End for Indian currency notes prompts chaos at banks

By Ahmad Adil

CHANDIGARH, India (AA) – Indian Prime Minister Narendra Modi's announcement Tuesday that there would be an immediate end to use of 500 and 1000 Indian Rupee ($15) notes has triggered panic among citizens worried about their money.

The government said the move was an attempt to counter money made in the black market and used for "subversive activities" because the specific denominations were easier to counterfeit than others.

It added that old currency notes may be deposited by the public into their bank accounts or exchanged in bank branches until the end of the year, while new versions of the notes would be issued by Friday.

Despite a provision allowing the notes to be accepted during the first 72 hours, there has still been panic because of a closure on banks and cash machines.

“It can be disruptive for very small businesses but this decision is going to hit the corrupt and black money holders badly. It has created a great deal of uncertainty but I think that panic will disappear in next few days,” Dhirendra Kumar, chief executive officer (CEO) of New Delhi based investment company Value Research told Anadolu Agency.

“In India, there is a deeply-settled thought that having the cash economy is fine, to a reasonable extent, but that will change from one now onwards,” said Kumar.

C.P. Gupta, Professor at the University of Delhi's Department of Financial Studies, told Anadolu Agency the decision will have “widespread consequences”.

“It will affect almost every person in India…If we are able to stop the black money today, the same may arise in future once we have new currency. The government has to take care of it,” he said.

In his announcement, Modi said "enemies from across the border" had been using the fake currency to fund attacks against India.

"This has been going on for years. Many times, those using fake five hundred and thousand rupee notes have been caught and many such notes have been seized,” said Modi.

According to security experts, such fake currency has also been used to lure voters during elections and could affect state-level polling in the northern states of Uttar Pradesh and Punjab next year.

"This decision will definitely have an impact in the short term on the handing out of cash during election times,” Mumbai-based security analyst Sameer Patil told Anadolu Agency. He, however, said that “given the resilience of the saboteur element, they will surely invent new ways to overcome this problem.”