Canadians scramble to cash in rupees ahead of India’s deadline

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A man walked into an office in a labyrinthine Mississauga industrial park and pulled out a small stack of 1,000 Indian rupee notes. He handed them to Jagraj Sidhu, a Punjabi TV and radio producer who has recently been moonlighting as a currency trader. Mr. Sidhu counted them out onto the veneer receptionist's desk (there were eight bills in all), punched some numbers into a calculator and showed it to the man: He'd buy the 8,000 Indian rupees for $80. The man shook his head, annoyed, tucked his bills away and walked out of the office, a gust of cold air sweeping in as he pushed open the door.

Mr. Sidhu, his hair slicked back with gel, adjusted the gold chain around his neck and shrugged. He knew he was offering a bad rate (8,000 rupees is in fact worth about $160) but it was Dec. 23 and in a week, those bills would be useless. He knew people were desperate to offload them. And where there's desperation, there's opportunity.

On Nov. 8, 85 per cent of India's currency was taken off the market with a surprise announcement from Indian Prime Minister Narendra Modi that 500 and 1,000 rupee notes (respectively worth about $10 and $20) were now useless. A deadline of Dec. 30 was set for Indians to deposit their old bills in their bank accounts. It was a dramatic move to eliminate black money and counterfeit notes that has caused nothing short of chaos in the cash-based society. The economy has taken a hit and hours-long lines are the norm at banks, causing inconvenience for the well-off and devastation for the country's poor, many of whom do not have bank accounts or access to banks.

The decision has rippled across oceans, affecting those who travel regularly to India and tend to keep rupees on hand, including the 1.2 million of Indian origin in Canada. Many have begged relatives and friends travelling to India to deposit their holdings for them. Others hope they can change over their money in the new year at one of a handful of Reserve Bank of India offices in that country before a March 31 deadline, a process that is much more complicated than going to a regular bank.

And then there are those such as Mr. Sidhu, who have identified business opportunities in demonetization.The morning after learning that 500 and 1,000 rupee notes were no longer valid in India, Torontonian Lorna D'Souza rushed to her local State Bank of India branch in the city and tried to get her wad of bills – worth 50,000 rupees ($1,000) – changed over to Canadian dollars. The bank teller refused. So did a currency trader.

"They said, 'We are not taking because nobody is buying,'" she recalled.

No Canadian banks or Canadian branches of Indian banks have accepted the notes since Nov. 8. The Indian consulate in Toronto has reportedly been swamped with calls from Indo-Canadians about what to do with their now invalid bank notes, but a representative said, "We don't have any information from our ministry about these notes."

Ms. D'Souza had such a large amount of cash on her because she travels with her husband to Mangalore, on India's southwest coast, annually for three-month stretches. It is regular practice for her to take out a large sum of cash when she's leaving so that once she arrives, she can skip a visit to the bank and pay rent on the condo she leases and also have some spending money.

She had already planned a trip to Mangalore in January, after the deadline to change their money has passed, but she'll be rerouting and staying in a hotel in Bangalore (an hour's flight from Mangalore) for a few days, simply so she can visit the Reserve Bank of India office in that city and not see her 50,000 rupees go to waste.

"My husband is saying he doesn't want to. He's not bothered. But me? I said, 'No, it's the principle,'" Ms. D'Souza said.

Manan Gupta hasn't travelled to India with his family since 2009, but the Brampton resident had stockpiled about 30,000 rupees ($600): A combination of funds left over from his last trip and from gifts relatives had given his children.

Not wanting those funds to go to waste, Mr. Gupta turned to his network of Indian friends and family spanning half the globe to help. Two in Brampton agreed to carry 15,000 rupees apiece to India with them. After they land in Delhi, Mr. Gupta's relatives will meet them and bring the money back to Punjab, where they live, to deposit it in their own bank accounts.

"Due to the deadline, everybody was trying to find every person travelling to India. 'Please take some of ours!'" he said.

Those not lucky enough to find a mule for their cash have other, more questionable options.

Mr. Sidhu, who advertised his rupee-buying services on his Punjabi TV station – Mehak – and on Kijiji, received many calls from interested sellers.

"It's a friendly service. Why not?" he said. He plans to deposit the money in his own Indian bank account when he travels to the country in the new year.

Last week, Ashok Jewellers in Mississauga advertised on local radio in Brampton and Mississauga that it was accepting payment for jewellery in 500 and 1,000 rupee notes but when reached by phone Monday, an employee said the store had stopped the practice on Friday.

Mississauga resident Chitra Gulati caught herself on the receiving end of the desperation to change money before it loses its value when she was visiting Delhi in November.

One friend in Toronto, who had taken 8,000 rupees back from Chennai on her last trip, had sent that cash to Delhi with a friend, who then passed it on to Ms. Gulati. Ms. Gulati tried and failed to deposit it in her friend's account.

She tried to put it into her own account and withdraw the amount in valid bills but couldn't do that either, since the Indian government imposed weekly withdrawal limits of 24,000 rupees ($480) and she'd already reached her limit for the week. Eventually, she had one of her sister's employees in Delhi change it for her.

She, as with many members of India's middle class, has applauded demonetization, saying it was time the government tackled corruption and black money, which makes up 20 per cent of India's GDP, according to a study by Ambit Capital Research released earlier this year.

After the 500 and 1,000 notes were made invalid, bags full of those notes, assumed to be counterfeit or otherwise illegally obtained, were found abandoned in garbage dumps, parks and other places across the country.

Local news reports have said the move has dramatically reduced incidents of sex trafficking and nearly eliminated counterfeiting, though others predict both will bounce back as time wears on.

The execution of the plan has made Ms. Gulati worried about what the future could hold. Before she boarded a plane back to Canada a few weeks ago, her sister tried to give her some 100 rupee notes "just in case." Ms. Gulati, now worried that those bills could also lose their value overnight, refused.

"Once, we burned our hands. I don't want to burn them again," she said.