Modi’s dramatic “surgical strike” on India’s highest denomination bank notes may have sparked a nationwide rush for ATMs and even bumped Trump vs. Hillary from the top of the news, but for anyone paying close attention, something was clearly afoot.
Days before the announcement, rumors began circulating that the Reserve Bank of India would soon release Rs2,000 banknotes — with pictures of the new bills going viral online.
Peek-a-boo: pictures of the new Rs2,000 notes leaked before the big change.
Modi urged people to deposit their Rs500 and Rs1,000 notes in banks and post offices within the 50-day transition period ending December 30.
Banks will close on Wednesday and ATM services will be disrupted as lenders begin the mammoth task of taking the existing notes out of circulation. ATM withdrawals will be restricted to Rs2,000 per day and withdrawals from bank accounts will be limited to Rs10,000 a day and Rs20,000 a week.
Hospitals would continue to accept the big bills for the next 72 hours, Modi said. Despite assurances that fuel outlets would also have the 72-hour extended grace period, many refused to take the notes, sparking heated arguments with customers. That scene was played out at shops and restaurants also.
Banks and business leaders welcomed the move, although some critics pointed out that it does little to curb illegal wealth stashed abroad.
“It is a big reform … and will have a huge impact on people who are hoarding money and not disclosing money for tax purposes,” said Deepak Parekh, chairman of Housing Development Finance Corp., the nation’s biggest home lender.
This is the first time since 1978 that India has “demonetized” its larger bank notes. The then Prime Minister, Morarji Desai, scrapped all notes above Rs100 … also to fight corruption.