Sydney, 11 November, 2016
Indian Government demonetised (banned) INR 500 and INR 1000 notes on 8 November, 2016.
Indian Prime Minister, Narendra Modi, addressed the nation at 8 pm on Tuesday, 8 November and announced the banning of these notes from midnight. The justification for this decision was to control the menace of black money, which is a tool for tax avoidance and is often is also used to fund and spread terrorist activities in India. Apparently, millions of fake currency notes are smuggled into India from across the borders to finance terrorism in India. Political parties will be affected too because their (illegal) trenches of such notes will be worthless and will not be able to be used during elections.
Seemingly, it is a great decision which will be beneficial to Indian economy in the long term.
Black money is estimated to be 25% of India’s GDP and the commonest (estimated 80%) notes used for counterfeit currency are high denomination notes. If and when new notes of high denominations are printed and circulated by GOI, it is expected that they will have advanced security features which will make counterfeiting difficult, if not impossible.
This decision will therefore help India in many ways, although it will cause some temporary inconvenience to people. This could be due to short term restrictions on ATM usage, limits on maximum amount withdrawn from ATMs and banks and lack of sufficient supply of regular currency notes.
This decision affects NRIs and PIOs too. Many people travel to India at least once a year, and some do so even more often. It is not uncommon for them to have some Indian currency with them and bring it back to the country of their residence, while flying out of India. They carry it back with them when going back to India.
There are many in our community in Australia who have some Indian currency with them. Some may be travelling to India in November and December, but some may not be travelling to India for some time.
This issue are not confined to Indian Australians only. NRIs/PIOS all over the world are in the same boat.
It is not possible to exchange INR currency of high denomination into any other currency overseas presently and representatives of Indian Banks do not want to or are not authorised to deal with this matter presently.
Options which NRIs/PIOS can choose from are covered in the articles below.
There is some confusion whether NRIs/PIOs were allowed to carry INR 7500, 10,000, 25,000 or none at all while travelling into or out of India.
Rules have been changing and this link from RBI says NRIs/PIOS can bring into or take out from India only upto INR 5000. https://www.rbi.org.in/scripts/FAQView.aspx?Id=11
Can Ministry of External Affairs, Finance Ministry, Reserve Bank of India and GOI authorities in Australia clarify this matter please?
It is likely that NRIs/PIOs will have small amounts (maximum of a few thousands) of INRs. Having said that, it is possible that the amount could be higher depending on number of people in the family. They do not wish to waste this money.
NRIs/PIOs have following options:
- Carry the cash if travelling to India until 30 December and deposit them in a Post Office or Bank. The option of changing them at the airport ended on 11 November.
- Exchanging of these notes at Exchange Houses or foreign branches of Indian Banks in our country of residence not available.
- Deposit these notes in your NRO (Non-Resident Ordinary) account if travelling until 31 March, 2017, but we need to be in India to do so. Foreign branches of Indian Banks in our country of residence are not doing it.
- Authorise someone including a relative to deposit these notes into your bank account if you have such notes in India. You will need to provide written authorisation and such authorised person will need to go to the Bank branch physically with all documents and identification. I presume you can get authorisation document with the help of your local Indian Embassy/High Commission/Consulate. This will need clarification from local GOI authorities.
- Send the money with someone you can trust or a family member who is travelling to India and get the money deposited in your account as explained in point (4).
Many of us might not have an NRO account.
State Bank of India and a few more Banks have branches in Australia. This will be the case in many other countries too.
They should be able to allow us to open NRO accounts, if they get the permission by Government of India/RBI. This is feasible and is not a huge work.
it will ease the problem if NRIs/PIOs are treated as a special case and a consideration is given to extend the time by which they must deposit the notes in NRO accounts. It will help if they are given time until 31 December, 2017 to complete this process.
May we ask Indian High Commissioner in Australia and Consul Generals, as well as Ministry of Overseas Indians affairs, Ministry of External Affairs, Government of India, to take this matter up and help NRI/PIO community in Australia as well other countries with a practical mechanism in this matter?
Dr Yadu Singh