India fighting corruption by banning their largest Currencies
On November 8 2016, Narendra Modi, India’s Prime Minister, banned its widest-circulated currencies in an attempt to limit the flow of counterfeit money, fight organized crime, and to start a cleansing process in the government body that relies on cash to pay bribes and avoid taxes.
It’s a bold move from PM Modi, removing the 500 and 1,000 rupee notes, the equivalent of $7.53 and $15.07 respectively that accounts for 80% of the currency in circulation.
Modi immediately announced a bank holiday on Wednesday November 9, 2016, giving individuals until the end of the year to replace their large for smaller notes and new bills that are being created.
Initially, the decision to ban the notes caused confusion as individual’s scrabled to withdraw cash from ATM machines, and complete financial transactions. In an attempt to fight unaccounted cash or “black market” money, people will be able to replace only 4,000 rupees a day (approximately $60), hence anyone exchanging that amount of money will be asked about the origin of the money resulting in a tax investigations.
Modi addressed the inconvenience citizens faced by stating: “Experience tells us that ordinary citizens are always ready to make the sacrifices and face difficulties for the benefit of the nation.” But did he think of the poor who have no bank accounts and can’t exchange the money they have on hand? Did the weakness of the rupee play a role in shadowing the impact of Modi’s decision?
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