A man displays a new 2,000-rupee banknote after withdrawing it from a bank in Jammu on Friday. (Reuters photo)
Visitors to India are reminded that 500- and 1,000-rupee banknotes are no longer accepted after the government abruptly withdrew them from circulation to combat counterfeiting, tax evasion and corruption.
The advisory on Friday came as the cash crisis in India stretched into its third day with ATMs running dry and people queuing for hours to exchange the now-defunct notes. A government official told Bloomberg News that the shortages would continue into December.
India’s banks have been caught out by Prime Minister Narendra Modi’s unexpected but widely praised announcement late Tuesday of the move to scrap the notes as part of a crackdown on the country’s huge “black economy”.
However, the now-worthless 500- and 1,000-rupee notes — once worth the equivalent of 265 and 530 baht respectively — account for 86% of all money in circulation, leaving many Indians with little or no cash.
Residents of Thailand who have such notes at home and are going to India will have to endure some inconvenience to exchange them for legal notes. The government has introduced a new 2,000-rupee note that is said to be much harder to counterfeit, but printers cannot keep up with the demand. A new 500-rupee note is also planned.
Apirat Sugondhabhirom, the acting Thai ambassador to India, suggested that tourists and regular visitors to India specifically request legal banknotes other than 500 and 1,000 rupees when they exchange their baht for travelling to India.
Credit cards are another favourable option for travellers under the present circumstance, he said on the sidelines of a meeting at the Foreign Ministry in Bangkok.
About 93,000 tourists from Thailand visited India in 2013, the most recent year for which the Thai embassy had statistics. But the number has been growing steadily in the last three years amid rising interest in Buddhist pilgrmages, officials have said.
About 8 million foreigners travelled to the country last year and the Thais were not among the top 10, according to the Indian Tourism Ministry.
In New Delhi and some other cities on Friday, armed soldiers and security officers were deployed outside banks to manage the growing crowds, who so far have waited patiently to exchange their currency. Banks are restricting withdrawals to 4,000 rupees per person, adding to the cash shortages.
Pushpendra Pankaj, a worker at New Delhi’s Municipal Council, told Bloomberg that he had been waiting for 90 minutes at the Canara Bank branch near Parliament House to exchange his old 500-rupee notes. He said he had been told that the bank’s server had crashed, but was prepared to stay in line as he needed money for household expenses.
“It’s a good move by the government to curb black money, but it is full of hassles for common people like us,” said Pankaj.
Compounding the problem is the need to reconfigure the country’s 220,000 cash machines so that they can dispense the new 500- and 2,000-rupee notes, which do not fit into the existing cash trays in the ATMs, according to Navroze Dastur, the managing director for India and South Asia at NCR Corp, which supplies about two-thirds of the country’s ATMs. He said it would take “some time” to adjust all the machines.
Until then, the machines can only dispense low-denomination 100-rupee notes, which are also increasingly in short supply.
The long queues outside banks are a sign that the government was ill-equipped to deal with such a huge transition, said Manoj Joshi, a fellow with the New Delhi-based Observer Research Foundation.
“The whole exercise is premised on the fact that you’ll be able to implement it quickly and effectively,” he said. “Governments in India simply don’t have that ability.”
People queue to deposit 500- and 1,000-rupee banknotes at a bank on the outskirts of Allahabad, India. (Bloomberg Photo)
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