On the eve of the US elections, Prime Minister Narendra Modi announced a reform during a televised address to the nation that caused panic among the people. He announced that notes of Rs 500 and Rs 1,000 would be scrapped and become illegal after midnight of November 8.
The decision to demonetise these denominations comes as part of a larger move to capture black money and fake currency, and curb corruption.
He had also said that ATMs and banks would be shut for a day to get things in order, and that only hospitals, transport operators and petrol stations would accept notes of Rs 500 and Rs 1,000 until November 11.
For the rest, the only option was to wait until Friday to withdraw newly designed notes of Rs 500 and Rs 2,000 from ATMs (with a daily cap of Rs 2,000), or to use their cards.
Modi added that old notes of Rs 500 and Rs 1,000 will retain the same value, and can be exchanged at banks for new notes until December 30.
Chaos at ATMs, petrol stations
The immediate reaction to the announcement was inevitable: chaos. Long queues were formed outside ATMs at night, as citizens hurried to withdraw Rs 4000 in denominations of 100 multiple times.
The situation played out across India, including Delhi, Lucknow, Mumbai, Bhopal and others. Soon, ATMs ran dry, leaving people stranded.
Meanwhile, vehicles clogged up petrol stations, until petrol pump attendants allegedly stopped accepting notes of Rs 500 and Rs 1,000. Some reports say that petrol pumps were shut on Wednesday.
Toll gates also experienced heavy traffic on Wednesday.
Brands make the most of the situation
While people worried about how they were going to get through the next few days, some brands were opportunistic. Online food delivery app Box8 immediately sent out a push notification message saying that this was the last chance to order using Rs 500 or Rs 1,000 notes.
Ola, Zomato, Paytm, Freecharge and MobiKwik also joined the bandwagon, and reminded their customers and the public that they were open to online payments.
On the other hand, people began purchasing more gold to get rid of their old notes. According to reports, jewellers sold gold at Rs 40,000 to Rs 60,000 per 10gm, and marking these transactions as back-dated entries in their accounts.
The news of scrapping denominations, along with Donald Trump's nomination as the next president-elect, caused a steep fall in the Indian stock market the following day.