The chaos has begun. The phone calls, email, smses, whatsapp have all begun to ping and ring – average people calling to ask if their currency is useless now.
Rumours are beginning to spread. The reason for the panic is the move by the Narendra Modi government to demonetise the Rs500 and Rs1,000 notes. What this means is that starting midnight 8 November all the currency notes you hold in Rs500 and Rs1000 are worth nothing. But remember that all the currency notes you hold in your bank area still worth the money they denote.
Just that you wont get Rs500 notes from the ATM, but Rs100 and Rs50 notes.
November 9th will be a day of chaos as people queue up outside shut banks and ATMs. You can exchange the Rs500 and Rs1000 you hold for Rs100 and lower denomination notes from your bank starting 10 November. But there is a limit of Rs4,000 a day on this exchange, this limit will be raised after 24th November.
You can deposit any amount in your bank deposit — but be sure that if you show up with a suitcase full of cash, questions will be asked. Carry an ID proof when you go. You can withdraw Rs10,000 per day up to a limit of Rs20,000 per week from your ATM starting 10 November.
You can also withdraw cash against withdrawal slips or cheques subject to ceiling of Rs10,000 in a day, within an overall limit of Rs20,000 in a week (including withdrawals from ATMs) up to 24 November 2016, after which these limits shall be reviewed.
Why has the government taken this drastic step? To curb black money. The decision to demonetise the higher value currency notes comes as a step two to the income declaration scheme that got over recently. Those who declared their unaccounted income, paid a tax plus penalty of 45% on the income, those who did not are now sitting on worthless cash.
What should you do? Don’t panic. Use your credit and debit cards for transactions. Use mobile money, payment wallets and, bank transfers online for transfers and payments. The bottomline is this: get digital with your money. The infrastructure is all there. The high value notes are gone. Go digital.