India puts fresh curbs on cash, compounding crisis
India’s central bank yesterday imposed fresh restrictions on deposits of banned currency notes into bank accounts, days before the December 30 deadline to swap old rupee bills for new ones. Prime Minister Narendra Modi unleashed chaos last month with his shock move to withdraw high-denomination 500 ($7.50) and 1,000 rupee notes from circulation, in an effort to tackle widespread corruption and tax evasion.
The decision triggered a cash crisis, with long queues materializing outside banks across the country as people tried to get rid of their old notes some 86 percent of all bills in circulation a head of next week’s deadline.
Yesterday the Reserve Bank of India (RBI) said that people would now only be allowed to make a single deposit amounting to more than 5000 rupees ($75) before the deadline, and would be required to explain why they hadn’t deposited the money earlier.
“Tenders of Specified Bank Notes (SBNs) in excess of rupees 5,000 into a bank account will be received for credit only once during the remaining period till December 30,” the RBI said. Opposition parties attacked the move, which comes as many Indians are already facing a shortage of cash with ATMS running dry as thousands throng to them. “There are elderly, housewives, poor and students who were waiting for the long queues to become smaller,” the opposition Congress party spokesman Randeep S Surjewala told reporters in Delhi. “This new rule shows that Modi government has no direction or clear policy”, he added. Modi has repeatedly defended the scheme, saying it will bring billions in so-called “black”, or undeclared, money back into the formal system. “I said this at the start, and will repeat again today, these difficulties that you have been facing will start easing after December 30,” he said yesterday, addressing a political rally in the northern state of Uttar Pradesh. — AFP
NEW DELHI: An Indian man sits outside a cashless ATM machine in New Delhi Yesterday.