India: Currency changes affecting residents’ daily banking transactions
What is the change? India is pulling old rupee notes of the 500- and 1,000-rupee denominations out of circulation and will restrict ATM transactions from now until the end of the year.
What does the change mean? Banks were closed Thursday Nov. 9 and ATMs were shut down Wednesday and Thursday, Nov. 9-10. ATM withdrawal limits will be in place starting Friday, Nov. 11, and all residents have until Dec. 30 to deposit existing 500- and 1,000-rupee notes into their bank accounts or exchange them for other bills. New 500-and 2,000-rupee notes will be put into circulation.
- Implementation time frame: Immediate and ongoing.
- Who is affected: All residents and individuals in India performing cash transactions and foreign nationals entering India.
- Business impact: Foreign nationals in India should be notified of the bank closures and restrictions on banking and ATM services during the transition.
- Next steps: Individuals in India should plan for the restrictions in banking, ATM and cash transactions. Old notes may be used for emergency transactions such as hospital visits, train and air tickets and fuel purchases until Friday. The changes do not affect transactions using credit or debit cards, checks, money wires or online transactions.
Background: The Reserve Bank of India published the notice Tuesday with little warning. New “Mahatma Gandhi” 500- and 2,000-rupee notes will be put into circulation featuring a new design, color, size and security emblem.
During the transition:
- Banks were closed Wednesday and reopened Thursday.
- All ATMs, cash deposit machines, and other machines used for the deposit of cash were shut down Wednesday and Thursday.
- Cash withdrawals at bank counters are limited to 10,000 rupees per day and an overall limit of 20,000 rupees per week. ATM withdrawals are limited to 2,000 rupees per day per card until Nov. 18, and 4,000 rupees per day per card on Nov. 19 and after.
- Individuals may exchange their old 500-and 1,000-rupee notes for other denominations, but are limited to a 4,000-rupee maximum exchange during the first 15 days of the transition period.
- Individuals should deposit or exchange their old 500- and 1,000-rupee notes by Dec. 30, but if they are not able to do so by that date, they may need to go to a specified location thereafter.
BAL Analysis: All residents in India should be aware of the changes and plan for possible delays in banking transactions during the transition. The banking limits and other terms of the currency exchange are subject to change without notice.
This alert has been provided by the BAL Global Practice group and our network provider located in India. For additional information, please contact your BAL attorney.
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