Baby dies after Indian hospital refuses to accept parents' money because of country's new cash note ban

Chaotic queues have appeared outside banks as Indians rush to exchange their old banknotes

The 500 and 1000 Indian Rupee banknotes have been withdrawn from circulation in a bid to tackle corruption (Getty Images)

A baby died when a hospital in India refused to accept a deposit paid in banknotes which were withdrawn from circulation the day before.

Police said they are investigating a doctor in a Mumbai suburb who allegedly turned away a couple with a premature baby because they did not have the correct currency.

Kiran Sharma gave birth to a boy around one month early on 9 November and was rushed to Jeevan Jyot Hospital in Govandi to the east of the city, reported The New Indian Express.

A doctor provided basic care to the premature baby and charged a 6,000 rupee (£70) deposit for the full treatment.

But they allegedly refused to accept the payment in 500 rupee (£6) banknotes offered by Ms Sharma’s husband Jagadish.

Mr Sharma said the couple took their child to another hospital but its condition worsened and the infant died before it received treatment.

Indian Prime Minister Narendra Modi scrapped the country’s two largest denomination banknotes – 500 rupees and 1,000 rupees (£12) – at midnight on 8 November in a bid to fight corruption and tax evasion.

Indians queue to deposit and exchange discontinued currency notes outside a bank on the outskirts of New Delhi (Associated Press)

The surprise decision created chaotic queues outside bank branches as people rushed to swap old notes for legal tender, bringing parts of India's economy to a standstill.

A 73-year-old man collapsed and died while standing in an ATM queue in Mumbai to change his notes, according to The Hindu.

And The Indian Express reported that two people had died in Kerala in the rush to exchange old banknotes for new notes with enhanced security features worth 500 and 2,000 rupees (£24).

Prime Minister Modi said concessions would be allowed for use of the notes in government-run and private hospitals, chemists and petrol pumps until 11 November. This was then extended to 24 November.

Police in Mumbai told The New Indian Express they had registered a case against the doctor for “causing death by negligence and disobedience of order”, but the newspaper reported that no arrest has yet been made.

Indians can exchange their old banknotes for the new ones until 30 December.

There are also plans to introduce a new 1,000 rupee note with a fresh design and dimensions.

The doctor in question told the Mumbai Mirror the family could not afford the admission fee to an intensive care unit, despite their claims that they were turned away because they did not have the correct lower denomination notes.

"I had told them if you can arrange [the fee], then I will admit her, but they took [the baby] away," she said.