When India abruptly banned its largest-denomination bank notes last month, New York City resident Raj Karnawat’s nearly $3,000 stash of rupees became essentially worthless, overnight.
“It’s not a small amount of money for a middle-class family to lose through no fault of our own,” said Mr. Karnawat, a citizen of India and the U.S. whose family owns a wholesale precious-stone business in Manhattan. “There was no way to be prepared for this.”
About 16 million Indians live outside the country, the largest nonresident population in the world, according to a 2015 United Nations report. In the U.S. alone, there are more than three million people of Asian-Indian origin, the U.S. Census Bureau estimates.
Many say they were floored when Indian Prime Minister Narendra Modi announced in early November he was voiding the 500- and 1,000-rupee bills to thwart corruption, counterfeiting and tax evasion.
The Indian government has set a deadline of Dec. 30 to deposit the old bills, but this option is largely unavailable outside the country. Indians living abroad are only allowed to deposit the banned bills into a special bank account, called a non-resident ordinary account, that many say they don’t have.
Currency-exchange services and many overseas branches of Indian banks aren’t accepting the bills for exchange or deposit because Mr. Modi’s decision rendered them illegal.
The 500- and 1,000-rupee bills are worth only about $7.50 and $15, respectively, but many overseas Indians keep piles on hand to pay for small expenses such as taxis, hotels or gifts during visits without having to pay foreign-exchange fees.
“There is a huge Indian diaspora outside of India and all of us are trying to figure it out,” said Vaibhav Agrawal, who lives in Chicago and had been keeping about $600 of the now-banned currency for trips to his Indian hometown.
After contacting about a dozen friends, Mr. Agrawal finally found someone traveling to India before year-end to try to exchange his bills.
Mr. Modi’s decision, which took about 86% of India’s currency out of circulation, has already wreaked havoc on India’s cash-based economy and threatened India’s position as one of the fastest-growing emerging markets.
Real estate sales have plummeted while sales of big-ticket items such as vehicles have also dried up as the Indian government struggles to get the new bills into people’s pockets. Critics have labeled it a “war on cash” that has been particularly hard on the poor, who often depend on off-the-books cash payments.
The Modi administration has said the move will eventually lead to better tax collection, improved surveillance of crime networks, and more accurate monitoring of commercial activity itself.
Like many Indians living abroad, Mr. Karnawat in New York built up a stash of rupees through decades of trips back home. “My family travels to India so often it doesn’t make sense to lose out on the exchange rate, the exchange fees when we’re going to be traveling back in a year again,” said Mr. Karnawat, who moved to the U.S. in 1996.
He says he can travel to India before year-end, or find someone traveling to India to exchange the bills for him. But even these paths are ridden with obstacles. Indian banks have stopped exchanging the bills and are now only accepting deposits. Lines often stretch for hours.
Attempts to deposit large amounts could bring tax consequences or legal problems.
Mr. Agrawal in Chicago grew so frustrated with the lack of information about the ban that he sent more than a dozen tweets to India’s central bank, financial minister and the Indian consulate in Chicago.
No one responded, he said. Many Indians have taken to using the hashtag #whataboutNRIs, referring to nonresident Indians.
Gaurav Agarwal, a New Delhi native who now lives in Canada, said he was told by a representative of his Indian bank to mail his C$200 worth of rupees to India for deposit. That “didn’t solve the problem either as currency bills can’t be sent through courier,” he said.
He too began blasting Indian officials on social media, which he acknowledges isn’t the best mode of communication. “But I have no other option left,” he said.
In the Jackson Heights neighborhood of Queens, Shaikh Abdul Hai has searched for weeks for someone traveling to India by year-end to exchange about $300 worth of rupees for him.
“Of course it’s painful to lose the money, I’m a working man,” said Mr. Hai, who works at India Sari Palace, a retailer situated on a block dotted with curry houses and shops known as “Little India.”
Source: wsj.com