The India Government has decided to allow the use of old Rs 500 notes for prepaid mobile recharges across the country.

This will be a major relief for the Indian telecom operators who are relying on prep-paid users for regular cash flow.

The Department of Telecommunications (DoT) notification, which has extended the deadline for the acceptance of 500 rupee notes as legal tender for recharging prepaid phones for top ups till December 15, 2016, will assist nearly 95 percent of India’s mobile phone user base.

According to TRAI, India’s wireless subscriber base declined from 1,034.23 million in July to 1,028.88 million in August, registering a monthly decline rate of 0.52 percent.

India’s mobile subscription in urban areas declined 0.63 percent to 585.89 million, while wireless subscription in rural areas fell 0.37 percent to 442.99 million.

This decision will allow customers to use mobile services without disruption and ease their anxiety, allowing them continuous communication, said the Cellular Operators Association of India (COAI) in a statement on Monday.

COAI Director General Rajan Mathews said: “We are delighted that the Government acceded to our request prioritising consumer interest, so that citizens can continue to top-up and use mobile phones, which are an essential service.”

Despite initial teething problems, demonetisation will benefit the nation by driving increased digital transactions, promoting transparency, boosting tax collection and ensuring social equity.

Continuing the use of old Rs 500 notes as legal tender for prepaid mobile services is crucial because industry estimates indicate between 30 percent and 50 percent fall in demand as customers are still struggling with less cash in hand due to demonetisation of Rs 500 and Rs 1,000 notes.

With the extension on usage of Rs 500 notes in public utilities, including mobile recharge services, prepaid dealers can continue to accept these notes till 15 December. Since the prepaid segment accounts for more than 90 percent of India’s mobile market, the extension will help customers and dealers in continuing their daily operations.