08/11/2016 8:28 PM IST | Updated 09/11/2016 1:41 AM IST

India Scraps ₹500 And ₹1,000 Currency Notes Presently In Use To Beat Black Money, Corruption

The step is aimed at curbing black money and corruption.

Getty Images/Flickr RF

In a surprise move aimed at curbing black money and corruption, the government has scrapped ₹500 and ₹1,000 currency notes presently in use, Prime Minister Narendra Modi announced today.

Starting midnight on November 8, ₹500 And ₹1,000 cash notes of ₹500 and ₹1,000 denominations will cease to be legal tenders, Modi said in a televised national address on late Tuesday, adding the Reserve Bank of India will issue new notes of ₹2,000 and ₹500 in the coming weeks.

The move comes at a time when India has been trying to tame black money, which is seen as a major hurdle in fighting corruption. It is also an important step to usher in a cashless economy, say experts.

"Black money and corruption are the biggest obstacles in eradicating poverty," Modi said in his address.

As part of the steps, Modi said people will be able to deposit ₹500 and ₹1,000 cash notes in their banks and post offices from November 10 through December 30, 2016, adding that people will have nearly 50 days to exchange their present notes for new notes which will be issued in the coming weeks. Those unable to deposit notes by Dec 30 can change them until March 31, 2017 by providing ID proof.

ALSO READ: 9 Things To Know About The ₹500 And ₹1,000 Currency Swap

All national banks are to remain closed on November 9, it was announced.

"There is no need for panic. Your money will remain yours. You need not worry on this point," he said, adding the move will be inconvenient for many people in the short-term, but was in the interest of the country's future.

Despite Modi's efforts to calm nervous citizens, people across the country were already reportedly lining up outside ATMs as well as petrol stations, which will continue to accept the old banknotes.

People queue up outside an ATM in Bangalore.

Here's a snapshot of how the present bank notes will be treated:

Minutes after the announcement, Twitter, broke out in a frenzy of hilarious memes on the radical move.

ALSO READ: These Hilarious Jokes On ₹500 And ₹1,000 Notes Will Calm You Down In Case You Are Freaking Out

This is India's third demonetisation attempt after 1946 and 1978. In 2012, a committee headed by the Chairman of the CBDT meant to look at ways to curb black money, considered this as a solution but rejected it.

According to JNU prof Arun Kumar, there is little evidence that the 1978 demonetisation helped reduce black money. Kumar studied black money extensively in his book The Black Economy.

In his address, Modi said black money to the tune of Rs 1.25 lakh crore was unearthed during last two-and-a-half years.

-- With inputs from Rukmini S.