Prime Minister Narendra Modi on Tuesday said the government has decided to scrap currency notes of Rs 1,000 and Rs 500 denomination, in a startling announcement aimed at combating counterfeits, corruption and tax evasion.
The notes will cease to be legal tender from the midnight of 8 November, Modi said in a surprise televised address to the nation.
“It will cause some hardship to you... Let us ignore these hardships... In the country's history, there comes a moment when people will want to participate in the nation building and reconstruction. Very few such moments come in life,†Modi said.
Hospitals, railway ticket booking counters, government bus stands and airports will continue to accept Rs 500 and Rs 1,000 notes till the midnight of 11 November.
Modi said people can deposit Rs 500 and Rs 1,000 notes they hold in their bank and post-office accounts from 10 November until 30 December with a valid ID card such as a passport, PAN card or Aadhaar card.
He also said the decision will help reduce poverty and tackle terrorism, indicating that fake notes from across the border were being used to finance terrorism in the country.
Modi, however, said all notes of lower denomination—Rs 100, Rs 50, Rs 20, Rs 10, Rs 5, Rs 2 and Re 1—and all coins will continue to be valid. He added that new notes of Rs 2,000 and Rs 500 will be introduced but these will have limited circulation.
The government has also decided to cap cash withdrawals from ATMs to Rs 2,000 a day and withdrawals from bank accounts will be limited to Rs 10,000 a day and Rs 20,000 a week.
Banks and ATMS will remain closed across the country on 9 November, Modi said, adding that ATMs will not function in parts of the country on 10 November. However, electronic transactions can be conducted as usual.
(With PTI inputs)
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