Have you heard of the Indian cash crisis? I had read a little blurb last week on The Skimm, my daily sassy news blurb, but didn’t think a whole lot about about it.
“At the root of this chaos is the fact that India is an overwhelmingly paper currency country: some 90% of the transactions are done with cash….The two scrapped denominations – 500 and 1,000 rupees – account for more than 85% of the value of cash in circulation.” *
Basically much of India’s economy runs on cash and many people who operate in cash never pay taxes. In an effort to force the issue, make more people pay taxes, and register the money they currently have, the government declared the two biggest bills, 500 and 1000 rupees, worth just over $7 and $14 respectively, to no longer be legal tender. They gave 4 hours notice for this.
Can you imagine? Suddenly most of your money, say all your $20s, is completely worthless and ATMs only give out $1s.
There will be new bills coming at the end of December, but until then, the 100 rupee note, worth not quite $1.50, will have to be exchanged for at banks with ID and only those notes are available at ATMs.
I hope I didn’t lose you yet!
Blah, blah, blah…right? But this is significantly affecting our stay in India! Anywhere we can pay in card is fine…but those places are very few and tend to be the relatively expensive restaurants and shops. Most places operate in cash only. The cash that Paul had obtained from an ATM before this announcement is dwindling and it has proven very difficult to exchange the last big bill he has. The banks have gigantic lines spilling onto the streets long before they open every day.
Why don’t we just get more at another ATM? They are all out of cash. All of them! There are long lines or crowds around all of the ATMs and banks in the area until that machine is empty, then the crowd rushes to the next one only to have the same experience repeated. Not to mention, there is a really low weekly amount that can be withdrawn anyway. We have visited multiple ATMs multiple times a day since arriving with no luck yet!
We have been in countries with interesting government and bank situations happening before, but it has never affected us quite this directly. When we visited Athens, Greece last year we knew well ahead of our arrival of the bank crisis and were able to stockpile Euros in preparation. Unfortunately, the demonetization in India occurred while Paul was already here, and since there are no new bills yet, I couldn’t even order money ahead at home.
Yesterday and today, as the kids and I went in search of a place for lunch that would accept credit cards, we were told no at several establishments. As we walked around, we passed about 4 banks/ATMs with lines/crowds around them. All of us felt the frustration of the men there. That isn’t to say that I feel unsafe…I just don’t want to hang around any longer than absolutely necessary.
In a classic example of Indian culture and not telling someone “no,” the manager of our apartment has told us every day that he will exchange our big, now worthless bill at a given time or part of the day and then never shows. We will see! Today he says he will be here “post lunch” for the exchange…I’m not holding my breath!
In the meantime, one of Paul’s co-workers has kindly spotted us some cash and another is working with a reputable agency to help us exchange at a reasonable rate some American cash we brought.
Until we get more cash, we will continue visiting a little “provisions” store that sells some western grocery items and accepts credit cards. Lunch yesterday ended up being an Indian version of Top Ramen with some eggs and Coke. It works for now. Just don’t tell my mom that I didn’t have any vegetables with that meal! 😊
Thankfully, this story is not going to end on a sad note.
Late in the afternoon, the apartment manager came to the door and exchanged the 1000 bill for us. Yay!
The Thomas Cook agency that exists only to exchange money is all tapped out. So, they won’t be of help to us yet.
But late at night, Paul went to three ATMs. He was the 26th person in line at 11:30 at night. 30 minutes later the machine still had money and we are thrilled to have some cash in hand!
(Here is a good, quick, updated article on the situation http://www.bbc.com/news/world-asia-india-37983834 and The Skimm linked to this article http://money.cnn.com/2016/11/08/news/economy/india-rupee-notes-ban-currency/ )