01 The Hour
Midnight
Tuesday 8 November 2016, into Wednesday
The 500 and 1,000 rupee notes of the existing series stopped being legal tender at midnight. Together they accounted for about 86 per cent of the currency in use.
The Reserve Bank's circular had gone out to bank chairmen that day. It made Wednesday a non-business working day, ordered every cash machine, deposit machine and recycler shut on the 9th and the 10th, and required each branch to count the withdrawn notes it held at that midnight, including the ones sitting inside its machines.
02 The Sequence
8 Nov Tuesday. The withdrawal is announced in a televised address. The gazette notification and the Reserve Bank circular carry the same date.
9 Nov Wednesday. A non-business working day. Branches open only to prepare. Every cash machine, deposit machine and recycler is shut for this day and the next, and the withdrawn notes are called back from the machines, from the cash-in-transit companies and from the business correspondents attached to each branch.
10 Nov Thursday. Branches resume normal operations and open exchange counters. Exchange over the counter is capped at 4,000 rupees a person against a requisition slip and identity proof. Counter withdrawals are held to 10,000 rupees a day within 20,000 a week.
11 Nov Friday. The machines are reactivated, reconfigured to disburse 100 and 50 rupee notes only, with the new series held back until further instruction. Withdrawals are capped at 2,000 rupees per card per day.
12 Nov Saturday. Reuters files from Dudko, a village about 75 kilometres south-west of Delhi, where villagers had crowded the gates of the single bank branch the previous day and were told the new notes had not arrived.
14 Nov Monday. A task force is set up under a Reserve Bank deputy governor to oversee recalibration of the machines. District central cooperative banks are stopped from taking the withdrawn notes from the following day; what they collected between 10 and 14 November was later treated as the eligible window.
21 Nov Monday. Farmers are permitted to pay for seeds with the withdrawn 500 rupee notes at government outlets, state seed corporations and agricultural universities, on production of identity proof.
22 Nov Tuesday. The Reserve Bank tells banks with currency chests to keep the district cooperative banks and rural branches supplied for the rabi sowing, putting the cooperative requirement at about 350 billion rupees at 100 billion a week, with a farm credit agency drawing on its own limits of about 230 billion. Around 40 per cent of the country's machines are reported recalibrated.
1 Dec Thursday. The working group's deadline of 30 November has passed. A machine maker puts the count at about 180,000 of roughly 200,000 recalibrated, at an average of about 12,000 a day, with the remainder expected over the following ten days.
30 Dec Friday. The exchange and deposit scheme closes at bank branches and Reserve Bank offices.
03 The Hidden Dependency
The circular says the new series has a different size and design. Inside a cash machine the notes sit in cassettes, trays fitted to the dimensions of a particular banknote, and a tray cut for one note will not feed another.
So the machines came back on 11 November dispensing 100 and 50 rupee notes only, and the new series was held back. A task force was formed on 14 November, with a working group of machine makers, cash-in-transit firms and service providers under it and a deadline of 30 November for the whole estate.
The work ran at around 12,000 machines a day. Recalibration also changed what a machine could hold, from roughly 500,000 to 600,000 rupees in 100 rupee notes to about 5 million.
The switch could not be thrown centrally, because the constraint was the size of a tray inside each machine.
04 What Still Worked
The Non-Cash Rails
The circular placed no restriction on cheques, demand drafts, credit and debit cards, mobile wallets or electronic transfer.
The Small Denominations
The 100 and 50 rupee notes were untouched, and the machines were reconfigured to dispense them from 11 November while the new series waited.
The Exempted Counters
For 72 hours after the notification the withdrawn notes could still be used at government hospitals, government bus stands, railway ticket counters and airports.
05 The Document
The Document 8 Nov 2016
Circular DCM (Plg) No.1226/10.27.00/2016-17, from the Department of Currency Management on the fourth floor of Amar Building, Sir P.M. Road, Mumbai, addressed to the chairmen and chief executives of public sector, private, foreign, regional rural, urban cooperative and state cooperative banks. It sets the exchange cap, the counter and machine limits, and the shutdown of the machines. One internal detail: paragraph 2 puts the branch return deadline at 13:00 on 10 November, and the annex carrying that return is headed 13:00 on 9 November.
06 The Pattern Library
1
When one retail withdrawal channel closes or fails, demand concentrates on whichever channel is left open, and the capacity of that channel sets what a depositor can obtain.
Observed: Northern Rock 2007, Cyprus 2013, India 2016.
2
A currency replacement can require physical modification of each cash dispensing machine before the new notes can be issued, so the machine estate returns to service site by site rather than at once.
Observed: India 2016.
Changed today: Entry 1 gained India 2016, where the machine network was shut by order on 9 and 10 November and the exchange demand went to branch counters, and where district central cooperative banks were stopped from taking the withdrawn notes from 15 November. Entry 2 added, on the physical refitting of each machine for notes of a different size.