India to Replace Largest Bank Notes

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Material Guy
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India to Replace Largest Bank Notes

Post by Material Guy »

A sudden move by the Indian government and central bank. This is certain to shake things up and will keep the Indian stock markets volatile for some time.

http://www.wsj.com/articles/india-to-ph ... 1478619693

India to Replace Largest Bank Notes
Country plans to fight counterfeiting by replacing old bills with new 500- and 2000-rupee notes

In a surprise announcement on prime-time television Tuesday night, Indian Prime Minister Narendra Modi said the country will replace its largest-denomination bank notes with newly designed ones, in a move aimed at thwarting counterfeiting and curbing corruption.

The new 500- and 2,000-rupee notes, worth $7.50 and $30 respectively, will begin to circulate soon, officials said. Existing 500- and 1,000-rupee bills will cease to be legal tender from midnight early Wednesday, Mr. Modi said, but can redeemed at banks and post offices until Dec. 30. .........
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capitalG
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Re: India to Replace Largest Bank Notes

Post by capitalG »

When I first read about this today morning I thought it was an Onion article, it seems like a surprising and radical move. Having previous worked and lived in India, I have a fair amount of rupees in cash with me in the US right now which is likely in Rs 500 and Rs 1000 notes - does anyone else living in the US have this problem, and if so, have any advice on how how to deal with this? I plan on checking with my US bank on whether I can just exchange/deposit these into my account as USD.

AS
TroyMcClure
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Re: India to Replace Largest Bank Notes

Post by TroyMcClure »

capitalG wrote:I have a fair amount of rupees in cash with me in the US right now which is likely in Rs 500 and Rs 1000 notes - does anyone else living in the US have this problem, and if so, have any advice on how how to deal with this? I plan on checking with my US bank on whether I can just exchange/deposit these into my account as USD.
I think you're going to be disappointed. I also lived and worked in India and even though it was a good few years ago I doubt the rules have changed: it's illegal to take rupees out of India. There are a few special conditions for Indian residents traveling abroad but even that is a low sum (like 7,500 INR or so).
I can't think of any legitimate bank or financial institution that would either buy or sell rupees outside of India since that is also de facto illegal.
dbltrbl
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Re: India to Replace Largest Bank Notes

Post by dbltrbl »

What is a fair amount? It might be worth a trip to India :D and you can deposit them at a bank. IF it is 10,000 Rs or so than just think of it as a donation in anti corruption drive.
Bharat
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Re: India to Replace Largest Bank Notes

Post by Bharat »

What's people's opinion about this move? Will it improve black money and counterfeit money problems significantly?
Everything that you own, owns piece of you.
saladdin
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Re: India to Replace Largest Bank Notes

Post by saladdin »

Bharat wrote:What's people's opinion about this move? Will it improve black money and counterfeit money problems significantly?
My Indian friend said his peeps that live in the US are trying to figure out what to do with the ones they have stashed over here.

I've heard his many stories of Indian corruption and counterfeit issues and he's for it but also said that his family still living in India noticed some weird transactions months prior to this announcement like some knew it was coming.

He is for anything to curb the corruption but knows this will do nothing.
ikowik
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Re: India to Replace Largest Bank Notes

Post by ikowik »

capitalG wrote:When I first read about this today morning I thought it was an Onion article, it seems like a surprising and radical move. Having previous worked and lived in India, I have a fair amount of rupees in cash with me in the US right now which is likely in Rs 500 and Rs 1000 notes - does anyone else living in the US have this problem, and if so, have any advice on how how to deal with this? I plan on checking with my US bank on whether I can just exchange/deposit these into my account as USD.

AS
So do I, though not a large amount. Looks like foreign nationals (tourists) can exchange these notes up to an (small) amount. Not clear how long that will be effective or how easy it will be.

http://www.thehindu.com/business/no-mor ... 321409.ece

If the limit is Rs. 5000, it is probably not worth the hassle.
TravelGeek
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Re: India to Replace Largest Bank Notes

Post by TravelGeek »

I have a left-over 500 rupee note from a recent India trip. Kept it for a potential future trip. Don't think anyone bothered to tell me that i would have to spend all my rupees before leaving the country.

Says right on the bill:

"I promise to pay the bearer the sum of five hundred rupees"

Some promise. Hope the new bills will be a bit more honest.
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dm200
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Re: India to Replace Largest Bank Notes

Post by dm200 »

Has something like this happened with US Currency? As far as I know, as long as I can remember Old US bills have continued to be negotiable for the full face value, even if that particular bill style has been replaced by another.

I know that something like 100 or so years ago (maybe more) the US currency was much larger in size. I don't know how long those "big" (physical size) bills were honored.
shelanman
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Re: India to Replace Largest Bank Notes

Post by shelanman »

All (edit: US) old notes are still negotiable, except for Confederate notes, as far as I am aware. On the other hand, old notes are all worth enough as collectibles that they are unlikely to ever be spent.
Tanelorn
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Re: India to Replace Largest Bank Notes

Post by Tanelorn »

The locals could just agree to keep using them, even if the banks don't want them. Money is a social construct, after all.
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hand
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Re: India to Replace Largest Bank Notes

Post by hand »

dm200 wrote:Has something like this happened with US Currency? As far as I know, as long as I can remember Old US bills have continued to be negotiable for the full face value, even if that particular bill style has been replaced by another.

I know that something like 100 or so years ago (maybe more) the US currency was much larger in size. I don't know how long those "big" (physical size) bills were honored.
Not sure about standard US currency, but the same sort of thing has happened with US Military Payment Certificates (a form of US currency typically used to pay military in foreign theatres) where old series certificates were devalued and had to be exchanged for new series certificates.

In fact, I believe there is a MASH episode where this is addressed:
http://mash.wikia.com/wiki/Change_Day_( ... s_episode)
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Epsilon Delta
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Re: India to Replace Largest Bank Notes

Post by Epsilon Delta »

Globally withdrawing old currency is quite common.
The US position that old notes remain legal tender is rare. More often either the old currency becomes worthless after a fixed date or the old currency stops being legal tender but will still be exchanged by specific agents (e.g a central bank).

The introduction of the Euro gives us examples of both. Germany intends to honor Deutsch Marks indefinitely and will exchange them for Euro. (Informally DM still circulate). France canceled all outstanding Francs a few years ago, they are now just wall paper.
krannerd
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Re: India to Replace Largest Bank Notes

Post by krannerd »

TroyMcClure wrote: I can't think of any legitimate bank or financial institution that would either buy or sell rupees outside of India since that is also de facto illegal.
Funny that you say this as my local Wells Fargo bank branch is more than willing to order some for me from their foreign exchange desk. I think that Bank of America did the same thing a few years ago as well. Last purchase that I made....5000INR maybe?

Checked with my home FX bank and found that I'm going to be out 500INR in a few days....dang.
cheesepep
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Re: India to Replace Largest Bank Notes

Post by cheesepep »

I found some old notes from my parents from a foreign country trip in the 1970s. I exchanged them for the full face value at a currency exchange shop. Not from India, though!
TravelGeek
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Re: India to Replace Largest Bank Notes

Post by TravelGeek »

Epsilon Delta wrote:Globally withdrawing old currency is quite common.
The main difference, though, is that this is literally happening overnight here, without warning. The DM/Franc/... switch to Euros was announced a long time in advance.

I have usually small amounts of foreign currency from about a dozen countries at home. Left-overs from trips where I didn't want to buy fandom stuff at the airport to burn the last bit of money. And in many cases it comes in handy on subsequent trips or layovers.

The 500 rupees I will lose aren't worth getting too upset about, of course. But if the Euro countries did the same I would be out several hundred Euros.
TroyMcClure
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Re: India to Replace Largest Bank Notes

Post by TroyMcClure »

krannerd wrote: Funny that you say this as my local Wells Fargo bank branch is more than willing to order some for me from their foreign exchange desk. I think that Bank of America did the same thing a few years ago as well. Last purchase that I made....5000INR maybe?
This is odd. Or maybe they have a workaround saying they're sourcing it for travelers to Bhutan...
Regardless, assuming you're not Indian, even if you can purchase it from your bank it still is illegal to bring these 5,000 INR to India.
saladdin
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Re: India to Replace Largest Bank Notes

Post by saladdin »

TravelGeek wrote:
Epsilon Delta wrote:Globally withdrawing old currency is quite common.
The main difference, though, is that this is literally happening overnight here, without warning. The DM/Franc/... switch to Euros was announced a long time in advance.

I have usually small amounts of foreign currency from about a dozen countries at home. Left-overs from trips where I didn't want to buy fandom stuff at the airport to burn the last bit of money. And in many cases it comes in handy on subsequent trips or layovers.

The 500 rupees I will lose aren't worth getting too upset about, of course. But if the Euro countries did the same I would be out several hundred Euros.
You say unannounced but my Indian pal said his relatives noticed some odd transactions the last few months from "politicians and rich folks". As corrupt as that country is no doubt it was known. I understand what you mean by unannounced but we both know this type of stuff is leaked.
spectec
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Re: India to Replace Largest Bank Notes

Post by spectec »

This discussion about it being illegal to leave India with Rupees puzzles me. The Indian Customs Declaration Form requires that you state if you have in excess of 10,000 Rupees (along with some other limitations) upon entering the country. So if their customs form allows for bringing a small amount of Rupees INTO the country, how can one legally do that if they had not previously taken Rupees OUT of the country?

Furthermore, I have traveled to India with people who carried more than 10,000 Rupees with them. They simply declared the excess and stopped off at the declarations desk to fill out a supplemental form. Nobody in authority ever told them this was illegal.
Don't gamble; take all your savings and buy some good stock and hold it till it goes up, then sell it. If it don't go up, don't buy it. - Will Rogers
TroyMcClure
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Re: India to Replace Largest Bank Notes

Post by TroyMcClure »

It wouldn't be the only thing about India that is puzzling or that is nonsensical, but I think we're both right.
I checked again the Mumbai Customs Airport website and it clearly says it's prohibited, and you're right about the customs declaration form.
Back when I was working in India I was told unequivocally that I could not wire this money out from my bank account, nor could I take it out cash in rupees.
The rules are probably flexible depending on which port of entry you have into India, and your nationality.
spectec
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Re: India to Replace Largest Bank Notes

Post by spectec »

I usually keep enough for cab fare to the hotel and maybe a snack upon arrival. Looks like I got stuck with six 500 Rupee notes - enough to think about but not enough to lose any sleep over.
Don't gamble; take all your savings and buy some good stock and hold it till it goes up, then sell it. If it don't go up, don't buy it. - Will Rogers
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