko
Veteran Contributor
Veteran Contributor
Posts: 6327
Joined: 24 Jan 2016 09:26

Re: As of midnight tonight, current Indian Rs 500 and 1000 notes are no longer legal tender, replaced with new notes

Post by Mordko »

An own goal. Undermining trust in your currency is never a great idea. Particularly so right at the time when EMs are under attack...
User avatar
Peculiar_Investor
Administrator
Administrator
Posts: 13271
Joined: 01 Mar 2005 14:52
Location: Calgary
Contact:

Re: As of November 9, 2016, current Indian Rs 500 and 1000 notes are no longer legal tender, replaced with new notes

Post by Peculiar_Investor »

I don't have any specific knowledge of the topic but found the following Canadian Press article Canadians left with worthless wads of cash after Indian government scraps rupee bills | National Post that covers some of the nuances for Canadians.
Diana Mehta, The Canadian Press wrote:But for anyone with the cancelled currency outside India — including members of the large Indian diaspora in Canada — there appears to be confusion on what to do with the discontinued bills.

The High Commission of India in Ottawa said it did not yet have any official guidance on the matter.

“We have written to our national Reserve Bank. We are waiting for their response,” said Prem Selwal, attache consular with the commission.

<snip>

... reached out to a few Canadian banks for advice on the matter but hasn’t received responses that help.

TD Bank said all Canadian banks, including its own branches, are “unable” to process, buy or sell transactions of Indian rupees.
A spokeswoman said Modi’s announcement had made exchange rates for rupees unavailable until further notice. Wire payments are not affected.

The Royal Bank of Canada said it would be unable to buy or sell rupees in any denomination until it is given details on when the new banknotes are available and in circulation.

“We are advising clients to hold on to their existing banknotes until we receive further clarity around the circulation of new ones,” said spokesman AJ Goodman.
Google also turned up Indian rupees: Holders of notes abroad face tough battle - BBC News which might be helpful for those exploring options.
Imagefiniki, the Canadian financial wiki New editors wanted and welcomed, please help collaborate and improve the wiki.

Normal people… believe that if it ain’t broke, don’t fix it. Engineers believe that if it ain’t broke, it doesn’t have enough features yet. – Scott Adams
Profit not Prophet
Contributor
Contributor
Posts: 948
Joined: 03 Aug 2007 14:24
Location: Southern Ontario aka not TO

Re: As of midnight tonight, current Indian Rs 500 and 1000 notes are no longer legal tender, replaced with new notes

Post by Profit not Prophet »

Interesting and a reminder of how India isn't Switzerland. Reminds me a little of the nicely dressed people lined up during a bank run in Shanghai post ww2 pre mao winning.
Hammerer
Contributor
Contributor
Posts: 628
Joined: 21 Oct 2008 00:09

Re: As of midnight tonight, current Indian Rs 500 and 1000 notes are no longer legal tender, replaced with new notes

Post by Hammerer »

From what I have read, taking physical rupees out of the country used to be completely illegal, now you're allowed to take out 5000 rupees at a time (US$75). Combine that with a bunch of prohibitions on exchange... They're nowhere near reserve currency status...
Post Reply