India banks reopen to long queues after rupee withdrawal

India banks reopen to long queues after rupee withdrawal

Long queues formed outside banks in India on Thursday (Nov 10) as they reopened for the first time since the government's shock decision to withdraw the two largest denomination notes from circulation.

long queues at India bank
People in Kolkata queue outside a bank to deposit and exchange 500 and 1,000 currency notes on Nov 10, 2016. (AFP Photo/Dibyangshu Sarkar)

NEW DELHI: Long queues formed outside banks in India on Thursday (Nov 10) as they reopened for the first time since the government's shock decision to withdraw the two largest denomination notes from circulation.

Some banks in the capital New Delhi had received the new 2,000 rupee (US$30) bill and a number of ATMs were working again, two days after Prime Minister Narendra Modi announced the 500 and 1,000 rupee notes would no longer be legal tender in a blitz against tax evasion and corruption.

Modi's Tuesday evening bombshell prompted a late night rush on cash machines as customers withdrew smaller notes from ATMs before they closed at midnight in preparation for the turnaround, but millions were left stranded without cash.

India bank queues

(AFP Photo/Dibyangshu Sarkar)

"I have only come here to check if I can change my old notes for a new currency even if I don't have an account with the bank," RP Singh, a newspaper vendor, told AFP outside a bank in New Delhi.

"The real worry is how we will get essential daily supplies in the next few days as most people are short of those smaller denomination or new currency notes," he added.

The government said customers would be able to exchange their old bills for new notes or deposit them in their accounts from Thursday. They would face major scrutiny by tax authorities if they could not account for a sudden swell in their balance.

However, it was unclear how many banks across the country - particularly in rural areas - had received the new 2,000 note. Newly designed 500 and 1,000 rupee bills will be rolled out at a later date.

"The country has around 125,000 bank branches and an extensive network of post offices in rural areas, which should be enough. Let the exchange process begin and we will see if more is required," India's Finance Minister Arun Jaitley said Thursday.

At a Yes Bank branch in New Delhi a queue of around 20 people formed early, many waiting from before the lender opened.

"It is certainly a huge rush very early in the morning and for obvious reasons. Everyone wants to make deposits and withdraw smaller currency notes to get by," a bank worker told AFP.

Local media reports showed much longer queues in smaller cities, with some people complaining that banks and post offices, where old notes can also be exchanged, had not opened on time.

"We don't know what they are doing, why they haven't yet opened the bank? We have already been waiting for over two hours just to exchange our currency notes," a customer outside a bank in Modinagar in the northern state of Uttar Pradesh told ABP news channel.

The shock announcement has also affected tourists.

"I had to return from the camel fair in Pushkar, Rajasthan, because I didn't have enough smaller currency notes and it is difficult to use credit cards there," Argentine traveller Contantz told AFP.

The government has said that only tax dodgers will lose out from the move, the latest in a series of anti-corruption measures introduced by Modi.

Analysts largely welcomed the decision, saying that while consumer spending will likely dip in the short term as the new notes slowly make their way into circulation, in the long run the move will boost GDP.

Source: AFP/ek

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