On 8 November, 2016, the Indian government made the announcement that INR 500- and INR 1000 banknotes would be invalid and that new INR 500 and INR 2000 banknotes would be issued. The move was initiated in order to crack down on counterfeit cash that was being used to fund illegal activities. It was also seen as a way to encourage digital transactions in more areas than before. This policy was known as ‘demonetisation’.
The government allowed for a period of 50 days for old notes to be deposited in the bank. Thus, the following weeks saw the long queues in the bank counters and ATMS, and a shortage of the new notes. Initially, the move received support from several bankers as well as from some international commentators, but it was also criticised in terms of poor planning, especially in terms of not being able to meet the demand for new notes.