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16 November 2016 / leggypeggy

India moves to wipe out ‘black money’

India's largest banknotes

India’s 500 and 1000-rupee notes are no longer valid currency

Queues at banks in India

The waiting game at the banks

Last Tuesday in a bold and controversial move, Prime Minister Narendra Modi demonetised India’s two largest banknotes—those worth 500 rupees and 1000 rupees. Suddenly these bills—worth about A$10 and A$20 each—were essentially worthless.

Modi took the step in an effort to curb the spread of ‘black money’ or the financial gains of corruption. Corruption is rife in India, involving politicians, public servants, business people—virtually anyone who thinks they can get away with it.

The Prime Minister is so determined to halt corruption that he made the decision in secret, not even informing members his cabinet or other high ranking government officials. Clearly he did not want them offloading any of their ill-gotten gains.

We were in a homestay near the village of Koppe when the news broke, and luckily Anand and Deepti heard the broadcast as it aired.

Here was the deal. As of midnight on the Tuesday, all 500 and 1000-rupee notes were no longer valid currency, although they would be accepted for some transactions and for exchange until 31 December. Hospitals, fuel outlets, tourism sites and the like were urged to continue to accept 500-rupee notes or credit cards. All banks were to be closed Wednesday and Thursday.

Waiting to change banknotes in India

The honest wait to change their banknotes

Modi made it clear he was not out to disadvantage the poor and honest, but was keen to eliminate the huge stashes of money acquired through corruption.

Starting on Friday, people (including tourists) would be able to go to a bank and exchange 4000 rupees worth of larger notes per day (ID would be mandatory).

Anand and Deepti did the sensible thing on the Tuesday night, and drove into Koppe and withdrew the daily limit of cash. They were hoping the ATM would give them a mix of 100s and 500s, which it did.

I wasn’t particularly concerned for us. Anand and Deepti make it easy for their travellers. The trip is prepaid and virtually all-inclusive, so all our accommodation, meals, admissions, transport and such are already covered. We pay for souvenirs, special drinks, any extra excursions we choose and some tips.

Plus, I am a hoarder of change—more about that later—so even though we had about 20,000 in 500 and 1000-rupee notes (about A$400 or US$308), I had another A$40 in small bills. That would be more than enough to carry us over until the banks reopened on Friday.

1000 rupees, in 10s and a single 1000

I now have heaps of change—a discontinued 1000-rupee note topped by 100 brand new 10-rupee notes

There was overwhelming handwringing and complaints in the aftermath of the announcement. As an example, taxi and auto rickshaw drivers had to decline fares because prospective customers waved only 500-rupees note at them.  The same was true at small food stalls and other small operators. The buyers had small change, but didn’t want to part with it. The reality was that the announcement caught everyone unawares so these sellers simply did not have enough change to cater for so many requests.

But change is an issue most of the time, and especially for small operators. More than a week before the announcement was made, Poor John got a pair of shorts mended at a tailor’s in Goa. The fellow asked for 30 rupees (60 cents). Poor John had notes of 10, 100 and 500. The tailor chose to accept 10 rupees as payment rather than make change for a 100.

But back to the demonetisation.

We had a stroke of luck. Because of the outcry, there was a last minute decision to open banks on Thursday. This news was not widespread. In fact, we were surprised to  find Koppe’s small bank open after we finished a morning safari drive on Thursday.  (By the way, the jerk at the safari ticket office that morning wouldn’t take 500-rupee notes even though tourist outlets had been urged to do so. I could have slapped the smirk off his face.)

Anyway, Anand, Deepti and Poor John sashayed into the bank with photocopied IDs for the four of us. The bank’s photocopier wasn’t working, so a person couldn’t exchange notes unless they had their own photocopy (which the bank kept). Marian only had her passport, but no photocopies.

There were only about five people in the queue waiting to exchange notes, so the whole process went very quickly. The bank was already running low on cash, so only let each person exchange 2000 rupees.

Queues to change notes in India

Huge lines at banks

In an effort to exchange a share for Marian, we drove to the only Xerox shop in town (to get Marian’s passport photocopied) but it was closed. Then it turned out Sandeep (who doesn’t speak much English) got the gist of the conversation and produced a photocopy of his own ID. So in the end, we got 10,000 rupees worth of notes changed with little hassle.

Oh wait, there was a slight hassle. While Marian and I sat in the van waiting for the others to finish the banking, a policeman stopped and asked where the driver was. He said he’d noticed that our van had driven up and down the street four or five times that day and wondered what was going on.

Now Koppe isn’t a big place, but at one end of town are entrances to two stretches of vast wildlife parks. Out the other end of town are many kilometres of homestay places that cater for the tourists—Indian and foreign—who come to visit the parks. I suspect all tourists travel back and forth on that road all the time.

That said, I was so very tempted to tell him they were inside robbing the bank instead of exchanging the large rupee notes.

Bank queues in India

More waiting to change banknotes

It’s now a week later and we haven’t yet had a chance to exchange our large notes. We managed to spend a few in the first days, but now no one will take them. The queues at the banks have been overwhelmingly long—virtually thousands of people are waiting as we drive by.

ATMs are now dispensing only 100-rupee notes and a new 2000-rupee note has been released. A new 500 note is planned and the 1000 is to be scrapped completely.

Today Deepti found an ATM in a small town that was working and had only one person in the queue. Cash-wise Poor John and I are still fine.

Other people haven’t been so lucky! As of Saturday, quite a few banks were being investigated for exchanging large sums of notes without getting IDs, and up to 600 jewellers are under suspicion for taking large payments for goods.

Ah, the corruption continues.

One of the reasons I hoard change

I’ve hoarded change and small bills ever since I lived in Egypt in the 1970s. Shopkeepers loved saying they didn’t have change, so unless you had exact change you were usually out of pocket and sometimes by quite a bit. As a creature of habit, I still accumulate change.

It served me well in Burma in 1986 when U Ne Win demonetised the Burmese currency. He instantly withdrew all the 25, 50 and 100-kyat notes. A huge change given that an Australian dollar was worth 6 kyats.

And guess what? His astrologer advised him on good replacements, so we ended up getting 15, 35 and 75-kyat notes. Did wonders for our multiplication tables.

India's smaller banknotes

These rupee notes were not affected


Leave a Comment
  1. Halee Pagel / Nov 16 2016 4:09 am

    When I heard about this on the news it didn’t even cross my mind how tourists would be getting on. Glad to hear it’s been alright for you!

    Liked by 2 people

    • leggypeggy / Nov 16 2016 12:30 pm

      We’ve seen lots of tourist suffer hardships because outlets that should take 500-rupee notes now won’t. We’ve been extremely lucky.


  2. beetleypete / Nov 16 2016 4:19 am

    What a palaver, as my Mum would have said! Just as well you managed to hang onto enough cash, Peggy. Do Traveller’s Cheques still exist, I wonder? I always preferred to use those, in the old’ days’.
    Best wishes, Pete

    Liked by 2 people

    • leggypeggy / Nov 16 2016 12:34 pm

      Oh Pete, I’ve always loved the word palaver. Thanks for the reminder. Now to work it into a blog post. 🙂 As for traveller’s cheques, I doubt there’s a single place we’e been in India that would take them if they still exist. That said, we have’t been in any big hotels. In the 2000s, we’ve always been able to manage well using the ATMs, except when the queues are horrendous.


  3. Christian / Nov 16 2016 4:22 am

    So what can be learned from this? Actually paper money has no value at all. The state snaps with the hand and the value vanishes. And second: as being seen it can actually be done. Even India manages to do this. Could happen anywhere.

    Liked by 3 people

    • leggypeggy / Nov 16 2016 1:45 pm

      Excellent points. It could happen anywhere. I’ll keep hanging on to small notes.

      Liked by 1 person

  4. Sharon Bonin-Pratt / Nov 16 2016 4:47 am

    I don’t know Indian politics or economics except to know that millions of Indian people are grievously poor, but something tells me that the power-that-be made a bundle on this secret demonetization. I hope I’m wrong, for the sake of those who are likely hurting the most.

    Liked by 3 people

    • leggypeggy / Nov 16 2016 12:35 pm

      Ah, the suspicious mind! Our suspicious minds can wonder together, although I will say that Modi does seem to be making a solid effort on most fronts.

      Liked by 1 person

      • Sharon Bonin-Pratt / Nov 16 2016 2:54 pm

        I hope you’re right, Peggy. You obviously know more than I do.

        Liked by 2 people

      • leggypeggy / Nov 18 2016 8:44 pm

        I hope I’m right too. It’s becoming a bit of a mess now because the government was unprepared to manage the situation. Many are struggling now.

        Liked by 2 people

  5. vagabondurges / Nov 16 2016 5:05 am

    Do you think it’ll work? Is it worth the disruption?
    Corruption is always such a beast of a problem. I’m watching poor Virginia Raggi try to root it out in Rome and… 😦 But India has a different set of options available. Interesting to see their efforts!

    Liked by 2 people

    • leggypeggy / Nov 16 2016 12:38 pm

      It’s sure to make a dent in the practice. Deepti has told me about her local representative who was once considered poor but was making so much ‘invisible’ money as a politician. Will be interesting to hear whether that woman’s lifestyle changes.


  6. thegreyeye / Nov 16 2016 5:40 am

    Don’t worry, if you have cards. All transactions by cards are acceptable. It is a very calculated and wise move from PM Modi and it will help immensely, and it is not the end. More similar projects are coming. Already 27 billion Euros have been deposited in the banks. Can you imagine?

    Liked by 2 people

    • leggypeggy / Nov 16 2016 1:01 pm

      We think it was a sensible move, and it seems the average person supports it. Will be interesting to see what happens next. The movement of euros is outlandish and I hope it can be traced.

      Liked by 1 person

  7. thegreyeye / Nov 16 2016 5:46 am

    That too in one week

    Liked by 1 person

  8. Curious to the Max / Nov 16 2016 6:42 am

    Peggy! Thank you for a wonderfully informative post. It’s one thing to hear the news on TV and another to get a first hand glimpse into the impact on people. You really added a dimension to this event that enriched my understanding. I, for one, am glad you were in India when this happened!

    Liked by 1 person

    • leggypeggy / Nov 16 2016 1:03 pm

      It’s been fascinating to watch and experience the aftermath. Things are calming down now and we are hoping the exchange the last of our notes by the end of the week. I’m hoping to get 100s rather than the bulky 10s.


  9. lulu / Nov 16 2016 7:04 am

    Wow, such an unexpected move could be problematic for a traveler. I’m glad you came out OK. These days it seems traveling is not without some risk.

    Liked by 1 person

    • leggypeggy / Nov 16 2016 1:06 pm

      Travel does have it ups and downs. Thank goodness, we’ve faced most problems before so are fairly good at managing.


  10. Alison and Don / Nov 16 2016 7:10 am

    Wow, it’s good you had hoarded lots of small notes, but it must have been quite shocking for the Indian people. And yeah, I’m not surprised the corruption continues. Those that think they can get away with it will find a way.

    Liked by 1 person

    • leggypeggy / Nov 16 2016 1:08 pm

      It was definitely a shock to the system here, but people seem to be managing well except for the enormous queues at the bank. I suspect some of that rush to the bank is based on fear that the rules might change before they get their change!

      Liked by 1 person

  11. Dorothy / Nov 16 2016 7:11 am

    What a hassle, I hope it served its purpose and helped them find out who was hoarding all their ill gotten gains.


    Liked by 1 person

    • leggypeggy / Nov 16 2016 1:09 pm

      It’s a hassle, but it has been fascinating to see how it’s being managed.


      • Dorothy / Nov 16 2016 4:12 pm

        I remember they did the same in Nigeria in the late sixties when we lived there. There was a lot of money laundering going on and large amounts of notes being moved around. It obviously must be something that works. They issued new notes and people had a time limit to change their old ones so the queues were long.this was just after the Biafran war

        Liked by 1 person

      • leggypeggy / Nov 18 2016 8:43 pm

        Sounds all too familiar. Hope you didn’t lose out at the time.

        Liked by 1 person

  12. Phyllis Gaetz / Nov 16 2016 7:57 am

    It seems to me the only people to have gained is the government! When they wipe out their pledge to Honor their currency they wipe out their debt. What a terrible action.y

    Liked by 1 person

    • leggypeggy / Nov 16 2016 1:15 pm

      To be fair, India hasn’t wiped out any of its debt, they’ve just withdrawn the two highest value (easiest to carry) banknotes that corrupt people tend to accumulate in bags in closets.

      These large notes will be replaced with new ones, but you have to take your old notes to the bank to get them changed—at the rate of 4000 rupees per person per day. And you have to present your ID every time. So people with large amounts of unexplained rupees will be reluctant to change them. That makes their ill-gotten gains worthless and that’s what the move was designed to do.


  13. ralietravels / Nov 16 2016 8:53 am

    What an interesting insight into what for me until now had just been an article in the newspaper. Endemic corruption is such a barrier to economic growth in most of the poor countries of the world.

    Liked by 1 person

    • leggypeggy / Nov 16 2016 1:16 pm

      You’ve made the perfect statement on endemic corruption. Thank you.


  14. Vicki / Nov 16 2016 9:07 am

    One can’t help but feel sorry for the bulk of the small business who transact only in cash. They must be devastated.
    Good to hear you and poor John managed ok. Always helps to have photocopies of legal documents (as well as copies at home with family).

    Liked by 1 person

    • leggypeggy / Nov 16 2016 1:21 pm

      The thing is Vicki, the small operators won’t lose any money. Doing business has been a bit problematic for them in the first few days with the banks closed and the long lines, but otherwise the little people don’t lose out. In fact, let’s hope they gain big time in the long run if government money is channeled into social services rather than politicians’ pockets.

      Liked by 1 person

      • Vicki / Nov 16 2016 9:29 pm

        That’s good to hear, Peggy. I got the impression from the news that the little businesses were hit hard. Just go to show you can’t trust everything the media tell us.

        Liked by 1 person

      • leggypeggy / Nov 18 2016 8:41 pm

        Actually businesses are now being hit hard because they’ve run out of cash. I plan to do an update post.

        Liked by 1 person

  15. lexklein / Nov 16 2016 10:00 am

    These are the kinds of events I find “fun” when I happen to be in a place and something historic or newsworthy goes on. Of course, it can also be a huge hassle, but you will always remember this government action way more than if you just read it at home!

    Liked by 1 person

    • leggypeggy / Nov 16 2016 1:22 pm

      Oh, I agree with you completely. It’s fascinating to be on hand when such events unfold.

      Liked by 1 person

  16. Ms Louise M Oliver / Nov 16 2016 10:23 am

    What an interesting post Peggy! I didn’t know corruption was so rife in India and hope that this will help at least reduce, if not not end it. I too often cling onto change and small notes so that I can give people the right money or add a coin to a bigger note to make the change easier.

    Liked by 1 person

    • leggypeggy / Nov 16 2016 1:23 pm

      Corruption in India is terrible and widespread. Here’s hoping this move ends a quarter of it. Nice to know you are another change carrier! 🙂


  17. gerard oosterman / Nov 16 2016 10:47 am

    Those long queues in India. Of course, here in Australia we have daily cricket news to drive us up the wall. Yesterday’s highlight was that the cricket had to be stopped because of lack of light!
    If I hear our PM say once more ‘ensuring’, I’ll join the Indian bank queues for sheer entertainment.

    Liked by 1 person

    • leggypeggy / Nov 16 2016 1:25 pm

      We’re hearing the Aussie cricket news here and it’s depressing. More depressing that India’s money issues. And I’m with you on those horrible catchphrases like ‘ensuring’. Blech.


  18. Heather Sjoberg / Nov 16 2016 12:41 pm

    Thanks for the news – didn’t know about that and have alerted some friends who are anticipating travel to India. Love your posts.

    Liked by 1 person

    • leggypeggy / Nov 16 2016 1:26 pm

      The money issues will be over by the time they arrive. Just warn them not to take any old 500 or 1000-rupee notes as they have been discontinued. The new 2000-rupee note is fine as are all 100-rupee notes.


  19. Oz's Travels / Nov 17 2016 12:58 am

    Wow, this is adding to your adventure!!

    Liked by 1 person

  20. poshbirdy / Nov 17 2016 10:59 pm

    Oops! Hope I haven’t got too many of these tucked away in the tin. We don’t usually bother changing up currency as we always assume we’ll use it the next time. There’s a lesson learned here

    Liked by 1 person

    • leggypeggy / Nov 18 2016 8:38 pm

      You only have to worry about the 500 and 1000-rupee notes. If you have any, maybe you can change them at your bank.

      Liked by 1 person

  21. himanshu / Nov 20 2016 6:01 am

    Liked by 2 people

  22. tony / Nov 22 2016 6:15 pm

    Hi Peggy

    Sorry you got caught up in this and I imagine it is being handled in true Indian fashion with major complexity. I don’t know how it is going to play out in the long run. My impression initially is that many of my Indian friends think that the Modi Government is a bad government and this is a knee jerk reaction because they promised to deal with black money and corruption and hadn’t done anything.

    The news articles I’ve read say that this has caused chaos amongst small traders and small business in general. I’ve also read that some in the middle class are suddenly being very friendly to their servants (especially those who have maltreated them previously) and are asking them to put money into their bank accounts or to open bank accounts. The smart ones have refused! Similarly people are asking to pay their ironing wallahs and other tiny traders for a year in advance etc.

    I had two 500 INR notes only (fortunately), which I posted in a card to my friend. I said I suspected that she’d never receive it! However, as I was posting it, I imagined huge bricks of rupees in the post on the way to India. And some family members in the US being sent with huge suitcases of cash to India. However, unless you are well-connected at the airports etc. I imagine that there may be problems. An article I read also said that suitcases of cash in Delhi were being dumped in the Yamuna River. I find this hard to believe.

    This story will be ongoing for months and months and months causing immense heartache. I’m sure there will be interesting twists along the way, but though it will ruin lives, I suspect that its impact on black money and corruption will eventually turn out to be minimal. Although it may bring the Modi Government down.

    I’ll keep you posted!


    Liked by 2 people

    • leggypeggy / Nov 23 2016 12:28 am

      Thanks Tony, I plan to write an update on how things are going. What you have written is pretty much spot on, so we will see how it all plays out. We managed to change all our currency (we didn’t have all that much). But now its nigh on impossible to get anyone to accept a new 2000-rupee note (what all the ATMs dish out) because no one has change. it’s been very poorly managed.

      Liked by 1 person

  23. milliethom / Jan 23 2017 10:18 am

    I’m very late reading this, Peggy, and wouldn’t be surprised if you have already done your update. I’ve read a few of the comments, too, and now have a good picture of events out there. As others have said, it’s so different just hearing it all on the news. I’m glad you and Poor John weren’t badly affected by it, and I can understand you enjoying being there while such momentous events were taking place. That was a great tip about carrying plenty of small change on your trips.
    Let’s hope the poorer people of India don’t suffer in all this. An interesting post, Peggy.

    Liked by 2 people

    • leggypeggy / Jan 23 2017 1:22 pm

      Thanks Millie. I haven’t done the update yet. And yes, the poor people of India have suffered more than they needed to in this. 😦

      Liked by 1 person

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