Indian currency woes continue
- Published: Dec 7, 2018, 10 AM
India is once again having problems with its currency, reports the National Herald in a Nov. 28 article. The report said that notes issued in 2016 with new security features have already become unusable.
The Herald’s sources told it that the cause was the poor quality of the paper used, in comparison to the earlier notes that stayed in circulation for years. It seems that the new ones are so awful that they can’t be used in ATMs because the machine sensors cannot detect them. The problem is not only with the new 2,000- and 500-rupee notes, but also with even newer notes, the 10-rupee notes that were issued just this year.
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The Reserve Bank of India had to relax a rule forbidding banks from classifying new notes as nonissuable in July. The National Herald explained that banks categorize notes as “non-issuable” when they can’t be used in ATMs, or be accepted and exchanged by the public. The problem this presents for the Reserve Bank is that notes soiled, torn and dirty that are designated nonissuable can be returned to the Reserve Bank for a refund.
Modi previously made a mess of things in November 2016 when, in what he said was an effort to fight corruption, the black market, and money laundering, he demonetized all current 500- and 1,000-rupee notes overnight and said they would be replaced with the aforementioned 500- and 2,000-rupee bills.
This represented more than 85 percent of the paper currency in circulation, and what Modi succeeded in doing was wiping out the life savings of millions of citizens, especially the rural poor, who did not have bank accounts, and kept their savings in cash.
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