The court, acting on a batch of petitions challenging the decision announced by Prime Minister Narendra Modi last Tuesday, agreed with the government's argument that there will be "some collateral damage in a surgical strike against black money", but asserted that the "common man should not suffer."
The government has been asked to submit a report on steps taken to ease the crunch for citizens.
The Chief Justice of India, TS Thakur, suggested that the government should raise the withdrawal limit. "The general feeling is it is causing inconvenience to common man," he said.
Since yesterday, the government has announced several measures to lessen the difficulties faced by citizens trying to exchange banned notes and withdraw new ones.
The weekly cash withdrawal limit has been raised to Rs 24,000 and the daily limit is Rs 4,500. At ATMs, people can withdraw up to Rs. 2,500 per card per day. Old notes will be accepted at government hospitals, petrol stations, toll booths and other essential services till November 24.
PM Modi has urged the country to give him "just 50 days" to clean up the system and bear with the hardships for the larger good.