There have been huge queues outside banks with people lining up to exchange old currency
Highlights
- Customers cannot exchange notes at banks other than theirs today
- Senior citizens are exempt from this rule
- Unlike last weekend, banks will be closed on Sunday
Banks today will only exchange old 500 and 1,000 rupee notes for their own customers, and not for people who hold accounts in other banks. Senior citizens are however exempt from this rule and they can go to any bank to exchange their old currency for new notes. On Sunday, banks will remain shut.
"All these days our own customers have suffered because we have not been able to do their work. So, we have seen lot of pending work at branches especially for our existing customers. We, from IBA, have taken a view that on Saturday we shall be exclusively doing work for our own customers. And on Saturday we will not be doing exchange of notes (for outside customers)," said Rajiv Rishi, the head of the Indian Banking Association, adding that tomorrow will be used to clear a backlog of work.
Monday onwards, all customers will be allowed to exchange currency at a branch of any banks.
Since Prime Minister Narendra Modi's sudden announcement last week outlawing high-denomination notes, banks have been overflowing with customers desperate to get cash. The bills that were cancelled form 86 per cent of the money in circulation.
"No, note exchange stopped for a day. Yet another whimsical decision. Government must explain. Is there currency shortage? Financial emergency," tweeted West Bengal Chief Minister Mamata Banerjee who has attacked the ban on old notes as punishing the poor and wants it reversed, which the government has flatly ruled out.
Sources in the Finance Ministry on Friday denied that there is a discussion on whether to end the offer of providing new notes for old ones. The cap was originally set at Rs 4,000; it was raised at the start of the week to Rs 4,500 only to be reduced yesterday to Rs 2,000.
Banks have been asked to use indelible ink, just like in elections, to ensure people are not exchanging more cash than is permitted.
PM Modi's "demonetization" drive aims at curbing tax evasion, corruption and forgery. He has asked people to bear with temporary inconvenience. "Just give me 50 days," he said in an emotional speech last weekend as he pledged to stop the corrupt from "looting what belongs to the poor."
The government has emphasized that the move had to be abrupt to ensure those hoarding black money did not have time to channel it into assets like property. And though the reform has been generally praised by experts, the government appears to have incorrectly gauged the extent to which people would be left cashless, particularly in rural India.