(NEW DELHI) – Indian Prime Minister Narendra Modi on Tuesday announced that 500 and 1,000 rupee banknotes would be withdrawn from circulation at midnight, saying it was part of a crackdown on rampant corruption and counterfeit currency.

The surprise step appears designed to bring billions of dollars worth of cash in unaccounted wealth into the mainstream economy, as well as hit the finances of Islamist militants who target India and are suspected of using fake 500 rupee notes to fund operations.

“Black money and corruption are the biggest obstacles in eradicating poverty,” Modi said in an address to the nation.

New 500 and 2,000 rupee denomination notes will be issued at a later date, he added.

Modi’s ruling Bharatiya Janata Party came into power in 2014 promising to bring billions of dollars of black market money into the regular financial system. Critics said it had failed to deliver on that promise.

Tuesday’s announcement comes just over a month after the government raised nearly $10 billion through a tax amnesty for Indians to declare hidden income and assets.

A report by Washington-based think-tank Global Financial Integrity estimated that India lost $344 billion in illicit fund outflows between 2002 and 2011.

Modi also said militants operating against India were using fake versions of the 500 rupee note, worth about $7.50 at current exchange rates.

“Terrorism is a frightening thing … But have you ever thought about how these terrorists get their money? Enemies from across the border have run their operations using fake currency notes. This has been going on for years,” Modi said.

India accuses its neighbour Pakistan of harbouring militants who have launched attacks on its troops, particularly in the disputed Himalayan region of Kashmir which both countries claim. Pakistan denies the accusations.

Some officials and experts said Tuesday’s move was the biggest in decades aimed at fighting graft.

“It is like a surgical strike on black money,” said Revenue Secretary Hasmukh Adhia. ($1 = 66.4355 Indian rupees) (Reporting Neha Dasgupta and Nidhi Verma; Writing by Sanjeev Miglani; Editing by Mike Collett-White)

Get The Brief. Sign up to receive the top stories you need to know right now. Please enter a valid email address. Sign Up Now Check the box if you do not wish to receive promotional offers via email from TIME. You can unsubscribe at any time. By signing up you are agreeing to our Terms of Use and Privacy Policy . This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply. Thank you! For your security, we've sent a confirmation email to the address you entered. Click the link to confirm your subscription and begin receiving our newsletters. If you don't get the confirmation within 10 minutes, please check your spam folder.

Contact us at letters@time.com.