In a sudden surprise announcement, Indian Prime Minister Narendra Modi has declared discontinuation of the Indian currency INR 1000 and INR 500 notes, signalling shock waves through the nation. The new ruling announced on November 8, 2016 brought disbelief and anger jolting Indians across the country. In a country where cash is liberally used for transactions, Modi‘s decision to scrap the currency notes signalled a halt to the parallel Indian economy and rampant tax evasion, rendering a big blow to many in the Indian business community, corporations and individuals.
As per the ruling, people in India have up to December 31, 2016 to exchange the now redundant notes, up to INR 4000 ($80) through an ATM machine. Amounts exceeding that have to be exchanged at a bank or post office by producing a valid passport or voter ID or other photo identification. .
The announcement, while being hailed as a significant step, has also created ripples in the Indian community abroad, many of whom have small and large sums of Indian currency. Here in Canada, non-residents of Indian origin believe this is a positive move by the Indian government and are looking for direction on what to do with the cash they possess. Typically, most Indians keep around INR 10-20, 000 ($250 -$500) in cash to use when they travel back to India to pay for airport porters and taxis upon arrival in India.
Archana Tripathi from Mumbai, who has been in Canada for around four years, has only INR4000 ($80) but is angry because she is not getting any answers.
‘‘I feel cheated, ‘‘she says. ‘‘I called ICICI Bank as well as State Bank of India Canada (SBIC) and they didn’t even pick up the phone. There is a notice on the SBIC website that says they have withdrawn the legal tender status of INR. 500 and 1000 denominations dated November 8, 2016. ‘‘
ICICI Bank Canada has nine branches in Canada, seven of them in the Greater Toronto Area. ‘‘We are looking for direction to find a solution for this, ‘‘said Sriram Iyer, ICICI Bank Canada president and CEO.
Tripathi also went to TD Bank who told her they don’t buy or exchange Indian currency. She got the same response from Money Exchange who also responded negatively.
‘‘This is not correct. I don’t have a big amount of money but this is my hard earned money and not black money. ‘‘
‘I’m going to call the High Commission in Ottawa and the Indian Consulate in Toronto. This is not fair, ‘‘says Tripathi with vehemence.
But, according to Metro News, the High Commission of India in Ottawa does not have any official guidance on the matter.
"We have written to our national Reserve Bank. We are waiting for their response," Prem Selwal, attache consular with the commission said to Metro News.
Ramesh Chotai, a well-known business man from Pickering is frustrated.
‘‘There is no direction for non-resident Indians. We keep some cash with us because we need the money when we land in India to pay for porters at the airport, food, cabs and hotels. ‘‘
Many believe the Indian government has forgotten them in the process. In Mississauga, Zaynab Yusufzai, a media personality from New Delhi, also has Indian currency she brought back from her last trip to India.
‘‘I have a small amount of INR 500 and 1000 notes, but I have friends who have money and collectively it’s a big amount. The value of money has been locked. So much money gone to waste. And one cannot do anything. ‘‘
Others believe that while this may be a good move in the long run, it’s the common man who will suffer.
‘‘Most people who have black money keep it in Swiss banks, debentures, stocks and bonds, so they are the winners, ‘‘says Khalid Seyid of Jamun Media who has around INR 35,000 ($700) that he brought back from Mumbai from his last visit.
‘‘It’s the common man and the poor people who are suffering as they do not keep money in banks. Drivers, maids, vegetable sellers and others all do cash transactions and they wouldn’t know what to do. Many people also live in remote areas with no access to banking. ‘‘
He also added that this is a win-win situation for the Indian Public Sector units (PSUs)
‘‘These PSUs were dying and the government had announced that they will pump in INR 70,000 crores, but this decision was not implemented. With this announcement, all the PSUs and banks will have a lot of cash and they will be back in the lending arena. ‘‘
Dos and Don’ts
No official ruling for non-resident Indians has been announced.
Non-resident Indians have up to March 31, 2017 to exchange the bank notes but only if they travel to India.
State Bank of India (Canada) was not available for a comment on this. Instead, there is a notice on their website:
Notice: ₹500 and ₹1,000 denominations
"The Government of India, vide their notification no. 2652 dated November 8, 2016, has withdrawn the legal tender status of ₹500 and ₹1,000 denominations of banknotes of the Mahatma Gandhi Series issued by the Reserve Bank of India (RBI) till November 8, 2016
Please note that SBI Canada Bank does not offer Currency Exchange Service. For information on how to exchange bank notes of ₹500 and ₹1,000 denominations, please refer to the FAQs section on the website of RBI: www.rbi.org"