All About Estates

Demonetization – Dreams Become Nightmares

This Blog was written by: Gosha Sekhon

I recently visited India and thought I would share some interesting information. My family has travelled back to India on numerous occasions since my parents immigrated to Canada in the early 1980s. On this trip, we were surprised to learn about the federal government’s plan to demonetize certain currency notes.

In 2016, the federal government of India, led by PM Modi, took bold steps to curb the black market economy of the country. One main prong of their plan has been demonetization, including the RPN1000.00 bank note.

For those who have long kept “black money”, secretly stashed away from the government’s hands through a failure to declare income and business revenues, this step has had a major impact on their financial well-being. This has been for three reasons:

1) If they attended at a financial institution to exchange expiring bank notes for newly issued ones, documentation and explanations were required complete the transaction;
2) The government also limited the amount of funds that could be exchanged in any one transaction at a time; and
3) A deadline was put in place for the exchange of existing currency notes, after which they would become valueless.

The result is likely to be diminished financial legacies for such families. Estate administrators may be surprised someday to find out that the secret stash actually has no value.

For those individuals and companies that had been appropriately reporting income and sales figures, and properly paying their taxes all along, there was a minimal impact. In all likelihood, most of their funds were appropriately accounted for in bank holdings.
Another demographic [aside from individuals and businesses that had been purposely “hiding” money] which has been adversely impacted are the average wage earners, largely lower middle class, that have been putting together savings over the course of their lifetimes, For cultural reasons, this particular group is less likely to have used banks or other financial institutions to store their money, so these savings were largely held in cash.

For many in this demographic, these savings were their only “estate plan”, meant to assist family with future large scale events (education, weddings) and to be passed onto their heirs on the death of the primary wage earner. Those dreams, to put it mildly, have become a bit of a nightmare for many. A sad, and largely overlooked, effect that the government’s plan has had.

About Paul Fensom
Scotiatrust offers a full range of estate, trust and philanthropic advisory services designed to meet a client’s personal objectives and designed to evolve across a variety of life stages and financial events. Email:


  1. Andy

    March 16, 2017 - 1:59 pm

    Well Written Gosha.

  2. Joseph Taylor

    March 16, 2017 - 3:56 pm

    I have an old friend who buys small gold coins which he hides in his house, in anticipation of such events. Alas, my efforts to convince him to rent a safety deposit box or (better still) buy investments which yield a return fall upon deaf ears.

  3. Ravishankar

    March 16, 2017 - 4:24 pm

    This is not completely true. The government had opened close to 75 million bank accounts (called Jandhan accounts) to help the wage earners and lower middle class families who have all deposited their hard earned money.

Leave a Reply

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.