The move, Modi said, is aimed at curbing the menace of corruption, black money, counterfeiting and terrrorism
In a surprise announcement on Tuesday, Prime Minister Narendra Modi said Rs 500 and Rs 1000 currency notes would be scrapped starting midnight.
Such notes will need to be deposited with banks or post offices before December 30, 2016. Those who miss the deadline can deposit such notes along with a declaration at designated offices of the Reserve Bank of India by March 31, 2017. Such notes can only be deposited against production of government issued identity cards, such as PAN cards, passports, Aadhaar cards, and such as ration cards.
Instead, the government will issue new Rs 500 and Rs 2000 notes.
In his 40-minute address, the prime minister said that the Rs 500 and Rs 1000 notes will be 'just worthless piece of paper'. However, all banks and ATMs will stay shut on November 9th and on November 10 in some places.
Non-cash payments like, Demand Draft, Debit/Credit cards, Electronic Transactions will remain unaffected.
Withdrawals will be limited to Rs 10,000 daily and Rs 20,000 weekly until November 25. From November 25 to December 31, the withdrawal cap will be revised. ATM withdrawals will be limited to Rs 2000 daily and will later be expanded to Rs 4000 a day. The limit will be gradually eased as the money supply increases, Modi said.
The move, Modi said, is aimed at curbing the menace of corruption, black money, counterfeiting and terrrorism; these denominations are among the most counterfeited.
The PM also said there would be restrictions on daily and weekly restrictions from bank ATMs.
For the next 72 hours, these denominations will continue to be accepted at state-run hospitals, airports, bus stands, railway stations, petrol/diesel/CNG stations, milk booths, crematorium, burial grounds , and ration shops.
Families of patients will also be able to purchase medicines against prescriptions for the next 72 hours through November 11.
BJP president Amit Shah said: “We feel proud of PM Narendra Modi ji's surgical strike against black money and corruption. His decision to discontinue Rs 500 and Rs 1000 note will immensely help in eliminating corruption. On behalf of all BJP karyakartas, I compliment the Central government and the PM for taking tough but timely and path-breaking measures.We can no longer let corruption and black money slow down our development journey. We must create a prosperous India for future generations. The elimination of black money will help boosting the development with justice.”
Congress raised several questions over government's "sudden" decision to withdraw from circulation notes of Rs 500 and Rs 1,000 denomination and expressed apprehension that it could create a lot of problems for traders, small-time businessmen and housewives.
Party chief spokesperson Randeep Surjewala, however, made it clear that the party would always support "meaningful, specific and pointed" steps to unearth black money.
He also sought to know if the Prime Minister has brought this scheme without giving much thought just to cover his "failure" to bring black Rs 80 lakh crore black money stashed abroad and deposit Rs 15
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 "A sample of the new Rs 2000 currency note")
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