Bank queues as India bans ‘black money’

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(BBC) People have queued up outside banks across India to exchange 500 and 1,000 rupee notes after they were withdrawn as part of anti-corruption measures.

A line outside a bank in Kolkata (Reuters)
A line outside a bank in Kolkata (Reuters)

Indians will be able to exchange their old notes, which stopped being legal tender at midnight on Tuesday, for new ones at banks until 30 December.

The surprise move is part of a government crackdown on corruption and illegal cash holdings. Banks were shut on Wednesday to allow them enough time to stock new notes. There are also limits on cash withdrawals from ATMs.

There were chaotic scenes outside banks in Mumbai and Delhi.

People queued up in banks to withdraw and deposit currency
People queued up in banks to withdraw and deposit currency

The BBC’s Geeta Pandey in Delhi says some banks extended working hours to deal with the rush, and have hired extra staff on a temporary basis. Bank officials told the BBC that they also brought in extra cash to deal with the situation, and things had gone smoothly apart from the fact that the police had to be called in to deal with sporadic fights that broke out among customers.

 

Vijay Karan Sharma from Chhattisgarh, a student at Delhi University, told the BBC he had been standing in a queue since morning.

New 2,000 rupee denomination notes were introduced on Thursday (AFP)
New 2,000 rupee denomination notes were introduced on Thursday (AFP)

“I went home for Diwali and my parents gave me money as a gift. Now, instead of studying, I have been standing here,” he said.

“I wish they had a simpler system for students. I desperately need cash to pay my rent and buy books and food.”

A new 1,000 rupee note “with a new dimension and design” will also be introduced in due course, a senior government official said on Thursday.

The move is designed to lock out money that is unaccounted for – known as “black money” – which may have been acquired corruptly, or is being withheld from the tax authorities.

Finance Secretary Shaktikant Das warned people with large amounts of hidden cash that banks would closely monitor the exchange of old notes for new ones.

The government says the move will flush out tax evaders and that all old notes deposited in banks will be subjected to tax laws.

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