Indians rushed to ATM dispensers to stack up on cash in the form of 100- rupee notes on Tuesday night as Modi's government stepped up its campaign against "black money" when trading is done in cash to avoid taxes.

"Your money remains yours," said Modi, reassuring bank account holders, but added that hoarded 500 and 1,000 rupee notes would "no longer be legal tender."

Banks would be closed to the public on Wednesday, he said.

The Reserve Bank of India said new high-security 500 and 2,000 rupee notes would be issued from Thursday, November 10.

They would bear the image of Delhi's Red Fort and India's "Mangalyaan" Mars orbiter, respectively, said Finance Secretary Shaktikant Das.

Indian media said the move was aimed to re-inject billions of dollars in cash back into the mainstream economy, amounting to as much as 20 percent of the nation's gross domestic product (GDP).

Election promises

Recovering "black money" and fighting corruption were among key poll promises made by Modi during his election campaign in 2014.

Over the past year, the government urged people to declare monies they hold in cash to authorities.

"It's a good measure," said banker Anuj Mathur in New Delhi. "This will clean up the system."

Modi acknowledged during his televised speech that millions of India's poor people, many of whom do not have bank accounts, might not have cash in lower-currency notes to keep themselves afloat in the next few days.

Only three percent of Indians paid any income tax at all, India's previous finance minister told parliament in 2013.

ipj/rs (AFP, AP, dpa)