Prime Minister Narendra Modi announced in a surprise address to the nation that from today currency notes of Rs 1000 and Rs 500 would be scrapped. He said, "You have 50 days (from 10 Nov to 30 Dec) to deposit notes of Rs 500 and Rs 1000 in any of the Bank and Post office."
Notes of 100, 50, 20, 10 and coins of five, two and one rupee remain legal tender and will be unaffected by the decision. The PM also said that all banks and ATMs will be closed on Wednesday.
This scrappage of notes will have a consequential short-term impact on the sales of automobiles. Because there are still many customers who purchase cars in cash. Most of the dealers are worried about the booking amounts which are paid by the consumers in cash.
Industry experts have said their opinion about how this scrappage can affect the auto industry. Abdul Majeed, Partner, Pricewaterhouse said, "SUVs and luxury cars to have an impact on sales in the short term. However, on the longer run, there would not be much effect. However, it would not have much impact on the small cars.
"Reserve Bank has decided that on November 9 all banks for public purposes will be closed. New notes for Rs 500 and Rs 2000 will be brought into circulation. After the introduction of new currency notes, RBI will take steps to contain the amount of currency in circulation."
Nikunj Sanghi, Managing Director, JS Four Wheels said, "The customers who have planned their purchases in November will shift their purchase to next month. There will be an impact on November sales, as people who used pay the margin money and booking amount in cash have to wait for some time."