India is to use indelible ink to prevent people from exchanging old notes more than once, the government said Tuesday, a week after the withdrawal of high-value banknotes from circulation in a crackdown on "black money".

The move comes after reports emerged that people were recruiting others to exchange old notes for new bills on their behalf, in an attempt to continue to keep their wealth from the tax authorities.

"We have received reports that certain unscrupulous elements, who are trying to turn their black money into white, have organised groups of innocent people and are sending them from one branch to another branch... to exchange notes," Shaktikanta Das, secretary for economic affairs told the media.

Prime Minister Narendra Modi announced last week that that 500 and 1,000 rupee (US$7.50, US$15) bills -- 85 percent of the cash in circulation -- would cease to be legal tender in a crackdown on fraud and tax evasion.

The move -- which saw the 500 and 1,000 notes withdrawn from circulation just hours after the announcement -- was initially welcomed, but frustrations have mounted in the largely cash-reliant country where millions have been left without enough to cover their daily needs.

The ink, also used to prevent repeat voters during elections, will stop people from circumventing the strict daily limits on cash exchanges and ensure honest people get access to cash, Das said.

Das also urged temples and mosques to deposit their cash donations, which are usually made in small bills, in order to ease the cash crunch.

The sudden currency withdrawal is part of Modi's pledge to clamp down on tax evasion and corruption, a key tenet of the populist campaign that swept him to power in 2014.

Opposition leaders have said the government has failed to put adequate measures in place.

Analysts, however, have broadly welcomed the latest initiative, saying it will boost GDP in the long-run.