Fight against Black money – Scrapping larger rupee notes
In a surprise step, Indian Prime Minister Narendra Modi announced for withdrawal of 500 and 1000 rupee notes from the financial system.
“Black money and corruption are the biggest obstacles in eradicating poverty,” he said.
This move will bring a billion dollars of unaccounted cash into the mainstream economy.
New 500 and 1000 rupee notes will be issued to replace them. Banks have been told to exchange existing high denomination rupee notes over the next 50 days.
Modi’s ruling Bharatiya Janata Party came into power in 2014 promising to bring billions of dollars of black market money into the regular financial system. Critics said it had failed to deliver on that promise.
Modi also said militants operating against India were using fake versions of the 500 rupee note, worth about $7.50 at current exchange rates.
“Terrorism is a frightening thing … But have you ever thought about how these terrorists get their money? Enemies from across the border have run their operations using fake currency notes. This has been going on for years,” Modi said.
The finance ministry said India would introduce new banknotes of 500 and 2,000 rupees from Nov. 10. The old notes can be deposited in banks and post offices from Nov. 10 to Dec. 30. All cash machines will be closed on Wednesday and Thursday.