Anti-Corruption Exchange Of Rupee Notes Causing Chaotic Scenes

People have queued up outside banks across India to exchange 500 and 1,000 rupee notes after they were withdrawn as part of anti-corruption measures.

People have queued up outside banks across India to exchange 500 and 1,000 rupee notes after they were withdrawn as part of anti-corruption measures.

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 designed to lock out money that is unaccounted for which may have been acquired corruptly, or is being withheld from the tax authorities.

The move is part of a government crackdown on corruption and illegal cash holdings. The amount of illegal cash holdings in circulation is unclear but correspondents say the issue of “black money” is a huge problem in India.

The idea here is to lock out money that is unaccounted for and make it visible for tax purposes – banks will be happy to exchange a few thousand rupees, but will be asking questions of those who turn up with hundreds of thousands or millions in currency.

The 500 ($7; £6) and 1,000 ($15; £12) rupee notes are the highest denomination notes in the country and are extremely common in India. Airports, railway stations and hospitals will only accept them until 11 November.

People will be able to exchange their money at banks between 10 November and 30 December.

Banks were shut on Wednesday to allow them enough time to stock new notes.

There are also limits on cash withdrawals from ATMs.

An individual can put as much as he or she likes into the bank – but withdrawals are limited so the banking system may end up being flooded with cash.

Government guidelines say it is possible to exchange up to 4,000 rupees per day up to 24 November. People can also withdraw up to 10,000 rupees from a bank per day and a maximum of 20,000 rupees per week.

There were chaotic scenes outside banks in Mumbai and Delhi.

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.

Indian social media has been talking of little else.

The top trend on Twitter India has been #CashCleanUp with tweets ranging from the frustrated to the humorous, as many Indians came to terms with the fact that much of their day would be spent in queues.

Before you go to bank

The intention of #CashCleanUp was to catch the corrupt unawares.

New 2,000 (about $30; £24) and 500 rupee denomination notes with new security features are being given to people to replace those removed from circulation.

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.

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.

One woman who feared she would be left broke after hearing 500 and 1,000 rupee notes were being withdrawn from circulation in India has killed herself, police have said.

Kandukuri Vinoda, 55, had a large amount of the high denomination notes at home and apparently panicked, thinking her savings had become worthless.

Ms Vinoda, from Mahabubabad district, east of Hyderabad city, had been paid around 5.5 million rupees (£65,000) in cash after selling land last month.

She reportedly used some of the money for her husband’s medical bills and planned to buy a new plot with the rest.

A policeman was quoted as saying: “The family told us she panicked after hearing about the note ban and hanged herself at her home.”

Overseas Indians can deposit the banknotes in their non-resident rupee denominated accounts.

Tourists can purchase foreign exchange equivalent to 5,000 rupees using these bank notes at airport exchange counters until midnight on Friday.

Source: bbc.co.uk

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