I wasn't in India when it happened, but from what I've heard, bank employees were bribed directly (my dad is a retired bank employee). They took a 30% share for

I wasn't in India when it happened, but from what I've heard, bank employees were bribed directly (my dad is a retired bank employee). They took a 30% share for converting illegal money to new currency and kept it off the records. That's also one of the reasons why the supply of new bills didn't actually reach the common man. As always, humans are the weakest link and can be exploited quite easily.