NEW DELHI: Banks in New Delhi today [Aug 27] reported a run on bank notes of small denomination following rumours that the Government may demonetise one-hundred rupee notes to foil hoarders of “black money”. One of the city’s privately owned banks ran out of Rs 10 notes yesterday and officials of the state-owned Reserve Bank said they were short of the ten-rupee notes. Officials said the demonetisation rumours were not true, and there was no cause for panic.

The demonetisation rumours had gained ground in the past few days following raids by Finance Ministry officials on the homes and bank lockers of film stars in Bombay which had been taken as an indication of the Government’s determination to root out vast sums of “black money”. Finance Ministry officials said in Bombay yesterday that more than Rs 30 lakhs in Indian and foreign currency, gold bars and gold sovereigns had been seized in raids on homes and bank lockers of nine Indian film stars. “Black money” — money which does not figure in any accounts and is therefore not declared for income tax — is partly blamed for the present food price spiral in India as some people are believed to be using it for speculation in food grains.

Published in Dawn, August 28th, 2014