British Columbia

Indian business owner in B.C. loses $12K over rupee cancellation

Indian business owners in B.C. say they're set to take a hit when certain rupee banknotes are demonetized in the new year.

Ateek Khan sold his soon-to-be-demonetized rupees to a wholesaler for less than half of face value

A man displays 500 Indian rupee notes in Ajmer, India, on Nov. 24, 2016. The notes will be demonetized at the end of the year. (Himanshu Sharma/Reuters)

Indian business owners in B.C. say they took a financial hit after being left stuck with soon-to-be-useless rupee notes.

Ateeq Khan, who works at Best Currency Exchange in Surrey, said his business has always kept the Indian currency in stock to sell to clients travelling east. 

He said he had about $40,000 Cdn worth of rupee notes when he found out that India would be demonetizing its 500 and 1,000 bills at the end of the year — meaning whatever he had in those denominations would be as good as paper.

Harish Kumar, director of Surrey's Canada Economic Exchange Centre, said he also stood to lose a large chunk of cash.

He told CBC News he had a "small stock" of the outgoing currency for buying and selling purposes, but declined to reveal how much.

In its announcement on Nov. 8, the government of India said the 500 and 1,000 notes were being withdrawn to help the country to combat tax evasion, corruption and money laundering amid a large amount of undeclared "black money" in circulation. 

New 500 and 2,000 bills are being printed instead.

Locals had until Dec. 30 to deposit the outgoing notes in banks or savings accounts. Chaos ensued as millions swarmed banks to get their money swapped before the deadline. 

For those with 500 and 1,000 rupee notes outside of the country, there were few options. The Reserve Bank of India (RBI) said they could authorize someone in India to deposit the bank notes into an account on their behalf, but didn't provide any other suggestions.

Khan said that wasn't an option for him as he doesn't have anybody overseas to make the deposit.

Even if he had, he said, getting that much cash from Canada to India would have been cumbersome. Non-residents of India aren't allowed to bring in any more than 25,000 rupees (or about $500 Cdn) into the country at a time.

Searching for other options

Khan said he emailed the State Bank of India (SBI) last month to ask about options to exchange the cash. Officials replied to say they were looking into the matter, but the businessman said he did not receive further direction.

Khan did hold onto one last possibility: shortly after the Indian government's initial announcement, the RBI had set a March 31 deadline for non-residents to bring the outgoing bills into certain "specified" RBI officers or other similar facilities in order to have the money exchanged.

However, the RBI's latest statements don't give a specific deadline. 

India has created new 500 and 2,000 (pictured) rupee notes to replace the soon-to-be-worthless 500 and 1,000 denominations. (Bal Brach/CBC )

CBC News contacted the Indian Consulate in Vancouver to clarify if there was, in fact, an extended deadline for RBI exchanges. Staff said they'd been advised not to speak to the media about the issue and directed inquiries to the High Commission of India in Ottawa.

A representative from that office said he had "no information" to provide about the notes or an extended deadline.

CBC's calls to the RBI were not returned. The SBI in Vancouver said it wasn't able to process the cash.

Khan said the lack of direction was frustrating.

"It's unfair," he said. "They should know that there are Indian rupees outside of India and they should have a policy for what to do — India is not a small country, and there's no policy? It doesn't make any sense."

Bills sold to wholesaler

Earlier this week, Khan sold his 500 and 1,000 notes to a wholesaler for 40 per cent of face value in an effort to salvage some money. He said he lost the equivalent of about $12,000 Cdn.

Still, he said it could've been worse.

"Today we're getting only 40 per cent of the value, but tomorrow it might be zero ... Something is better than nothing," the businessman said. ​

Like Khan, Kumar said he couldn't find any options to exchange and that his cash was going "down the drain."

Regardless, Kumar lauded Indian government for its decision to withdraw the notes.

"It's good for the Indian point of view ... there was a lot of black money over there that had to be dealt with," he told CBC.

"But for the people who are holding the small amount of Indian rupees, they're going to take a hit."

With files from CBC's Jake Costello and The Canadian Press