November 11th, 2016


Indian currency held abroad - what becomes it?

This is a post I made on my Facebook, being posted here for public consumption.

With the 500-1000 demonetisation what becomes the status of the Indian currency held abroad? Nepal, and Bhutan officially use it, and recently Zimbabwe had added the Indian rupee to their list of currencies. Also other countries that have Indian currencies with them will be Maldives and Mauritius. Not to speak of the Indian currency held by Indian nationals, Indians of other citizenship, and foreigners who come to India often who will not be coming before 31st March next year to India.

Compared to the last Morarjee Desai domon of high denom currencies this time the Indian currency is visible in other countries. When I visited Europe in 1990 I found none of the money changers exchanged Indian currency. I don't know of Europe now, but the countries mentioned above surely do.

And money changers in many countries accept Indian rupee. I have seen counters with our country flag at money counters in the Gulf, HK and Singapore. Others on my friend list who are better travelled will know other places.

So there will be a tonne of Indian currency lying in various such countries officially and unofficially. Is that all vaporised? It is not black money. You can officially take ₹25,000/- abroad and convert it to local currency wherever they are accepted like the countries I have mentioned.

At the time it puzzled me as to what these chaps do with the Indian currency in their possession. After all international trade is no in our currency. I used to wonder where the Indian rupee held by a money changer in that country would head to. Does he send it to his local bank. Now boom all those notes however little held in demonetised denominations are gone.

The Indian demonitising of notes of 2016

This is becoming sillier by the minute. On 8th night our PM said these demonetised notes would be accepted till 11th Nov only at airports, railway stations, pharmacies, hospitals and petrol pumps. At all other places he said it would worthless pieces of paper.

BUT he also said it could exchanged at the bank ₹4000/- at a time, and deposited into your a/c till December 30th and later till March 30th at RBI offices. Then he said banks and ATMs will remain closed. Resulting in chaos. We had an LC to open but no bank. What about others who only had demonetised notes and had stuff to do? They were royally screwed. Chaps at toll plazas and tourists at zoos and monuments where suddenly seeing shit.

Then yesterday's paper had the RBI grudgingly adding a few more places to use those demonetised notes till today midnight. But the problem, with ₹100s disappearing from those places, and banks remaining closed even those places that could accept demonetised notes couldn't give change in current notes.

And finally the banks opened and promptly people lined up to change their demonetised to current notes. Except to change a paltry ₹4000/- they have to fill up a form and show an id. ATMs still remained closed and some on my route are still closed as of today.

Today's news is the lines at banks are still long. Now here's the thing our country has come a very long way since Morarjee Desai demonetised high value notes. At that time we were a pathetic country with very low anything. Today it is a very vibrant country with a bustling economy. You cannot have a drastic things like these happening. A flower seller who came to our house said "yesterday I had no sale at all".

They had 6 months to plan this. They should slowly replaced all ATMs with 50s and 100s only, and on 9th they should have refilled all those ATMs with the new notes. Exchange of notes should've been allowed without filling of forms. Now what will the banks do with all those forms? They will have to send it to the RBI for destruction. The IT Dept will be uninterested in processing those, since they are only looking at deposits of 10 lakhs+.

Also see this Q&A on the RBI site.

22. I am a foreign tourist, I have these notes. What should I do?

You can purchase foreign exchange equivalent to ₹5000 using these Specified Bank Notes at airport exchange counters within 72 hours after the notification, provided you present proof of purchasing the Specified Bank Notes.

Pray why do they want a proof of purchase from a foreign tourist for a paltry ₹5000? Who keeps proof of purchase of currency change anyway?

They should've done better. Old notes should've been allowed to be transacted at all places uptil Nov 11th like the other places. And you anyhow know that the IT Dept is keeping an eagle eye of large transactions. After all no one can come and spend ₹1 crore at a Nilgiris or at a restaurant.

Why do I say this? While the note is worthless paper as of Nov 9th, it is not. You can deposit it in your bank a/c till December 30. So person doing legitimate business can or will accept this since he has proof of income when depositing it in a bank.

At the same time the old currency would be replaced at all banks. And it has been done before. Remember when the RBI decided to have the year of printing on the rear of the note. Yeah that. That time all banks started withdrawing old notes and issuing only the new.

After Nov 30 depositing only at banks till December 30th. That would have made life much easier for the common person. What has been done today is a mess.