Chaos in Indian Banks Over Ban of Black Money

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There have been chaotic scenes inside and outside banks in India, following the withdrawal of 500 and 1,000 rupee notes as part of anti-corruption measures to curb Black Money.

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The move was made by the government to tackle corruption and tax evasion, however, there are no sufficient higher denominations to go round.

Some banks ran out of cash while some had to invite the police to help manage queues of anxious customers hoping to change their savings for the legal notes. People stand in line as they wait to enter a bank in Kolkata, India, November 10, 2016

Meanwhile, many low-income Indians, traders and ordinary savers who rely on the cash economy have been badly affected due to the inability to lay their hands on money.

Banks were shut down on Wednesday to allow them enough time to stock new notes and there were also limits on cash withdrawals from ATMs.

According to the BBC’s Geeta Pandey in Delhi, some banks extended working hours to deal with the rush on Thursday, and hired extra temporary staff to make the withdrawal process less cumbersome.



Black money

Black money

The 500 ($7; £6) and 1,000 ($15; £12) rupee notes are the highest denomination notes in the country. The people have till today, 11 November 2016 to spend those denominations or exchange for the new 2, 000 rupee notes. The exchange process started yesterday, 10th November and will end on December 30th.

The issue of black money in circulation, which is money acquired corruptly or is being withheld from the tax authorities – is a huge problem in india. India’s government hopes to flush out tax evaders and make money that is unaccounted for visible for tax purposes.

An Indian man displays a new 2000 rupee note after exchanging his old 500 and 1000 rupee notes at a bank in New Delhi on November 10, 2016

Government guidelines say it is possible to exchange up to 4,000 rupees per day up to 24 November – anything over this will be subject to tax laws. People can also withdraw up to 10,000 rupees from a bank per day and a maximum of 20,000 rupees per week.

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New 2,000 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.

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