Durban - India’s crackdown on black money and counterfeiting has panicked tourists from South Africa and locals as they struggle to get cash and face a fleecing at exchange bureaux.
The Indian government introduced new “hard-to-fake” Rs500 and Rs1 000 currency notes last week to tackle currency counterfeiting.
The Reserve Bank of India invited the public, from November 10, to return old Rs 500 (worth about R100) and Rs1 000 notes, with their bank accounts credited.
But in a $1.4 trillion (R19.9 trillion) economy where two-thirds of transactions are done in cash, the move has caused pandemonium.
Police have been deployed to keep the peace at ATMs where panic-stricken citizens and tourists, desperate to withdraw the new currency, have formed “serpentine” queues.
People have been limited to withdrawing Rs2 000 a day (about R420), with the limit expected to be Rs4 000 from Saturday. The old notes would cease to have value as of December 31.
Indian tour operator, Asif Hussain, of Akbar Holidays, spoke to the Daily News last night while standing in an ATM queue in Mumbai.
He said foreign exchange bureaux and hotels that change money were taking advantage of the panic by hiking their commission and exchange rates by up to 20%.
“The bank and ATM queues are about a kilometre long. Banks were also open on Sunday. Tourists are panicking. If they pay by credit card they are okay, but cash is the problem,” he said.
“Those who are accepting dollars are not accepting the old (rupee) notes and many who have the lower currency are keeping it. So when people have withdrawn the new Rs2 000 notes none of the shops or restaurants has smaller (notes) to give them their change.”
ATMs were also unable to cope with the demand for cash.
“Money in these ATMs run out within hours, but the banks are only refilling the next morning,” he said.
Quoting local news reports, he said 25 people, mainly the aged and dehydrated, had died while waiting in the queues.
“They are standing in the queues from dawn to dusk. There is a lot of panic, uncertainty and fear. The banks are only open from 10am until 6pm,” he said.
Hussein’s business has suffered, with people cancelling tours because of the lack of money. All tour operators in India were battling with the same problem, he said.
Ashwin Trikamjee, president of the Hindu Maha Sabha in South Africa, said he was in New Delhi on Friday and Saturday and had noticed the long queues.
Demand
“There was such a demand for cash that in an unusual move banks opened over the weekend and some ran out of money. Desperate locals were extremely frustrated at what was happening,” he said.
Trikamjee, however, did not experience any problems because he changed his money at his hotel.
He said the way the new currency was being introduced had been a “recipe for chaos”.
Now back home, Trikamjee said the organisation had not received any calls from people who were worried about the events unfolding in India.
But Nazir Malek, of Malek Travel and Tours, said there was “absolute chaos” in India.
He said a Durban couple in India contacted him in a panic, asking him to immediately arrange their return flights to South Africa.
“They had just landed in India and had difficulty exchanging their money. Fortunately, I had contacted an operator there and made arrangements for a currency exchange.”
He said foreign exchange bureaux were taking advantage of the panic by increasing commissions and exchange rates.
Dinesh Naidoo, group operating director at Serendipity Tours, said he would be flying to India on Wednesday to monitor the situation.
“This is a fantastic new system. Friends in India are saying the situation is tough right now, but good for the country in the future,” said Naidoo.
He advised tourists to not exchange their currency at hotels because of the poor rates offered, but to go to bureaux instead.
Naidoo also said there were no restrictions on exchanging US dollars to rupees or on using credit cards for payments.
He has contacted the Indian Consulate in Durban to appeal to the Indian government to provide the SA Reserve Bank with clearance to exchange old notes for the new currency.
“This, however, would take time,” he said.
Naidoo advised South Africans who still have the old rupee notes and were unable to travel to India before the December 31 cut-off, to contact a friend or relative travelling overseas to help exchange their cash.
On Sunday, the Reserve Bank of India issued a statement assuring people there was enough cash in small denominations at the Reserve Bank and banks.
“The Reserve Bank urges that public need not be anxious; need not come over to banks repeatedly to draw and hoard. Cash is available when they need it,” said Alpana Killawala, the Reserve Bank’s principal adviser.
The Indian Express reported “serpentine” bank queues and scuffles at ATMs.
The Hindustan Times said the Finance Ministry had asked banks to arrange for separate queues for senior citizens and the disabled.
The Indian Consul-General in Durban, Shashank Vikram, promised to comment today, but had not done so at the time of publication.
* With additional reporting by Mphathi Nxumalo