People continue to queue to exchange and deposit their old high denomination Indian banknotes. Photo: Reuters/Anuwar Hazarika
People continue to queue to exchange and deposit their old high denomination Indian banknotes. Photo: Reuters/Anuwar Hazarika

Modi in talks to calm Indian banknote chaos

Ministers meet into the early hours as public anger continues to grow over decision to take large denomination notes out of circulation

November 14, 2016 2:04 PM (UTC+8)

Indian Prime Minister Narendra Modi held talks with senior ministers till the early hours of Monday morning to review demonetization and its impact.

The meeting came amid chaos across the country over limited cash availability after 1,000 rupee and 500 rupee notes were taken out of circulation.

The meeting at Modi’s residence was attended by Home Minister Rajnath Singh, Finance Minister Arun Jaitley, Information and Broadcasting Minister Venkaiah Naidu and top officials of the finance ministry.

“The Reserve Bank of India has said there is enough cash available in the system,” economic affairs secretary Shaktikanta Das said after the meeting.

Nevertheless, public anger remained, along with the long queues in front of banks and at ATMs as millions clamored for new bank notes.

Indian Prime Minister Narendra Modi holds talks with senior ministers and foreign ministry officials at his home in New Delhi Sunday. Photo: Press Information Bureau
Indian Prime Minister Narendra Modi holds talks with senior ministers and foreign ministry officials at his home in New Delhi Sunday. Photo: Press Information Bureau

“What’s the use of issuing the new 2,000 rupee notes? The government should have just issued the new 500 rupee notes instead to help customers buying commodities,” said E.B.G. Menon, a retired state government official.

“An unnecessary panic has been created among the public as they rushed to banks for immediate of exchange or to deposit old notes. This could have been avoided since the government had given them time until December 30 2016,” said K. Jayaraj, said a retired bank official.

“Micro ATMs will be deployed in a large number of areas to dispense cash against debit and credit cards,” Das said, adding that there would be special queues for disabled and senior citizens.

Indian banks received 3 trillion rupees of 500 rupee and 1,000 rupee notes over the last four days, the Finance Ministry said.

Unaccounted wealth

Meanwhile, the government relaxed cash withdrawal limits including removing a per-day cap of 10,000 rupees, increasing the weekly limit to 24,000 rupees from 20,000 and allowed exchange of bills over the counter at banks to reach 4,500 rupees instead of 4,000.

The move to demonetize the large bills is designed to bring billions of dollars’ worth of cash in unaccounted wealth into the mainstream economy, as well as dent the finances of Islamist militants who target India and are suspected of using fake 500 rupee notes to fund operations.

The banned rupee notes made up more than 80% of the currency in circulation, leaving millions without cash and threatening to bring much of the cash-driven economy to a halt.

 

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