These travelling tips are meant for foreigners visiting India and is actually written by a foreigner who used to visit India frequently.
Use these travel money tips to make sure you don’t get into trouble or attract any unexpected suspicion.
Travel Money Tips #1: Black MarketDon’t do it! If you are staying in a ‘touristy’ area, you will probably be approached by people whispering ‘Change Money’ or ‘US Dollar’ or something similar. They are inviting you to change money on the black market. Don’t even think about it. It’s illegal and frankly, not worth the risk. In any case, you probably have an awesome exchange rate with India anyway (I really like multiplying my money rather than dividing it :-)
When travelling between countries, small plastic cases are very handy for keeping notes and coins of different currencies separate. You can just keep the ones you're not using in your bag.
Travel Money Tips #2: Banks
Banks can suck a lot of time, so the easiest way to get Indian Rupees is this: Convert your first lot at the airport money changer (don’t bother about trying for ATMs as they’re pretty rare or non-existent, even at the major airports). Now that ATMs are available fairly easily in most of the big cities, this is the easiest way to get more cash. If you have to, use a bank, but be prepared to wait a while. (The biggest thing that the English left behind when they left India was a deep and abiding passion for bureaucracy.)
Travel Money Tips #3: Receipts
Keep your receipts from ATMs and currency conversions, whether at the airport or at banks. Though you may not be called upon to show them, they prove that you sourced the currency through legal channels, rather than the black market, so it’s best to keep them.
Travel Money Tips #4: Travelers Checks vs Credit Cards
I used to use travelers checks when I first started going to India 20 years or so ago, but I don’t feel that they’re really needed anymore. I usually keep USD50-100 with my passport in a money belt, and take a few hundred to change at the airport. After that, I usually rely on ATMs. I would usually take at least 2 cards though, so you can keep them separately, in case of pickpockets. (I would have to say though, not to rely on the ATMs in Kathmandu, Nepal. When I was living there in 2002, there were only 3 ATMs in the city and they would regularly run out of notes—not good! I haven’t had it happen in India, though, and every time I go back there are more and more ATMs around.)
Travel Money Tips #5: Currency Declaration
I'm not sure why you would, but if you were to bring in more than USD 5,000 (or equivalent in foreign currency and travelers checks, you will need to fill out a Currency Declaration form. You are allowed to bring in as much as you wish, as long as you declare it. I would certainly not recommend bringing large amounts of cash, as you may a) find it too bulky to carry discreetly when converted to rupees and b) may find yourself parted from it by a masterful thief or scam artist.