Indian Prime Minister Narendra Modi has ordered the withdrawal of 500 and 1,000-rupee bank notes from circulation on Tuesday in a shock announcement designed to tackle widespread corruption.
Modi said that while people could exchange their old notes for new ones at banks or post offices, or deposit them in their accounts, they would no longer be legal tender from midnight.
The 500 and 1,000 bank notes, which are worth around $7.50 and $15 respectively, are the largest notes in use in India.
"To break the grip of corruption and black money, we have decided that the 500 and 1,000 rupee currency notes presently in use will no longer be legal tender from midnight," Modi said in a televised address to the nation.
The hunt for India's 'black money'
"This means that these notes will not be acceptable for transaction from midnight onwards."
Hospitals and transport operators will continue to accept old 500 and 1,000 rupee bank notes for payment for the next 72 hours.
They will also be accepted at petrol stations run by public-sector oil companies, and at milk booths, crematoriums and burial grounds. ATMs and banks will be closed on Wednesday and some ATMs would also be closed on Thursday.
Modi said that although the existing notes would be "worthless", members of the public would be able to exchange them for new bills at banks until December 30.
New 500 and 2,000-rupee denomination notes will be issued later by the country's central bank - the Reserve Bank of India (RBI), he said. Other officials said the new bills would be rolled out from Thursday.
The Indian prime minister said that the move was also designed to counter Pakistan-based armed groups who carry out attacks on India, saying "enemies from across the border" were financing their activities by mass-producing counterfeit Indian notes.
The government's finance secretary said in a separate statement that there had been a disproportionate rise in the number of 500 and 1,000-rupee notes in circulation in the past five years.
Since coming to power in 2014, Modi has made the fight against corruption one of the central planks of his governing platform.
While the use of debit and credit cards has increased in the past decade in India, many retailers still either insist on taking cash to evade tax or else ask for mark-ups to cushion the blow.
RBI chief Urjit Patel told reporters at a news conference in the capital, New Delhi, that the central bank was "ready to meet such a requirement [for new notes] in weeks and days to come".
"The RBI has been concerned with the growing menace of fake Indian currency notes which has been increasing in numbers," he added.
Finance Secretary Shaktikanta Das said the decision to pull the bank notes from circulation was "a very bold and powerful and a very decisive step to fight the menace of black money and the use of fake Indian currency notes".
He revealed that the new 500-rupee bank note would bear the image of Delhi's iconic Red Fort while the new pink 2,000-rupee note would have India's Mars orbiter "Mangalyaan" on it.