India pulls 500, 1,000 rupee notes to fight graft

Indian Prime Minister Narendra Modi ordered the withdrawal of 500 and 1,000 rupee notes from circulation on Tuesday in a shock announcement designed to tackle widespread corruption and tax evasion.

Modi said that while people could exchange their old notes for new bills at banks or post offices until the end of the year, or deposit them in their accounts, they would no longer be legal tender from midnight.

"To break the grip of corruption and black money, we have decided that the 500 and 1,000 rupee currency notes presently in use will no longer be legal tender from midnight that is 8 November, 2016," he said in a televised address to the nation.

"This means that these notes will not be acceptable for transaction from midnight onwards." After a one-day shutdown of all banks and ATMs, new 500 and 2,000 rupee denomination notes would be issued from Thursday by the Reserve Bank of India (RBI), the country's central bank.

The 500 and 1,000 notes, which are worth around $7.50 and $15 respectively, are the largest bills in use in India which is still a massively cash intensive economy.

Since coming to power in 2014, Modi has pledged to crack down on so-called black money -- vast piles of wealth kept hidden from the tax authorities -- with a series of new measures, including 10-year jail terms for evaders.

The latest announcement comes a little over a month after the government raised nearly $10 billion through a tax amnesty for Indians to report undeclared income and assets.

Finance Secretary Shaktikant Das said the decision was "a very bold and powerful and a very decisive step to fight the menace of black money and the use of fake Indian currency notes".

Source: National News Agency

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