Indians see red as banks struggle to dispense cash

Indians waiting in queue outside a bank in Guwahati yesterday to exchange 500- and 1,000-rupee notes that were taken out of circulation last week in a shock move aimed at uncovering unaccounted wealth hidden from the taxman.
Indians waiting in queue outside a bank in Guwahati yesterday to exchange 500- and 1,000-rupee notes that were taken out of circulation last week in a shock move aimed at uncovering unaccounted wealth hidden from the taxman.PHOTO: REUTERS

Hundreds of thousands queue for long hours trying to replace large banknotes scrapped in Modi's war on graft

NEW DELHI • Anger rose across India yesterday as banks struggled to dispense cash after the government withdrew large-denomination notes in a shock move aimed at uncovering billions of dollars of unaccounted wealth hidden from the taxman.

Hundreds of thousands of people stood outside banks for a third day for long hours trying to replace 500- and 1,000-rupee banknotes that were abolished last week.

These bills made up more than 80 per cent of the currency in circulation, leaving millions of people without cash and threatening to grind large parts of the cash-driven economy to a halt.

"There is chaos everywhere," said Delhi Chief Minister Arvind Kejriwal, who is a bitter foe of Prime Minister Narendra Modi. He said Mr Modi's move had upended the lives of the poor and working class while the rich - whose wealth he had sought to target - had found loopholes to get around the new rules.

People argued and banged on the glass doors of a branch of Standard Chartered Bank in southern Delhi after security guards blocked entry, saying there were already too many people inside the bank.

Others turned on Mr Modi, criticising his ongoing visit to Japan while his countrymen suffered at home.

"He is taking bullet train rides in Japan and here you have old people knocking on bank doors for cash," said college student Prabhat Kumar, who said he had spent six hours in the queue. "He has made a terrible mistake."

But Mr Modi said he would pursue the war against corruption and tax defaulters even if it meant going back decades to examine records.

"If unaccounted money is found out during the current clean-up drive, accounts of tax evaders dating back to the country's independence in 1947 will be checked. If required, I will hire people for this task," Mr Modi said in a speech to the Indian community in Kobe.

Nearly half of India's 202,000 ATMs were shut on Friday and those that operated quickly ran out of the new notes as scores of people descended upon them.

The government has asked people to redeem the old 500- and 1,000- rupee notes by Dec 30. The central bank said there was enough cash available with banks and that it had made arrangements to deliver the new bank notes all over the country.

Mr Modi's move was aimed at shrinking the "black economy", the term widely used to describe transactions that take place outside formal channels.

India has unearthed 1.25 trillion rupees (S$26.2 billion) of black money, including 670 billion rupees in the recent income disclosure scheme, since his government came to power in 2014, Mr Modi said.

REUTERS

A version of this article appeared in the print edition of The Sunday Times on November 13, 2016, with the headline 'Indians see red as banks struggle to dispense cash'. Print Edition | Subscribe