Modi limits legal tender to combat corruption, black money, terrorism and counterfeit notes ©Press Association
Modi limits legal tender to combat corruption, black money, terrorism and counterfeit notes ©Press Association

Stashed cash rendered useless

posted by Andrew Allen
in Law
9 November 2016

The Indian government has declared that the country’s two highest denomination notes, the 1,000 and 500 rupee notes, will no longer be legal tender as it seeks to render cash stored by tax evaders and other criminals worthless.

In a surprise announcement, Prime Minister Narendra Modi said the move was part of a fight against corruption, black money, money laundering, terrorism and financing of terrorists as well as counterfeit notes.

Government officials defended the element of surprise, saying it would stop criminals taking countermeasures.

The 1,000 rupee and 500 rupee notes are worth around £12 and £6 respectively.

India will issue new 2000 rupee notes and 500 rupee notes, meanwhile notes of 100, 50, 20, ten, five, two and one rupee will remain legal tender.

Modi said the 1,000 rupee and 500 rupee notes “hoarded by anti-national and anti-social elements will become worthless pieces of paper”.

The two denomination notes, the most common in circulation in India, can be exchanged in banks or post offices from 10 November to 30 December. Limits will be placed on how much can be withdrawn from ATM machines.

They will continue to be accepted at government hospitals, pharmacies in government hospitals (with a prescription), booking counters for railway tickets, government buses, airline ticket counters until November 12 as well as certain petrol, diesel and gas stations.

Modi has often reiterated his commitment to eradicate black money and the government passed laws in 2015 on disclosure of foreign bank accounts.

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