Indian Prime Minister Narendra Modi has announced that the 500 ($7.60) and 1,000 rupee banknotes will be withdrawn from the financial system overnight.

The surprise move, announced on Tuesday evening, is part of a crackdown on corruption and illegal cash holdings.Banks will be closed on Wednesday and ATM machines will not be working.

India is overwhelmingly a cash economy. New 500 and 2,000 rupee denomination notes will be issued to replace those removed from circulation.

"Black money and corruption are the biggest obstacles in eradicating poverty," Mr Modi said.

People will be able to exchange their old notes for new ones at banks over the next 50 days but they will no longer be legal tender.

The announcement prompted people across the country to rush to ATMs that offer 100 rupee notes in an attempt not to be left without cash over the next few days.

Government guidelines say it is possible to exchange 4,000 rupees - but it is not clear if this is per day or in total.Critics say the new rules may make it especially difficult for people who choose to keep their cash at home rather than in a bank account and for people with large rupee cash reserves who live abroad.

If there is a legitimate explanation for the cash, the authorities say, it will be possible to exchange it.

To read the complete article, see:
India scraps 500 and 1,000 rupee bank notes overnight(www.bbc.com/news/business-37906742)

When Prime Minister Narendra Modi announced on prime time TV Tuesday that bank notes making up almost 90% of the value of currency circulating in Asia's third-largest economy would become worthless paper within hours, he stunned a cash-loving nation.

He also drove bankers back to the office.

"It was like watching a bomb drop," said Rajnish Kumar, a managing director at State Bank of India Ltd., whose job includes running the network of branches and ATMs at the country's largest lender. "I rushed back to the bank and set up the war room."

To read the complete article (subscription required), see:
Banks and Businesses Rush to Adapt as India Moves to Replace Notes(www.wsj.com/articles/banks-and-businesses-rush-to-adapt-as-india-moves-to-replace-notes-1478700967)