In preparation for leaving India after a 30 day trip and changing my leftover non-useable 500-1000 bills, I took with me the copy of my official bank approved change voucher of $3000 US changed legally changed into rupees early November, to the Delhi Reserve Bank of India,Main Bank, (research showed late afternoon lines for foreigners very short, which was true)
The Official Response there was lousy: refusal to change unused portion beyond a mere 5000 rupees ($73), was scorned by clerk and told I should never have changed so much as everyone takes credit cards (pure nonsense) and was also told I could change and additional 5000 rupees at the airport. (at departure last night, checked with Punjab State Bank, Post Office, and Cooks there--not possible).
I was told if I didn't like it, go and see my Embassy. A young Chinese man was in line with an inch high stack of bills--same response, no relief. He was furious; big loss. An exhausted British young lady had already stood 4 hours in one bank line that day for the mere 5000,had done so the day before, and was trying for more elsewhere--they didn't allow. Her trip was ruined.
The situation is:
The Govt has not printed enough new bills; they don't exist to be handed out.
There are not enough old small bills in circulation to cover the demand.Read the newspapers online and see that parking isn't being paid, rickshaws have no change, vegetables sellers don't have change, etc Many many problems
The government hasn't thought through the situation, and in this case, as a foreigner, they don't care what happens to you right now. First time ever I have seen such a situation, and I have made over 100 trips since 1975.
I actually wouldn't go there now. Seriously, it's a quiet mess.
I guess I would try to set up an account with bank with access to a branch there. (Still, I would be limited by weekly withdrawals of 5000,but that was yesterday, and the situation actually changes every single day with a new rule.)
Perhaps if I had this bank access account, I could tie some local Pay phone apps to download on my iPad. For example, I would use Olla, Uber for cabs, etc.
I would use credit cards for every purchase and think twice about spending an extra penny of change because it can't be replaced. The new 2000 bills they have issued are almost unusualbe except for big ticket items, as the denomination is too big for daily use and 100's, and smaller bills in short supply.
I would go to all the banks in my home country and transit airports trying to convert into new rupees in advance (which I never do because of poor rates) simply to have a stockpile of new bills, if they available
I would probably carry some emergency 100$ US bills , understanding outside market exchanges are not sanctioned by govt and thus risky. .
Make a couple of xerox copies of both your passport and Visa to keep and give out sometimes, and making copies is sometimes difficult now, as no change for copy machines. Seriously.
I would be continually pestering the local Indian consulate for information; it changes daily, they need to make their government aware, and you need a friend with correct information.