Prime Minister Narendra Modi, in a sudden address to the nation on Tuesday, announced that Rs 500 and Rs 1,000 denomination notes are being withdrawn from midnight. He said that such notes will become “mere paper”. Modi said this was being done to tackle the menace of black money in the country, which has sapped the economy.
He also said that ATM withdrawals will be restricted to Rs 2,000 per day till November 11, when this limit may be increased slowly.
The Prime Minister said that the Rs 500 and Rs 1,000 denomination notes can be deposited in banks and post offices, and also exchanged across the bank counter by showing government-issued ID proof.
Withdrawals from bank accounts will be limited to Rs 10,000 for the first few days.
Banks have also been ordered to remain shut on Wednesday, he said.
Modi said that for medical patients, the old notes will be accepted.
He also said that retail petrol pumps will accept such notes till November 11, after which the stations will have to keep a register of such notes for some time.
The decisions come after a cabinet meeting.
Electronic and card payments, however, will continue as normal. But withdrawals will be limited to Rs 10,000 daily and Rs 20,000 weekly until further notice. ATM withdrawals will be limited to Rs 2000 daily and will later be expanded to Rs 4000 a day. The limit will be gradually eased as the money supply increases, Modi said.
The move, Modi said, is aimed at curbing the menace of corruption, black money, counterfeiting and terrrorism; these denominations are among the most counterfeited.
The PM also said there would be restrictions on daily and weekly restrictions from bank ATMs.
For the next 72 hours, these denominations will continue to be accepted at state-run hospitals, airports, bus stands, railway stations, and ration shops. Families of patients will also be able to purchase medicines against prescriptions for the next 72 hours through November 11.
PM Modi said the move has been conducted with utmost secrecy and that most government departments did not have knowledge of this.