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There are a lot of questions that expats may have about the current demonetisation in India, we have prepared a summary that would explain the reason, effect and implication of this step.
Prime Minister Narendra Modi announced the demonetization of Rs. 500 and Rs. 1000 notes ceasing the use of the denominations as a means of exchange for goods and services in an aid to combat the circulation of counterfeit notes used in illicit trade. The Government of India has implemented this measure in order to immobilize smuggling, corruption and terrorism.
The similarity of these counterfeit notes to the genuine notes goes unnoticed by the ordinary person despite any security features having been replicated, making it impossible for those who receive cash as their main means of exchange to identify the differences between genuine and counterfeit denominations. The demonetisation objective is to contain the rise in counterfeit notes, thus prohibiting the use of these notes for any business transactions or store purchases.
The Global Financial Integrity Group of Washington published that over $430 billion left India during 2003-2012 illicitly. The crippling of this on the economy seems to be a matter that the Indian Government is no longer taking lightly. This obviously hinders those involved in illicit trade from coming forth and exchanging funds as they would need to be able to provide proof of how they obtained large sums of money. Those with large sums of illicit cash would need to produce proof as to how they attained the money if they decide to brave the exchange process.
Citizens are permitted to exchange the demonetized notes at banks. Banks will issue citizens up to Rs. 2000 in cash and if they exchange an amount larger than the limit, the remainder is placed into their account which can be drawn or used to pay for goods and services electronically. This daily limit placed on citizens enforces banks KYC protocols further clamping down on the use of counterfeit money.
The Reserve Bank of India has strongly urged citizens to comply with the implementation as the benefits of it will be to all citizens in the long run. International airports and hotel banking facilities are able to assist expats and tourists with Rs. 5000 per day as per *The Economic Times.
The Government of India is taking a stand and is adamant that they will do what is best for its people and the country. Demonetization will aid the economy by:
In a country where the potential to be great is an absolute; these measures will ensure that unaccounted funds no longer stagger the growth of India in order for its potential and abilities to prosper become a reality.