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CONSOLIDATED: 500 and 1000 rupee notes no longer legal tender!

CONSOLIDATED: 500 and 1000 rupee notes no longer legal tender!

Old Nov 8, 16, 2:51 pm
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CONSOLIDATED: 500 and 1000 rupee notes no longer legal tender!

http://www.bbc.com/news/business-37906742

This is going to cause chaos, and I feel really badly for everyone involved.

My bank has stopped accepting rupees for currency exchange as of this morning, if anyone figures a way to change rupees back in Canada, I would appreciate any pointers!
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Old Nov 8, 16, 3:41 pm
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Wonder what is going to happen with the Indians who live in other countries and have rupees with them? Do they take a hit and exchange into dollars? Or will the Indian govt allow them to exchange when they come back into India?

A lot of questions about this..
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Old Nov 8, 16, 4:02 pm
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Well, the banks here are refusing to change rupees into dollars (or any other currency) so I am guessing they will have to get them changed in India (by relatives, or by making a trip themselves). Reports are saying the latest deadline will be March by exchanging them at the reserve bank (regular banks until the end of the year).
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Old Nov 8, 16, 4:04 pm
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Apparently there are ways to exchange the old notes at banks in India until the end of the year, but after that it seems the notes will have value as collectors' items only. If not as wallpaper.

Shocking move, especially since 500 rupees is hardly a large-denomination note.
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Old Nov 8, 16, 4:15 pm
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Originally Posted by emma69 View Post
Well, the banks here are refusing to change rupees into dollars (or any other currency) so I am guessing they will have to get them changed in India (by relatives, or by making a trip themselves). Reports are saying the latest deadline will be March by exchanging them at the reserve bank (regular banks until the end of the year).
I read that also...but wonder if they are going to charge NRI's a penalty for having this money? Or they just going to let them do an even exchange?

I exchanged a bunch of dollars for my next family trip to India and now I need to get it exchanged again, hopefully without losing anything.
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Old Nov 8, 16, 4:44 pm
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stupid stupid move by the government....i guess more information will come over the next few days & weeks but as of now it seems like they haven't really thought this through properly....
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Old Nov 8, 16, 5:31 pm
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Crazy government move. The only Indian notes I care to maintain between trips are the 500 and 1000 notes. If these clowns plan to actually carry out this threat, I guess I'll be paying cash for my December trip in a way I'd rather not. That or it may be an opportunity to get ripped off by brokers willing to deal with the RBI on the behalf of non-Indians and NRIs with Indian cash.

Just another sign that India's government wants its currency to be a poor store of value. Watch out for the price of onions.

The line borrowed by a POTUS candidate from Modi seems so very telling on what kind of craziness the crazy sarkars can give us all regardless of geography.

Last edited by GUWonder; Nov 8, 16 at 5:37 pm
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Old Nov 8, 16, 8:06 pm
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Do you know if currency exchange offices outside of India still accept these notes?

I might as well change the rupees I have at home now to avoid a trip to the reserve bank in March.
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Old Nov 10, 16, 12:31 am
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I could not have timed my return from India any worse

I returned yesterday to the US (the day the ban went into effect) with a small stack of 500 and 1,000 rupee notes for my next post-March trip to India with the money withdrawn from local Indian bank ATMs using my US ATM card.
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Old Nov 10, 16, 3:57 am
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This government is evidently cold-hearted.

The 500 & 1,000 INR notes are the highest denomination notes in Indian and extremely common. And yet airports, railway stations and hospitals will only accept them until November 11th; otherwise they are no longer legal tender. While holders of these notes will be able to exchange their money at banks between today and the 30th of December, do you know what kind of hassles this involves at banks today? Banks short of new cash notes, long lines and more.

India isn't open for business, with moves like this eating up so much of the ordinary person's time and effort to try to avoid the governmental effort to destroy the store value of cash.
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Old Nov 10, 16, 7:01 am
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The 1000 notes are the common currency of 'black' money, so evidently the RBI wants to destroy the parallel economy that way. Great.

Technically you are not allowed to take INR with you when leaving the country, so cash taken abroad is invalid anyway.

I think I have 20-30k at home...
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Old Nov 10, 16, 8:08 am
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Reading the RBI notification it seems it will not be a problem if you deposit the bills to your bank till Dec 30 or to the RBI in 2017:

Date : Nov 08, 2016Withdrawal of Legal Tender Status for ₹ 500 and ₹ 1000 Notes: RBI NoticeGovernment of India vide their Notification no. 2652 dated November 8, 2016 have withdrawn the Legal Tender status of ₹ 500 and ₹ 1,000 denominations of banknotes of the Mahatma Gandhi Series issued by the Reserve Bank of India till November 8, 2016.This is necessitated to tackle counterfeiting Indian banknotes, to effectively nullify black money hoarded in cash and curb funding of terrorism with fake notes.Starting from November 10, 2016, members of public/corporates, business firms, societies, trusts, etc., holding these notes can tender them at any office of the Reserve Bank or any bank branch and obtain value thereof by credit into their respective bank accounts.For their immediate cash needs, these notes of value up to ₹ 4,000 per person can be exchanged for cash over the counter of these bank branches.Public are advised to present a valid proof of identity for availing this exchange facility.Value credited to their bank accounts can be freely used by issue of cheques or by remitting through various electronic modes of transfer like NEFT, RTGS, IMPS, mobile banking, internet banking etc. Cash withdrawals from bank accounts, over the bank counters, will be restricted to a limited amount of ₹ 10,000 per day subject to an overall limit of ₹ 20,000 a week from November 9, 2016 till end of business on November 24, 2016. The limits will be reviewed after this.All ATMs and other cash machines will remain shut on November 9, 2016 to facilitate recalibration. When ready, they will be reactivated and cash drawals from ATMs will be restricted to ₹ 2,000 per day per card up to November 18, 2016 and the limits shall be raised to ₹ 4000 per day per card from November 19, 2016.Any person who is unable to exchange or deposit the specified banknotes in their bank accounts on or before December 30, 2016 shall be given an opportunity to do so at specified offices of the Reserve Bank or such other facility until a later date as may be specified by the Reserve Bank. For more details members of the public may visit RBI website www.rbi.org.in and Government web site www.finmin.nic.in for further information and details.

Alpana Killawala
Principal Adviser

Press Release : 2016-2017/1142
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Old Nov 10, 16, 1:52 pm
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This is a huge nightmare, especially for those who travel back and forth and are currently out of the country.
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Old Nov 10, 16, 4:35 pm
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Originally Posted by oliver2002 View Post
The 1000 notes are the common currency of 'black' money, so evidently the RBI wants to destroy the parallel economy that way. Great.

Technically you are not allowed to take INR with you when leaving the country, so cash taken abroad is invalid anyway.

I think I have 20-30k at home...
This demonetization/currency restriction on 500 and 1000 notes wasn't initiated by the career bureaucrats at RBI. This was a move pushed into place right from the PMO.

Indian cash outside of India is still technically valid. Technically, even you may be allowed to take some Indian cash out of India. I may be too. While prohibitions/restrictions of sort exist indeed on its export, it's technically not all banned; nor is all such cash invalid.

The common currency for dealing with "black" money is currency or physical assets. A 1000 rupee note is only worth around $15 (USD). No surprise that the biggest tax cheats in India don't store the bulk of their ill-gotten gains in Indian cash. Even the smaller tax cheats probably don't do it with 1000 notes.

Keep in mind they are putting in a 2000 note. Double the value of store for "black money".

Originally Posted by oliver2002 View Post
Reading the RBI notification it seems it will not be a problem if you deposit the bills to your bank till Dec 30 or to the RBI in 2017:
The problem is in having to deposit the bills to the commercial banks or in having to deal with the RBI. It's not all that fun to wait in more and longer/slower lines than already usual before this governmental move; and yet now there is this additional hassle for individuals with zero "black money".

When was the last time that the Republic of India demonetized an INR cash note? It's very obnoxious to invalidate previously forgotten currency that perhaps even grandpa/grandma gave their little grandees decades ago for pocket money.

The bank account use restrictions for cash withdrawal are also obnoxious, especially at this time of year that hits seasonal moving NRIs and others with seasonal business/residential expenses in India that are more easily and appropriately settled in cash than in dealing with cheques and other means not used very much by the unbanked/underbanked in India.

Most of the unbanked/underbanked are probably too poor to owe any income tax. And yet this is a group most likely to have a very high proportion of their limited assets in cash.

This PMO-driven move seems to be a product driven by/for NDTV-type/tabloid media coverage. Let's see how long it is until such frenzied media coverage results in even more draconian financial measures.

This is reminding me somewhat of Argentina and its corralito. That led to a sort of gold mine for international travelers in the main for some time. This Indian move , however, is way less likely to be like it was in Argentina; but it is a hassle too. Fortunately, I'm not an Indian in a part of India where standing in a bank line with a large chunk of cash may make you a target; unfortunately, many others are and they face more issues with this than I would.

Last edited by GUWonder; Nov 10, 16 at 5:18 pm
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Old Nov 11, 16, 12:18 am
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My father tried to give me 1k € in INR last year and struggled to find 1000 notes, so they were in short supply. Earlier this year when I was scrambling for funds to pay my mothers hospital bill my marwari neighbor lent me 5 lakh in cash within minutes. He mainly works with cash, even insisting I pay the society fees in cash. Paying him back in cash was a big problem... since my stepfather and I have no 'black' income we had to pay a premium to get cash.

There is a large section of the business community that is cash only. This move is going to create an enormous amount of dust, but hardly any solution to the cash/black section of the economy. The new GST has a far higher potential

What I don't understand is why Modi is trying to alienate his vote bank....
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