The Government of India withdrew the legal status of (also known as "to demonitize") ₹ 500 and ₹ 1,000 denominations of banknotes issued before Nov 8, 2016.
The Government of India said that it introduced this scheme mainly to tackle counterfeiting of such banknotes, to effectively nullify black money hoarded in cash and to curb funding of terrorism with fake notes
As per RBI annual report of 31 March 2016, total bank notes in circulation valued to ₹16.42 lakh crore (US$240 billion) of which nearly 86% was ₹500 and ₹1000 rupee notes. The Economic Affairs Secy has explained that while supply of all notes were increased by 40% between 2011 and 2016, the ₹ 500 and ₹1000 rupee notes increased by 76% and 109% respectively😱 in this period owing to counterfeit money which was then allegedly used to fund terrorist activities against India. Given this, steps to eliminate the notes was taken.