Prime Minister Narendra Modi last month said 500 and 1,000 rupee bank notes - worth a combined $US256 billion ($A355 billion) and 86 per cent of cash in circulation - would cease to be legal tender after December 30, disrupting the lives of hundreds of millions.
"I'm here to deposit a few old notes before the deadline expires," said Rakesh Kumar, queuing outside a bank in New Delhi.
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"But I expect the government and RBI (central bank) to quickly replenish banks and ATMs with new notes so that we can withdraw without any trouble."
Only 35-40 per cent of ATM machines were currently dispensing cash. Modi has said his government would end the chaos and restore normality in 50 days.
But analysts say the impact would last at least six more months, with concerns about lower economic growth, job losses and a fall in demand for goods.
Another cost could be job losses, especially in the informal sector, where most poor people work.
Modi on Thursday said the demonetisation decision would give the economy a boost and provide long-term benefits, including forcing the vast shadow economy into the open.
"We took the demonetisation decision not for some short-term windfall gain, but for a long term structural transformation," Modi was quoted as saying.
He has said the demonetisation action was needed to fight corruption and cut off financing for attacks by militants who target India.
