India refused banknotes for the sum of 500 and 1000 rupees for the fight against corruption. They become invalid as of midnight local time, announced Prime Minister Narendra modi in a televised address to the nation.
An unexpected move intended to combat corruption and money laundering, said modi, calling them a "disease" and "impediment" to economic success of the country. Modi said changes in the policy largely has failed to root out corruption. Two years ago, he said that India is a 100 place of corruption according to polls.
The idea is that people who have accumulated undeclared income will now have to emerge from the shadows. "This move will strengthen the resolve of the common man in the fight against corruption, black money and fake currencies," said modi, who heads the ruling Party Bharatiya Janata.
But the ban may also provoke the mad scramble when ordinary people will rush to exchange or invest their funds. Modi said that citizens have 50 days to Deposit money in banks and post offices. Hospitals will not be permitted to accept banknotes banned for another three days, until November 11.
This transition will not be an easy task. Reserve Bank of India (RBI) believes that there is 16.5 billion 500 rupees banknotes 6.7 billion and RS 1000 notes in circulation. ATMs will be closed on November 9 and 10 to help implement the change.
The Central Bank also is preparing to release a new series of 500 and 2000 rupees, which will be put into circulation on 10 November.
Indian users of social media widely welcomed the decision, calling it a "bold step".
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