What does India’s demonetization mean for tourists? (Plus tips to help you cope)

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.

india-suddently-scaps-500-and-100-rupee-notes-what-does-this-mean-for-travellers

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.

india-takes-historic-step-to-end-black-money

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

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

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 with  Western 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.

A supporter of veteran Indian social activist Anna Hazare wears a cap lined with fake currency notes while attending a public meeting by Hazare in the southern Indian city of Chennai December 18, 2011. Hazare, while addressing a public meeting on Sunday, said he was firm on his plan for an indefinite fast later this month if the government did not bring an effective anti-graft legislation in Parliament. REUTERS/Babu

Photo Credit: REUTERS/Babu

Read More:

I’ll update this page if I hear of any developments.

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

 

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59 Comments

  • Shubham Aggarwal says:

    I love your posts simply because I see in them a concern and love for my Country. Thank you Gg!

  • Hannah Meiners says:

    Just reached India yesterday. Looks like ATMs are mostly out of service or have long queues. Shops don’t have change so the new 2000 rupee notes don’t help much. It’s going to remain tricky here in Bangalore for some more time I’m afraid.

  • Scott Day says:

    It is an extremely difficult situation. Haven’t seen an ATM with cash in it yet. Today the queues at the banks were mind numbingly long in Delhi. I figure if the Capitol doesn’t have it sorted, the rest of the country must be far worse. There are over 100,000 atms in the country. That’s a lot of recalibrating.

    • Anna says:

      Yikes, thats not good news. I think all over the country is the same – no cash and it will go on for longer than first thought – its making it very difficult for tourists to pay for accommodation, transport and food etc. Even changing foreign currency only gives me the old currency 🙁

      • Shubham Aggarwal says:

        A little piece of info, yes the atm’s are crowded, but if you could simply request a person nearby the ATM booth to allow you before him/her, I’m sure people won’t mind much in helping foreigners. You Could try.it will help.

  • Nina Thomas-Bennett says:

    We (myself,partner &2kids) are in arambol. We arrived 8th so had no idea what we were getting into. Managed to get enough rupees for a cab and to pay for our accommodation for 2 weeks but that is drawing to a close and we’re down to our last 300 😔 Can’t help but feel a little concerned. The ATM are all empty and after waiting in at bank for 3 hours were told that we wouldn’t be getting anything! Any advice would be gratefully received 💚

    • Anna says:

      Yes I haven’t had much luck with ATMs – they don’t seem to have any money. I’ve been changing foreign currency (they give in old notes and then you have to go to the bank and change them but its something. Good idea to keep your receipts will make changing the old money easier if they ask questions. Hope it helps.

  • Prabhu D says:

    Good one for the Travelers 🙂

  • Sharon Dobson says:

    Today in Bomdilla managed to get 15,000 rupees in 2,500 x 4 times withdrawals. Had to wait in pushy queue for couple of hours! Enough money to pay bills and get to Guwati and ticket already bought for Delhi. Planning g on flying to Goa Sunday hope this isn’t a mistake!

  • Hannah Meiners says:

    How many of you were successful at ATM´s? And how much were you able to withdraw? There is so much different information out there, and I´m wondering how to plan my next weeks…

    • Anna says:

      I havent had much luck with ATMs plus my card charges me alot for every transaction – I’ve got some foreign currency (dollars, pounds, euros) that I’ve been changing but they are only giving the old notes so I’m trying to split them at petrol stations etc where they are accepting old notes and changing them in the bank

  • Sharon Dobson says:

    No I went independently and stayed at guesthouse at monastery in Bomdilla and then went on pilgrimage with one of the monks to Tawang district and stayed a week up there. I did meet Sange at Bomdilla though which was good as we are FB friends for a couple of years now……

    • Sharon Dobson says:

      actually gentleman at bank (0ver cup of tea) told me foreign cards maybe able to withdraw more thank goodness he told me that as I would have only tried for 2,500!

  • Handy to know as we will be coming over in just a few weeks 🙂

  • Try to travel in cities only, in rural areas you will face exchange problem n no card swapping machines to pay through cards

  • Sara says:

    I’ll be traveling in India for the first time this January and February, so I’ve been watching this story unfold closely. How willing are Indian hotels, tourist sites, and restaurants to accept US currency? I’m wondering if as a back-up plan I could pay in US cash? Any thoughts?

    • Anna says:

      I don’t know, I haven’t tried. I think that the problem is that there simply isn’t enough legal tender/ cash printed and all the ATMs are running out of money so its better to have anything rather than nothing. I think bringing dollars is a good idea, the hotels may not accept it but you can at least change it into rupees (often old money and then have to go to the bank to change it) but its better than nothing. That’s what I’ve been doing – changing dollars to old money and then changing into new money. Hopefully the situation will improve by the time you come though as the deadline for exchanging the old notes is 30 Dec although the first few weeks of Jan might be difficult too if they have still not printed enough money to keep up with demand.

  • No they didn’t mention tourists. They also related it to the story of the lavish wedding in Bangalore. The journalist said that although there were queues everywhere most people agreed with the policy.

  • causing a fair bit of stress – off to andaman islands in a couple days and need enough cash for 3 weeks – not easy at all!

  • Malliga says:

    Travelling to India in 4 days time on holiday booked a month ago. Had already changed local currency into rupees (obviously 500 and 1000 rupee notes). All this before the smart alec of a Minester dropped a bombshell. Even the joy of going on holiday is gone. If haven’t paid for package would definitely cancel the trip. Forgot the 4 or 5000 rupees that can be changed a day. Are we going on holiday on a tight schedule or to stand in queues every day to exchange currency?

    • Anna says:

      Yes its a real inconvenience for tourists and those without an Indian bank account and the timing sucks. At least you have paid for most things so you won’t struggle to put a roof over your head! By the way, you can now only change 2,000 rupees in the bank but you might be able to change more at the airport when you fly in – thats what I would try. Hope you still manage to have a nice holiday!

  • Lokesh says:

    I would recommend people traveling to rural areas to stay put till end of December if you can. I would say the same for those that are traveling on a low budget as most small businesses are not yet equipped to deal with card transactions (Not the governments fault here. They were given ample time to set it up and its difficult to change this cash culture in India. So this hard dose was much needed albeit some sufferings that ensued). Also You should be able to do fine in big cities as I saw many establishments (Even mid sized businesses) accept cashless transactions during my last visit there. If you have friends from India who live in your home country, contact them and they should be able to help you out to a certain extent.

    • Anna says:

      Thanks for your tips Lokesh, yes rural areas may be more difficult due to the lack of cash at the moment and budget travellers are most affected. Hopefully people can still find a way to enjoy their holiday and that this will lead to a better India in the long run.

  • Andrea Kirkby says:

    This is a disaster for the budget traveller in India for a month or more. Every time I use a credit or debit card my bank charges me between 200 and 600 rupees. On 2,000 rupees, the charges are crazily high. Usually, I get out about £100 worth of rupees at a time. Besides, if I am travelling in Ladakh, I need money for maybe six or seven nights at a time without having access to an ATM.

    It’s okay for people staying in five star hotels of course. But I’m afraid demonetisation will hurt badly my friends running small, cash-only guesthouses. Frankly, if Modi wants decent demonetisation, he needs to look into using smartphone payment systems – yes, lots of Indians have smartphones. No, they don’t all have credit cards.

    • Anna says:

      Yes, totally relate to you on this. It’s been really difficult for everyone, both Indians and travellers, and it makes it harder that most places, especially budget places, in India do have the facility to take card payments. My bank also charges me a crazy amount every time I take out money too – so I used to do the same as you and it’s making things very difficult and expensive. You’re right, many Indians do not even have bank accounts, although PayTM is a mobile wallet that people can use but I don’t think you can get an account without an Indian bank account sadly. Hope you still manage to enjoy your trip despite the money problems.

  • Bruce McC says:

    Hello, we have arrived in Mumbai on the 22nd to pretty much chaos. Been here for 1 week and the allowances for withdrawals at ATMs has actually DECREASED from 2,500 to 2,000. You can use your foreign card multiple times in the machine but get hit with a 400R charge for every 2000 you take out.

    We are looking at the possibility to have to walk away from our 3 month long budget overland trip here in India because of this. We have only been able to stay In upmarket 3 star hotels as the other budget ones don’t take card, we can only eat at more established restaurants because the markets don’t take cash.

    There is no option to be a budget traveller in India right now. Our plan was to buy a pair of used bikes and motorcycle around India. But how can you pay for a 50,000 rupee bike if you can’t even get 2000 out a machine to buy food and water. We went to 30+ atms in the city today and we’re met with more ‘out of service’ signs than I care to remember.

    Pure and simple there is 1.3 billion Indians, and barely enough cash for half of them. Western tourist or not, there are no privelages here for you. We have stayed upbeat for 7 days but as the cash runs dry and our total time spent in queues tips from hours to days, we think we have to bite the bullet and get out of India til next year when the government can regain control of the situation.

    Frankly, India doesn’t deserve your foreign cash right now. I feel sorry for the Indian people, I feel more sorry for the tourists and travellers who walked into an economic beartrap on the 8th.

    Thailand looks nice this time of year btw.

    • Anna says:

      Hi Bruce, thanks for letting us know your experiences. Yes its a difficult situation in India at the moment and especially difficult for budget travellers. Everyone is spending too much time in queues at ATMs and spending alot of money on ATM fees. It’s really hard for tourists and it’s such a shame that this has ruined your trip so much 🙁

  • Hanna says:

    Hello, I read all the comments here and got really concerned about my holidays in Goa next week, flying in on Sunday 4th Dec. Can someone please give me a piece of advice what should I do straight after landing and what to expect, is the situation getting better or worse every day?
    My hotel is paid online in advance, I just worry about getting money for taxi etc. there are many different comments and not sure whether it is better to carry foreign cash or just use debit card as much as possible?
    thank you!

    • Anna says:

      Hi Hanna, I haven’t been to Goa airport in about a month so I’m not totally sure what is going on, the ATMs in Goa sometimes have cash but not all the time. I think you should bring foreign currency, try to change at the airport or use the ATM if there is cash. If not maybe you will see an ATM on the way, you don’t have to pay for the taxi until you reach your destination or maybe they will take foreign currency. It’s a difficult situation but in the big cities things are starting to get better now and I would assume that they would make it a priority to provide cash at the airports. Fingers crossed for you and hope you have a nice trip.

  • Melinda says:

    I’m coming to India from the states on Dec. 22 for a little over 2 weeks. I bought my airline tickets in August so I definitely didn’t know this money problem was going to happen. I have an Indian friend in Goa who has assured she will help me my 5 days there. But most of my time will be in Bombay. I paid for an Airbnb room a couple months ago by credit card so that’s not an issue. I have an Indian friend in Bombay who is willing to help me get Rs. 2-3,000 in small bills. Aside from that does Thomas Cook bank still accept Travelers’ Checks? They accepted them 2 years ago when I visited Bombay but they are no longer accepted in Nepal where I also visit every other summer. And when I bring dollars do I bring a lot of one’s, five’s, ten’s for small purchases (aside from 100’s to exchange in banks or airports)? Of course I will bring my debit cards and a credit card. Any advice will be appreciated.

    • Anna says:

      Hi Melinda, Sorry that the money situation is still a bit difficult in India, although I think in the big cities things are getting better but most of the ATMs are still shut in Goa. Great that you have an Indian friend to help you out and you’ve already paid for your accommodation. I’ve never used travellers checks so I don’t know about that one sorry. You could bring small denominations of dollars as a back up and try to use your debit card wherever possible but in Bombay you should be able to find an ATM with cash – just allow a little more time to try a few. Hope your trip goes well and happy travels 🙂

  • Emily says:

    Thank you for the informative post. Has access to cash improved? My husband and I plan to visit the Golden Triangle and the southern coast of India before heading to Sri Lanka mid-January 2017. Are you still there and what’s your experience with low cap ATM withdraws, long lines and cash access? Thanks!

  • Bob from Canada says:

    We changed as many US$ as were able to, $50 each for four people, in Mussoorie at an ISISI branch. It took almost three hours. There was only one person there when we arrived and most of time we were the only ones in the bank. We must have signed a dozen or more documents. I was waiting to be turned into a cockroach, Kafkaesques indeed.

    • Anna says:

      Hey Bob

      Yes, it takes a while doesn’t it! India really teaches you the art of patience and dealing with unexpected things!

      Hope you enjoyed your trip anyway 🙂

  • Suzie Blundell says:

    Hi – this has been really interesting to read but also very worrying – my heart goes out to everyone effected. What a crazy situation to be in!! With the comments stopping in December am I hopeful in thinking that now and moving forward everything is ok for tourists getting money? I am flying into Delhi on the 19th of Feb and want to be prepared. Any advice or am I worrying about nothing?

    • Anna says:

      Hi Suzie

      Sorry for not being able to respond sooner – the situation has gotten alot better over the last few weeks and I think in the big cities like Delhi things should be almost back to normal now but its probably a good idea to allow a bit of extra time to make sure you plan ahead and use the ATM when you can so you don’t run out of cash.

      Hope you have a good trip 🙂

  • Kat says:

    Hi there, any news on the current situation, please? 4 of us are going to India on the first of March for 2 weeks. We will be mostly staying in Kochi and Goa, with 1-2 days in Mumbai. Has anyone had any experience regarding these areas and what is the exchange situation at the moment? Will be thankful for advice.

    • Anna says:

      Hi Kat, things have got better, you can now take 4,500 rupees out of the ATM and change £60 at the airport. I think in the big cities things are kind of back to normal but in Goa some of the ATMs are still a bit short on cash so best to get as much cash as you can whenever you can and bring some foreign currency too although the rates are not good. Hope you enjoy your holiday. 🙂

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