India Escalates Global War on Cash

November 15, 2016

Queues of angry, panicked Indians wound around bank buildings in Mumbai, the financial capital, on Thursday morning, two days after the prime minister, Narendra Modi, announced that 500- and 1,000-rupee notes, worth around £6 and £12, would be taken out of circulation.

In a televised announcement on Tuesday night, Modi had urged Indians not to rush to banks, as they would have until the end of 2016 to deposit cash in their accounts. But with the high-value notes withdrawn from Wednesday in an effort to combat corruption, black-market trade and tax evasion, many were left without cash for day-to-day expenses.

Banks were closed on Wednesday, and reopened on Thursday morning with a cap on cash withdrawals. ATMs remained closed, so currency was only available from the banks. Newspapers around the country reported long queues at branches, as people scrambled to exchange their high-value banknotes for 100-rupee bills.

At the Churchgate branch of the Bank of India, dozens of people queued in the midday heat, filling out deposit forms as a security guard barked instructions. “Life is completely paralysed,” said Maganbhai Solanki, who had been waiting in line for four hours.

“On the news, they said banks would open at 8am today. I got here at 8.01,” he said. “Now, it’s noon, but I’m still here. Around 50 people in the queue ahead of me got tired of waiting and left but I have no choice. There’s no money in the house. We only have 500- and 1,000-rupee notes which are worth nothing. We didn’t even have enough to pay the milkman this morning.”

“I can’t even buy a cup of tea,” said Guru Birajdar, a lawyer. “I didn’t go to work today because I had no cash. All my money is in 500s and 1,000s so I had to come straight to the bank this morning. I had two 100-rupee notes in my wallet on Tuesday night, but I used that up yesterday.”

Shops, train stations, and taxis stopped accepting 500- and 1,000-rupee notes on Wednesday, interrupting normal trade. Even hospitals, which are exempt from the immediate demonetisation, have reportedly turned down payments in high-value banknotes.

Some complained that Modi’s surprise announcement had completely disrupted normal life. “Nobody is willing to give you change,” said Solanki. “They should have planned this properly instead of springing it upon us.”

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