Washington Star/Evening Star

KARACHI—Pakistan citizens, close to panic tried to jam into banks yesterday to trade huge amounts of paper currency which are suddenly without value by government decree.
The decree Monday night demonetized all 500 rupee and 100 rupee notes, respectively worth $106.25 and $21.25 at the legal exchange rate. These two types of bills represent approximately 60 percent of Pakistan's circulating currency.
According to the, government, militant Bengali separatists who briefly controlled the administration of East Pakistan in March and April left the banks of East Pakistan empty when the army reoccupied the province. The amount of money that disappeared represented about one-tenth of the nation's circulating currency.

Taken to India

The government is seeking to undercut the economic resources of Bengali separatists who are believed by the government to have taken a large part of the East Pakistani currency into clandestine camps in India.
The demonetization measure also is aimed at crippling the vast currency black market that has developed as the result of the disparity between the legal exchange rate of the rupee and the rupee's real value in international markets. The differences between these rates is nearly three to one.
Customs inspection at all ports of entry into East and West. Pakistan were instructed today to conduct rigorous searches of all arriving passengers who might be bringing Pakistani currency into the country, expecially from neighboring Afghanistan and India and from Hong Kong.

Given receipts only

As citizens brought their 500 and 100 rupee notes to banks, they are given merely bank receipts.
There was no indication when currency would be given to citizens. Some bankers speculated it might take a month or more.
Serial numbers of all bills are being checked against a list of bills taken fron the East Pakistani banks. Anyone seeking to exchange such a bill is likely to be arrested.
The government, which is facing an economic crisis and the probability of having to default on foreign debt obligations, stands to gain as estimated $20( million as the result of demonetization.