How To Take Money Out Of India

How will the demonetization of the 500 & 1000 Rupee bills affect travel in India?

Imagine waking up one day and finding that most of your cash is now worthless… that's basically what has happened in India.

On the 9th November 2016, all currency denominations of 500 Rupees and 1,000 Rupees ceased to be legal tenders in a sudden and surprise move by the Indian government as part of a crackdown on corruption, counterfeit currency and black money.

This post does not seek to debate on the impact of the political situation in India but as the main tourist season for India is just beginning this post focuses on the impact of the demonetization on people traveling in India. I'm updating this frequently at the bottom.

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When the announcement was made, it was stated that banks and ATMs would be shut for a few days and then would reopen with new 500 and 2,00 Rupee bank notes. It was also said that people have until 30th Dec to deposit the old notes in banks and post offices to get them replaced.

However, 1 week down the line, it seems that the demonetization move may cause disruption for Indians and travelers alike for a while longer as there is simply not enough cash to replace the notes taken out of circulation and the ATMs all need to be re-calibrated to accept the new notes which apparently will take 2- 3 weeks at least.

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The changes have effectively made 85% of all India's cash illegal tender overnight. The last week has seen chaos and long queues at banks and ATMs across the country as people struggle to obtain cash for daily purchases. People have even died while queuing to change their money.

India is predominately a cash economy, more than 90% of all transactions are done in cash, many businesses cannot accept card payments and many poor Indians in rural areas do not have bank accounts and do not have the ID to be able to even set one up.

Queuing for money. Photo Credit: The Guardian

So how can travellers and tourists in India get cash and pay for daily expenses?

Many businesses in India, especially budget guesthouses, hotels, tourist sights, restaurants, buses and taxis do not have facilities to accept card payments. As people have till 30th Dec to deposit old notes some businesses may accept the old notes but many will not. Hospitals, pharmacies, railways, petrol stations are supposed to be accepting the old notes so use up your old notes there if you can.

Obtaining cash is becoming increasingly difficult. It's not just the queuing, the problem is that now 500 and 1,000 Rupee notes are no longer legal tender the only notes available are the new 2,000 Rupee note and the old 100 Rupee note. However, banks and businesses do not have enough 100 Rupee notes to give change for the 2,000 Rupee note and the new 500 Rupee notes are still not in circulation yet and it seems there will not be a new 1,000 Rupee note.

The new 2000 rupee note

There are 3 ways travellers can obtain cash in India

Take money out of the ATM: However the daily withdrawal limit is 2,000 rupees, it is hard to find an ATM that is open and has money and the ones that do have cash have long queues.

Bring foreign currency and change it into rupees: You'll probably get a good rate for your foreign currency as people scramble to try and change their old money but I tried a few places today and they did not have any new currency so could only give me old currency which I then had to change anyway. You will likely get a better exchange rate for your foreign currency if you are willing to accept the old notes, if you change for new notes then you will probably get a lower exchange rate.

Change your old currency at the bank: If you have the old bank notes you can change them at a bank. You can only change 4,000 rupees and you must take a long a photocopy of your passport and visa, fill out a form and wait in line.

Update 25/11/16 Now no over the counter exchange of old notes is allowed, the only way to change old money is by paying it into an Indian bank account. (If you are here for a long time it might be worth trying to set up an Indian bank account but be aware that the banks are very busy at this time and it could take weeks. ) It was said that foreigners would still be able to change 5,000 rupees per week which will be marked in your passport but I have tried on 3 occasions and have been told no exchange of old notes is possible f0r anyone. http://timesofindia.indiatimes.com/india/Demonetisation-tightens-No-more-exchange-of-Rs-500-and-Rs-1000-notes-Centre-announces/articleshow/55603482.cms

Queues at the banks - Photo Credit: Hindustan Times

Queues at the banks in Delhi – Photo Credit: Hindustan Times

So what should travelers in India do?

To be honest, everyone is in shock and trying to find ways to cope but here are some of my tips for travellers:

Try to pay for as many things by card as you can – Minimize reliance on cash by booking hotels and paying online, shop at supermarkets and large stores that can accept cards, use taxi apps like Ola and Uber and pay online, and try to leave as much small change as possible for daily expenses.
Bring foreign currency to change. The Rupee is a closed currency so it many places you will not be able to obtain Rupees outside of India so to avoid having to queue to use the ATM every day of your trip (and paying a lot in foreign withdrawal fees) bringing a lot of foreign currency to change would be a good idea – hopefully money changers will have the new notes soon and at least if they give you old notes you can change 4,000 at a go in the bank unlike queuing for the ATM to get only 2,000 out. Bringing smaller denominations is better and some market vendors have also been accepting dollars – any money is better than no money!
Get as much cash as you can in the cities – rural areas (including popular tourist destinations like Goa) take longer to get the ATMs refilled and have less cash than cities.
Ask for 100 Rupee notes. When you change money its better to try and get as much in 100 Rupee notes as it is hard to find a vendor who will have enough change and be willing to accept the 2,000 notes.
Use up the old notes to pay for things at airports or for things like petrol or train tickets which should be still taking the old notes.
Send money online withWestern Union, you can collect upto 15,000 rupees from the office or general post office. Again, you'll need to bring a copy of your passport and visa but check that they have cash before you send money as many small agents do not have the cash to be able to make the payment. You could use Western Union to send money to a bank account to pay someone, it could work for larger purchases and could save you time and effort trying to find an ATM with enough cash. You could also try paying for things by transferring money via Paypal. You could also try MoneyGram.
Try getting a pre paid Indian Rupee Travel Money Card from ICICI before you leave home. You'll avoid ATM and foreign card transaction charges
But of course some of these solutions still rely on the bank, ATM, forex counter or money changer having the cash to give out, which may not always be the case as they simply didn't print enough money to replace the money taken out of the system. The rules also keep changing suddenly so it's best to stay on top of the latest developments.
Having a rushed itinerary in India is never really a good idea, especially now it's important to allow more time to account for some disruption and expect some difficult obtaining cash.

Although the government stated that this "transition phase" where restrictions on the amount of cash you can withdraw are put in place to last until the end of December 2016. This is because it will take time to print the new money and re-calibrate the ATMs to be able to dispense the new notes. However, some sources did the maths and estimate its more likely to take 6 months.

Update 18/11/16:

As of Friday 18/11/16 you will only be able to exchange Rs 2,000 in cash over the counter in banks (instead of the earlier limit of Rs 4,500)

This is supposed to be a one time transaction and they will put indelible ink on your finger (the same as they use for elections so that people cannot vote more than once) This means you can only change 2,000 rupees maximum but I have not had ink put on my finger and have visited the bank many times now. You can only change 2,000 rupees in the same bank in one day but can probably go back the next day to the same bank or try another bank in the same day. In some places, like in Goa, they have a separate queues for foreign tourists or NRIs to change money meaning that you don't have to wait so long. The queues seem to be shorter all round now.

People with foreign cards have also been able to make more than 1 withdrawal in the ATM, even on the same day. With this in mind and in my experience, I think these restrictions are not being so strictly enforced for tourists because this situation is very difficult for those who do not have an Indian bank account.

You may be able to withdraw Rs 2,000 by swiping your debit card at some (but not all) petrol pumps.

Also, the AAI has allowed the opening of currency exchange counters by scheduled commercial banks at its airports across the country although it seems they are also struggling to keep up with demand.

Update 25/11/16

Now no over the counter exchange of old notes is allowed, you can only pay them into a bank account. It was said that foreigners would still be able to change 5,000 rupees per week which will be marked in your passport but I have tried on 3 occasions and have been told no exchange of old notes is possible f0r anyone. http://timesofindia.indiatimes.com/india/Demonetisation-tightens-No-more-exchange-of-Rs-500-and-Rs-1000-notes-Centre-announces/articleshow/55603482.cms

Old 1,000 notes are not really being accepted but petrol stations still accept the old 500's sometimes. Many ATMs are still shut and when open have long queues and run out of cash quickly. Withdrawals are limited to 2,000 rupees but foreign cards can often do multiple transactions but be aware of fees your bank might charge you for each transaction. It is still hard to find someone who can accept the new 2,000 rupee note as there is still a shortage of cash and change. The bigger cities in India like Mumbai and Delhi are faring better but it is still a struggle to find cash in Goa and rural places.

Photo Credit: REUTERS/Babu

Are you traveling in India at the moment? How is this effecting you?