Frequent travellers caught in a rupee bind

In August, Singaporean Visvanathan Balu bought $4,000 worth of rupees from a bank in Bangalore, India, thinking he could use the cash for future trips to the country.

Now the notes, which are all in 500 and 1,000 denominations, are practically worthless - unless he returns to India and exchanges them for new ones by the end of March.

Mr Balu, 49, like many other frequent travellers to India, worries about being stuck with cash that can no longer be used. They are unwitting victims of Indian Prime Minister Narendra Modi's fight against tax evaders and corruption. Those sitting on undeclared cash will have to declare it before it can be exchanged, and possibly account for it to the taxman.

On Nov 8, India, with hardly any notice, invalidated its 500 rupee (S$10) and 1,000 rupee bills and gave citizens until Dec 30 to exchange them for fresh ones at banks there. After that, they can replace the notes at the Reserve Bank of India only until March 31.

Since the announcement, money changers and Indian banks here stopped accepting the bigger notes. According to the State Bank of India's website, the notes can be exchanged only in India.

Last week, an inter-ministerial group in India was set up to address the grievances of non-resident Indians, but it has not come up with any fresh announcements or guidelines. The Reserve Bank of India has also not come up with separate guidelines for people living abroad.

Some here are counting on friends and relatives who are heading to India to change the money for them. At least two friends have asked public relations consultant Mansi Maheshwari, 31, who is going to India for a holiday later this year, to help them deposit their expired notes at banks there. To do this, she has to show the banks a letter of authorisation from her friends and proof of her identity.

Ms Maheshwari, who has less than 10,000 rupees worth of the old bigger notes with her, said she had approached two Indian banks here - ICICI Bank and the State Bank of India - but both told her she could not deposit the bills with them.

"At least I have an upcoming trip to India, so I can exchange the notes. But I have family members in other countries who do not know how to," she said.

Read also: Money changers, banks stop taking old rupees

When The Straits Times visited money changers at Mustafa Centre in Little India yesterday, most displayed signs saying that they do not buy or sell the old notes, and do not have stock of the new notes.

"Every day, I have customers crying for Indian rupees, and some ask, 'At least give us a few hundred'. But we don't have any stock," said Mr A. M. Shaik Alaudeen, a supervisor at Mustafa Foreign Exchange.

The only new rupee notes that he gets are from Indian customers who sell them to him, but those have been few and far between.

"When we get, say, 20,000 rupees, we try to limit each customer to only 5,000 rupees each. So at least we can sell the notes to four customers," he said. "We are also losing a lot of customers because of the ban. It is the year-end holidays, and many of them are going to India."

About 10 per cent to 15 per cent of his firm's business comes from trading the Indian rupee.

Mr Mohamed Rafeeq, the owner of Clifford Gems and Money Exchange, has thousands of rupees - he declined to give the exact amount - in old notes of higher denominations. "I am keeping them and waiting for good news from the Indian government. Hopefully, they can give us more time to exchange the notes."

The High Commission of India could not be reached for comment.

Mr Sam Vijaya, 52, who has about $400 worth of old rupee notes, hopes the Indian Embassy here will work with banks to allow the notes to be exchanged here. Said the ethics and compliance director: "I won't fly to India just to change this amount. If it really can't be changed here, I have no choice but to write it off."

Mr Balu, 49, a director of a media company, said: " Now, it is all rubber money. I understand they want to curb tax evasion, but it should not be at the expense of foreigners."

Read also: Stocks slide, ATMs run dry after India rupee shock

Notes from ATM became 'like toilet paper' in an hour

In just one hour, the several thousand rupees that Ms Arti Mulchand withdrew from an automated teller machine in India became, in her own words, "like toilet paper".

The Singaporean communication agency director had gone to Pune, a city in west India, for a week to care for her sick relative.

At 7pm on Nov 8, Ms Mulchand, 40, had withdrawn the money - she declined to reveal the exact amount - to foot her relative's hospital bills the next day.

The amount was dispensed in 500 and 1,000 rupee bills.

When she returned to her family home at 8pm, the news broke: The notes would be invalidated by midnight as part of a crackdown on rampant corruption.

"Everyone thought it was some kind of a joke. We thought it was impossible," Ms Mulchand told The Straits Times. "But it became increasingly apparent that it was real. We completely panicked. In an hour, our money became worthless."

The next day, banks and ATMs were shut and shopkeepers refused to accept the notes. The streets became "uncharacteristically quiet", she said, as people did not dare to spend money.

A long queue formed at a petrol station that was willing to take the bills, she recalled.

"I heard that people were filling their vehicles with the minimum amount of petrol so that they could get change for 500 rupees," she said. "Everybody was holding on to every coin they had."

Fortunately for Ms Mulchand, the hospital was willing to accept her old notes. But with the banks closed, she had to borrow usable money from a relative for her meals. "My sister and I made do with $20 worth of rupees to last us for two days. For lunch, we shared a plate of food from the hospital canteen, which was more affordable," she said.

She returned to Singapore on Nov 11.

Ms Vanessa Frida, 38, a marketing director who was on a work trip to Mumbai from Nov 6 to 10, recalled waking up on Nov 8 to news "on every television channel" about the ban. Her hotel front desk allowed people to change their expired notes into 100 rupee bills, for up to 1,000 rupees, but that stopped by 1.30pm, she recalled.

"When I left, I had a bit of spare cash, but the airport duty-free shops did not accept the notes. There were a lot of frustrated people," the Singaporean said.

"So I kept a 500 and 1,000 rupee note as a souvenir."

Read also: India to use indelible ink to ensure people change cash only once

India banks reopen to long queues after rupee withdrawal

This article was first published on Nov 25, 2016.
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