India abolished the country’s largest currency notes in a fight against unaccounted wealth and corruption, Prime Minister Narendra Modi said in an unscheduled address to the nation
MUMBAI (REUTERS) – India’s central bank on Sunday (Nov 13) urged savers to not hoard money as public anger mounted over the government’s shock decision to withdraw large denomination notes in an attempt to expose undeclared wealth.
Thousands of people were again standing outside banks across the country trying to change 500 and 1,000 rupee (S$10.46, S$20.91) bills the government abolished on Tuesday (Nov 8), in a surprise move to clean up India’s black economy.
The banned rupee notes made up more than 80 per cent of the currency in circulation, leaving millions of people without cash and threatening to bring much of the cash-driven economy to a halt.
As banks struggled to dispense money, the Reserve Bank of India said small denomination currency notes were available with both the central bank and with other lenders.
People “need not be anxious” and should not hoard bank notes because “cash is available when they need it”, the RBI said in a statement.
The head of a regional group that runs the most populous Uttar Pradesh state demanded the federal government cancel the decision to demonetise the notes.
“The government has spread anarchy in the country, the common man cannot buy daily products,” said Mulayam Singh Yadav, leader of Samajwadi party, as crowds formed outside banks from early on Sunday in the state capital Lucknow.
Mamata Banerjee, the chief minister of West Bengal state, said the situation was “nothing short of an emergency” and vowed to unite opposition parties against the government’s decision.
“I have never seen such a thing. People have money in their accounts but can’t access it. They can’t pay for treatment of a family member in hospital, weddings have been put on hold, daily business has taken a beating,” she said.
In addition to cracking down on corruption and counterfeit currency, Prime Minister Narendra Modi’s supporters said the move was also aimed at illegal political donations that fund India’s elections.
Candidates running for office are known to buy tickets from regional party bosses and there is also a widespread culture of cash-for-votes, often using high-denomination notes.
Current 500- and 1,000-rupee bills can be redeemed at banks and post offices until Dec. 30.
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