The financial situation in India is slowly getting out of hand. Not only are residents restricted to withdrawing a small amount of cash from ATMs, but the government is introducing even stricter measures. Indelible ink will be used to ensure the one-time exchange of old notes for new ones. This should prevent the illegal currency activity in the country, although it remains to be seen how useful this countermeasure will be.
Indelible Ink To End Illegal Currency Exchange Operations
Ever since the decision was made to get rid of the old 500 and 1,000 Rupee notes in India, financial turmoil has become a daily occurrence. Consumers can only withdraw so much money from ATMs right now, leaving many people holding worthless cash bills. Exchanging these bills is certainly possible, but at a lower face value.
To be more precise, several individuals have set up illegal currency exchange offices, where users can exchange their old notes for new ones at roughly 70% valuation. Since consumers with no access to a bank have a hard time exchanging bills, they are forced to choose this less favorable option. However, the government wants to nip these transactions in the bud by introducing indelible ink.
Every old note in circulation will be marked with this ink, ensuring that it can only be exchanged for new currency once. Whether or not indelible ink will make a significant difference in the illegal currency exchange market remains to be seen. After all, it remains unclear who will mark the bills to begin with.
If it is left up to the people holding these old bills, they won’t mark them themselves. Nor will the illegal exchange offices mark them, as they won’t be equipped with the tools to do so. Once the bills are deposited at a bank branch, they can be marked and effectively removed from circulation. Until then, however, the same currency can change hands multiple times without problems.
To make matters even worse, India’s bank ATMs are not equipped to handle the new 2,000 Rupee notes. As this particular model of banknote is much smaller than the rest, ATMs have to be retrofitted to accommodate dispensing them. This process is expected to take at least three full weeks, barring any significant technical difficulties along the way.
The situation in India is very precarious right now, and it appears as if everyone will have to live with this turmoil for the coming weeks. Once order is restored, though, daily life should return to normal. Until then, hardship will be endured by those outside the realm of financial inclusion. Additionally, local retailers will see their earnings shrink, which doesn’t bode well for the country’s economy.
If you liked this article, follow us on Twitter @themerklenews and make sure to subscribe to our newsletter to receive the latest bitcoin, cryptocurrency, and technology news.
