All currency exchange bureaus within the UAE refuse to accept the demonetised Indian currency notes of 1,000 and 500 rupees, officials announced this week.
This may be shocking to some. Others however, may have seen it coming since Indian government made a surprise announcement on November 8 on the demonetisation of 500 and 1,000 rupee bank notes, as of November 9, 2016 onwards.
December 31st is the deadline the government has given to exchange the notes at all branches within India. If one fails to do so, the person is obliged to exchange the notes at the Reserve Bank of India (RBI) before March 31, 2017.
The new policy is aimed at tackling the several cases of the black money market in India. However, people are still struggling to have access to their accounts as the queues at banks continue to become longer.
“The new regulatory development was a surprise for Indians, both within and outside the country,” said Promoth Manghat, CEO of UAE Exchange Group.
There’s an audio message on WhatsApp has been shared across the country, saying that UAE Exchange still accepts demonetised currency notes. But most people think it’s false.
“We are receiving a lot of inbound calls seeking service assistance to exchange these notes,” the company said.
“We would like to reassure you that we are closely monitoring the situation and are standing by to make necessary arrangements as and when notified by Reserve Bank of India and/or government of India for handling such notes outside India.”
At the moment, residents cannot change their 1,000 and 500 rupee notes, says Rajiv Raipancholia, secretary of the Foreign Exchange and Remittance Group (FERG) in the UAE.
“Exchange houses have stopped accepting 500 and 1,000 rupee notes in the UAE because the problem is that no one is going to buy these notes from us and we cannot sell these rupees anywhere,” he told Gulf Business.
“So we ourselves are stuck due to this reason.”
The country’s main indian bank, Bank of Baroda, refuses to accepts demonetised notes.
The Indian Embassy have also expressed their concerns of the NRIs here, said Mangat.
“But if there is some way through the RBI – if we get a green signal that it [exchanging demonetised currency in the UAE] could be possible, then we would love to help out the public here. But at this stage it looks very tough,” added Raipancholia.
In the meantime, exchange houses themselves are struggling to handle their stock of demonetized money.
“We have approached the RBI and the Indian consulate for clarification how we can convert these notes to either receive dirhams or get a dollar credit in our accounts or dispatch the old notes for new denomination notes.
“We are yet to get a reply but we are taking the matter up,” he added.
While the move has been difficult – particularly in India which is predominantly a cash-based society, it will prove to be beneficial in the long term, opined Raipancholia.
“The government should have made arrangements for adequate amounts of 2,000, 100 and 50 rupee notes kept across all the bank branches all over India. If this would have been done much in advance, things would have been much easier,” he said.
“But then the secrecy would also not have been maintained. One must be patient – because in my opinion, the move is good. In time, things will fall in place,” he added.