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India’s cash crunch felt in Alberta

Posted on: December 01, 2016 | Author: Glenn Kubish

The Indian government’s dramatic decision to purge 500 and 1,000 rupee notes from the country’s money supply is being felt around the world, including Alberta.

“Our customers with family or business connections to India are watching the situation very closely,” said Raj Ramakrishnan, ATB Financial’s Senior Vice President of Retail Financial Services. “And we are, too.”

Raj Ramakrishnan
Raj Ramakrishnan

Last month, Indian prime minister Narendra Modi surprised his country and the world by announcing these popular denominations of currency would be rendered useless post December 30, 2016. The move was made to curb India’s black market in cash, which escapes government taxation.

ATB’s Ramakrishnan said more than 80 per cent of the country’s cash currency is in 500 and 1,000 rupee notes. Indian citizens face a looming deadline to turn the notes into authorities, for exchange and taxation, or risk them being demonetized, which, essentially, means they won’t be worth the paper they’re printed on.

The move has sparked long lineups at banks as Indians try to redeem their rupees. In turn, that has led to reports of banks starting the business day with fewer rupees for exchange and running out of them sooner, in some cases within an hour. According to some accounts, bankers are being locked in their branches by customers who insist on getting their money.

“Anyone who wants cash in India could face a challenge in the short term, but the situation will stabilize,” Ramakrishnan said.

Ramakrishnan said ATB customers should know:

  • There is a daily 20,000 rupee withdrawal limit currently in place.
  • The rupee purge in no way affects a customer’s ability to conduct personal or retail business digitally or by cheque in India.

“At the same time this currency move is being made, India is also transitioning to a digital currency economy faster than any economy in the world,” Ramakrishnan said.

The cash chokepoints at the receiving end in India do not prevent customers from using ATB’s new Global Transfers.

“Global Transfers work quicker than traditional wires and are a very good value,” said Ramakrishnan. “We know money follows where the heart points, and we know our customers have questions about India right now. We’re here with the answers.”

Learn more about the features of Global Transfers here. ATB’s Global Transfers offer service to more than 45 countries in 28 currencies, including the rupee.

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