People crowd in a bank to exchange currency notes in Kochi, state of Kerala in India, Nov. 10, 2016. India Tuesday night abolished currency notes of 500 and 1,000 denomination in one of the biggest revolutionary monetary reforms since independence, aimed at curbing the menace of black money. (Xinhua/Stringer)

NEW DELHI, Nov. 10 (Xinhua) -- Millions of people rushed to banks across India on Thursday to exchange the banned currency notes of 500 and 1000.

Long queues were seen outside banks in almost all the major cities including New Delhi and Mumbai, besides other towns, waiting for their turn to swap the banned notes.

"People since early morning assembled outside banks to get the banned currency notes swapped," Atul Kumar, a resident at Green Park in New Delhi said. "Soon after the banks employees arrived, they ordered people to make queues."

In a surprise televised address on Tuesday evening, Indian Prime Minister Narendra Modi announced the existing currency notes of 500 and 1000 Indian rupees will be withdrawn from the country's financial system.

He described the move as part of his anti-corruption drive to stop counterfeit and black money.

The currency notes of 500 and 1000 ceased to be legal tender from Tuesday night and people were urged to get the notes swapped at banks and post offices until Dec. 30.

Following the announcement, banks were closed for a day to allow them to stock new currency notes. The ATMs were also closed down for 48 hours and are likely to function from Friday.

India's Finance Minister Arun Jaitley said there would be no harassment for small deposits.

"Those individuals who have large undisclosed amounts will have to face the consequences," Jaitley said.

At most of the banks, there was a huge rush and scenes outside were chaotic. The rumour mongering around the exchange perturbed people.

"How far will the government be able to crack the whip on illegal cash holding remains to be seen but as of now the honest people including small traders and housewives are caught in long queues," Syed Hussain, a researcher in Business Studies said.

India is an overwhelmingly cash-based economy and banned currency notes are estimated to be 85 percent of the cash in circulation in the country.

The Indian government has announced it will introduce 2,000 and new 500 rupee denomination notes in the financial system.

Government guidelines say it is possible to exchange 4,000 rupees - but it was not yet clear if the directions were for a day or in total.

Officials said there would be no cap on the daily deposits. However, at ATMs, there will be an initial daily cap of 2,000 rupees on withdrawal per card. Later on it will be increased to 4,000 rupees within a week.