The prime minister of India announced Tuesday night that all 500 and 1,000 rupee notes will be replaced with new bills, trying to stem the corruption taking place ahead of state elections.
The announcement by Prime Minister Narendra Modi was a surprise intended to prevent citizens from circumventing the move, The Wall Street Journal reported. The rupee notes, which are worth around $7.50 and $15 respectively, are the largest currency bills in India. The bills are no longer legal tender as of Wednesday, but can be deposited in banks and redeemed at post offices until Dec. 30.
There are various types of corruption taking place related to the bills. At least $4 million in counterfeit bills was presented to banks last year, and many Indians are holding onto and trading cash to avoid paying taxes on the money, similar to working “under the table” in the United States. Finally, politicians buy votes with the bills to win local elections.
New 500 and 2,000 rupee notes will be issued, although it is not clear when that will happen. Nirmal Jain, chairman of IIFL Holdings Ltd., praised the move, saying, “It will have a deflationary impact in general and more specifically on real estate prices and make homes more affordable,” Bloomberg reported.
There are about 16.5 billion of the 500 rupee notes in circulation and about 6.7 billion of the 1,000 bills, central bank Deputy Gov. R. Gandhi told Bloomberg. “It’s going to be very inconvenient, because everybody uses these notes,” Sujan Hajra, an economist in Mumbai, commented to Bloomberg, although he admitted that it was ultimately a good move.
© 2025 Newsmax. All rights reserved.