Panic as 500, 1000 rupee notes become worthless

Venkat Raman –

New Zealanders holding currency notes of Rs 500 and Rs 1000 issued by the Reserve Bank of India have become worthless, following a sudden announcement by Prime Minister Narendra Modi on November 8, 2016.

A majority of travellers to India for business or leisure routinely bring back with them Indian currency notes for use during their next visit, although this is an offence under the highly rigid Foreign Exchange Regulation Act (FERA).

Substantial losses

While those holding just a few of these currency notes would not suffer substantial losses, those carrying with them notes of higher value would lose the entire amount, according to some experts.

“Provisions exist for people resident in India to exchange Rs 500 and Rs 1000 notes but there is no excuse for people living outside India to have these in their possession. They must explain the source of the monies they hold since the purpose of the demonetisation is to strike a deadly blow at corruption,” they said.

It has always been illegal to take out Indian currency from India, although this rule was observed more in the breach.

The Indian Rupee is not floating and hence not convertible outside India.

Indian Newslink had carried a news item to this effect on the front page of its October 1, 2013 issue, reproduced in our Businesslink pages.

Surgical blow

panic-as-500-1000-rupee-notes-worthless-notesLike all other rules and regulations, law against movement of Indian currency notes outside India was also soon forgotten but the ‘surgical blow’ struck by Mr Modi on November 8 would leave a deep impact on people who resort to criminal activities.

“To break the grip of corruption and black money, we have decided that the five hundred Rupee and thousand-rupee currency notes presently in use will no longer be legal tender from midnight tonight, that is November 8, 2016. This means that these notes will not be acceptable for transactions from midnight onwards. The five hundred and thousand rupee notes hoarded by anti-national and anti-social elements will become just worthless pieces of paper. The rights and the interests of honest, hard-working people will be fully protected. Let me assure you that notes of one hundred, fifty, twenty, ten, five, two and one rupee and all coins will remain legal tender and will not be affected,” he said in his address to the Nation.

panic-as-500-1000-rupee-notes-2000-and-500-notesThis step will strengthen the hands of the common man in the fight against corruption, black money and fake currency. To minimise the difficulties of citizens in the coming days, several steps are being taken, Mr Modi said.

The government has since then issued new 500 Rupee and 2000 Rupee notes as fresh legal tender in the country,

We are still analysing the issue and seeking the opinions of experts and monetary authorities from India but there is no official route that can used to redeem these currency notes.

Our Survey

A quick survey of money exchangers around the country revealed that they were facing a deluge of phone calls from people.

“We do not deal in any currency, leave alone Rs 500 and Rs 1000 notes issued by the Indian government. We are governed by rigid, zero-tolerant rules of the Reserve Bank of New Zealand and Financial Markets Authority and hence cannot be of any assistance to people holding these currency notes. They should follow the procedures for submission and/or exchange of these notes,” Giridharan Venkatraman, Director of Relianz Foreign Exchange said.

Additional Reading under Businesslink and Viewlink.

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