Money in India

Money in India: Overcoming the Chaos of Demonetization


Tuk-tuks and shopkeepers passed by the road in front of the outdoor patio of Coffee Temple Café. It was one of our favorite breakfast spots in Varkala, a cliff-top beach village at the southwest coast of India.Troy and I finished our Masala Dosa breakfasts, a crepe-like dish rolled and filled with spicy potatoes. We sat there and lingered a little longer as we sipped on our coffees and admired the views of the Arabian Sea.  I shared my plans for the day with Troy, and we agreed that we both needed a productive morning working back at our room in the Mango Villa guesthouse.

Little did we know that the calm day was about to change.  

Troy grabbed the receipt out of the billfold that arrived at our table. He reached for a 500-Rupee note from his wallet as we got up to pay at the front entrance.

The woman at the front counter said, “I can’t take this.”  “Sorry,” Troy said, “We don’t have any smaller bills.”(This is a typical challenge in India; small bills  and cash only are the norm here.)

“No!” she answered back, “didn’t you read the paper this morning? This 500-Rupee note is no longer legal!”

We looked at each other dumbfounded, while she passed over the paper. Skimming the front page, the news said:


On the evening of November 8th, Prime Minister Narendra Modi made a startling announcement just hours before this change came into effect. Money in India was about to become inaccessible.  All 500 Rupee and 1,000 Rupee notes were deemed worthless.

Of course, we had tons of questions that couldn’t be answered at that point.  And we knew we had to research this once we got back to our guesthouse.

“Can we pay with credit card then?”  Troy asked,  knowing the answer would be no, but asked anyway. He suddenly remembered that we stocked up on 500 rupee bills after a visit to the ATM two days prior. “No we don’t — cash only,” she responded

Clearly, we looked frustrated upon hearing this news for the first time, considering we also just ate a meal at Coffee Temple while unaware of this issue before we ordered our meals. After debates with the cashier were exchanged back and forth, the manager came by and accepted our note,  probably realizing this would be the only option to get paid.

This encounter was the start of several weeks of mass confusion about money in India as the government made this bold move to stop two currency issues.

1. Stop black money

This is money in India that has evaded tax and believed to be mostly tied up in real estate and gold. Its total worth is in the billions.

2. To eliminate fake currency with new and better counterfeit-proof bills.

Their solution?  Withdraw 500 rupee and 1000 rupee bills out of the market quickly, then replace with a new 500 note, eliminate the 1000 bill, and create a 2000 rupee note.

However, EXECUTING this plan has proven to be the biggest challenge.


One of the hundreds of line-ups at ATMs around Bangalore

The new notes are slow to come into the market. For now, they are replaced with 100 rupee notes. As a result, there is a massive money shortage all over the country. More money is getting printed and distributed, but this is happening very slowly. ATM’s also need to be recalibrated to accept new 2000 notes. (that are smaller in size)

This change has an immediate impact for locals and tourists in India right now because:

1. A very large proportion of business transactions in India is ONLY in cash.

Cash is king. Using any other form of payment is tough. It is a cash society unlike North America, Europe or Australia. Credit card machines are expensive; banks often don’t accept foreign credit cards, and debit card banking is not the mainstay. That is not to say that these services aren’t available because they are available in larger cities. (Although India 76% of India’s population is rural)  These cards, as well as India’s PayTM – a debit system that works much like Apple Pay, is most frequently used in the main centers like Delhi, Bangalore, and Mumbai.

Money in India

A full page ad from the banks to encourage use of PayTM cashless system

Interestingly, this move still encouraged banks to advertise their PayTM system in the national papers’ front page or full-page ads. Whenever I ask shopkeepers about its use, they would just laugh it off as though I was silly to assume this was working in their part of the country. But in a country of 1.3 billion people, India certainly doesn’t have most of these systems in smaller and remote areas. We only discovered this all too well when we visited Kerala in Southern India.

2. The second challenge is breaking larger bills into smaller denominations because most transactions involve tiny amounts of cash.

While 500 Rupees (7.30 USD) can buy dinner for two people, a bottle of water, on the other hand, will only cost 20 Rupees (0.29 cents USD), or bananas only amount to 30 Rupees (.40 USD). Given this, it’s hard to find any shop that has enough bills to change a 500 note.

What’s even more questionable? The 1,000-Rupee bill was taken out of the circulation, only to be replaced by a 2,000-Rupee note. It was a challenge having it changed anywhere other than a western-style department store in Bangalore.

Money in India

Queue for the bank – the same situation anywhere we traveled in India

Back at our guesthouse in Varkala, we didn’t have enough cash to pay our  Cash –only guesthouse room before we checked out.

The day after the news broke, banks announced they would be accepting the 500-Rupee notes up until December 31st.  This was good news for us since it meant that our wad of notes was no longer considered invalid. Still, we needed to find exact change as much as possible (since there was a lack of supply of bills for everyone)

The extension allowed us to continue to deplete our notes quickly without issue.  We were still short on cash to pay our hotel since most banks closed to reorganize their system after this change.

The solution for our hotel: credit card payment through another business. Fortunately, the owner negotiated with her hotel friend to use his credit card machine, and subsequently, he would pay her back.

Back to our cash on hand. We still didn’t have enough money to leave Varkala and travel further south because:  

  1. The ATMs closed for two days to recalibrate their machines to allow 100-Rupee notes only (as soon as the new 500 and 2,000 notes become available they would be added to the machines).
  2. When the banks opened again, they set a cap of only 2,000-Rupee maximum withdrawal per day(which is now 2500 rupees). This amount is equivalent to 29 USD –just enough for 1.5 nights or less in a hotel (depending on your spending habits)
  3. THEN, to make matters worse, many banks were still closed, as they didn’t receive enough cash in their machines.
  4. This led to a lot of the ATMs running out of cash early on due to the queues of people wanting to withdraw their money.

Does this sound complicated?

We played ATM merry-go-round for several days in Varkala, walking from one machine to the other, in hopes of seeing lines of people, which would mean they likely had cash, but hoping by the time we got to the front; there was enough money for our 2000 Rupee ration.


Surprisingly, we did have some fun that came out of this inconvenient and frustrating situation:

There were fun exchanges with many locals who were dealing with the same effects of the new rupee notes.

For instance, we walked out of one of the ATM rooms and said “sorry no money” to a group of locals crowding around waiting to witness some reaction about our withdrawal success. We shared a connection, each of us gesturing funny faces and gesturing “Isn’t this crazy!” with knowing looks and laughs.

Or the time when a man decided to check if his card might work instead of ours hoping that the lack of withdrawal was due to a foreign card, and was working for  Indian bank cards. He laughed as he left the ATM without any money and said: “I guess we all have the same problem!”

Let’s just say this experience has been a setback – with an impact on people in mass proportions!  

Now, three weeks later, limited cash is still a major issue.  ATM line-ups are long; cash is depleted quickly (despite a 2,500 rupee cap per person)

Shops and vendors are feeling a big brunt of the pain. As people decide to spend their few bills on essentials. (Food, shelter – not toiletries and clothing).

We met up with two girls who decided to walk over two hours to their destination instead of taking a 15 rupee bus trip, to save their cash on ‘essentials.’

The government claims the change will take at least until the end of December. For now, we stay calm, looking for options each time we need to pay for something.

As to whether this move will stop black money and counterfeit transactions, it’s hard to say, and the news reports aren’t optimistic.

If you are are heading here, a few tips to help you get money in India

  1. Bring extra US dollar, British Pound or Euro – If bank ATMs are out of money, perhaps you can exchange money. The airport currency exchange counters seem to be well stocked. This will cost more in exchange, but at least you get cash.
  2. Book hotels with and – you can find out if any location accepts credit cards by using these websites.
  3. In the major cities (Like Delhi and Bangalore)Use your Uber account for cab rides as this saves you in cash. Find out if restaurants accept credit cards. You have a much better chance in the major cities.
  4. Ask when cash will be available – Bank ATMs often have a security guard /staff at the booth. Ask them when the cash machine will be filled so you can plan to wait around that time. Hopefully, it’s sooner than expected.
  5. Indian Railways Bookings online – You can pre-book E-tickets for trains with a credit card, as long as you are preauthorized by IRTC. Be forewarned because foreign credit cards don’t always work. In case they don’t, you will have to buy from a travel agent (for a small commission, but would most likely have credit card services.)
  6. PayTM App – YOU can quickly register for the card, but as a foreigner, you can’t load the card. This is where finding some Indian friends can help you load it to make small purchases like

In cases where you don’t know whether an ATM has money in the machine or not:

  1. Carry multiple debit cards for different banks (emergency money) – That way your own bank security  is less likely to shut your transaction down if you have made numerous attempts to use a bank machine.
  2. Inform your bank of the situation They may question you for multiple transactions for the same amount (if at that time the government still has a rationed 2,000 Rupees per transaction.)
  3. Patience! Plan to go from ATM to ATM and wait in lines if you need to!

For more resources and frequently asked questions about money in India you can find it here.

Does this change our view about India? No, we thank this country for being one of the greatest travel experiences we have had in our lifetime.

For more posts about India, you can find all our India posts here!

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About the Author Dorene

Dorene is a marketing consultant and freelance writer. She quit her 20-year career in marketing to redesign her career and lifestyle on her own terms by living location independent. Now with her husband Troy, she helps people who want to redefine their midlife and make conscious changes at TravelLifeX. She also trains & coaches travel and hospitality clients to improve their marketing at

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