India: Largest currency bills banned in bid to cut corruption

Indian PM Narendra Modi fired a direct shot at India’s endemic corruption with a surprise move on Tuesday to ban the country’s largest currency bills, starting the next morning. The ban is intended both to curb the flow of counterfeit money and to take aim at terrorist organisations that rely on unaccounted-for cash. It is also expected to help the government clean up a system that has relied on cash to pay bribes and to avoid taxes. But the announcement, made on national television in both Hindi and English, led to an immediate upheaval in the country. Abolishing the current version of the 500 and 1,000 rupee notes, worth about $8 and $15, will effectively remove 80% of the currency in circulation. Modi said banks would be closed on Wednesday. After that, people can exchange the banned notes through the end of the year for those of smaller denominations or new bills that are being created. ATMs around the country were overrun Tuesday night with people confused about the plan and trying to complete financial transactions before the machines closed the following day. In some places, hundreds stood in line in front of a single ATM. Cash is so prevalent in Indian society that the ban came with a 72-hour exception for paying for hospital bills and airline tickets. India’s low-cost carrier, IndiGo Airlines, sent an email warning customers that banned notes could not be used to purchase in-flight services or to pay excess baggage charges.<br/>