Modi’s attempt to curb black and counterfeit money

In an attempt to curb circulation of black money and counterfeit notes being used to fund illegal activities like terrorism, government and RBI have issued guidelines declaring that Rs 500 and 1000 notes will no longer be accepted as legal tender from midnight of 8th November, 2016. All Banks and ATMs are closed for public dealing today (9th November, 2016).

Key highlights

- From midnight of 8th November, 2016, Rs. 500 and Rs.1000 will cease to be legal tender. "These notes are just papers from tomorrow," says the prime minister.
- These notes can be deposited to your bank accounts by 30th December, 2016 with valid I.D. proof without any penalty.
- The Banks will be closed for public dealing on 9th November, 2016 to prepare for large amounts of currency exchange in next few weeks.
- The ATMs will not function on 9th November, and in some places till 10th November.

Depositing/Exchanging old Rs. 500 and Rs 1000 notes

- Rs. 500 and 1000 bank notes may be deposited by individuals/persons into their bank accounts in bank branches or Issue Offices of RBI till the close of business hours on 30th December, 2016 without any limit but after production of valid government identity cards like PAN, Aadhaar and Election Card
- Rs 500, Rs 1000 notes can be exchanged with legal denomination currency notes at designated banks on production of valid government identity cards like PAN, Aadhaar and Election Card by December 30, 2016 but the current limit of exchange is Rs 4,000 per day. The limit of Rs 4000/- will be reviewed after 24th November
- People who possess Rs.500 or Rs. 1000 currency notes after December 30 can exchange it at Reserve Bank of India by providing a declaration. This is allowed till March 31, 2017.

Withdrawal Limits

- Cash withdrawal from a bank account, over the counter will be restricted to Rs.10,000/- subject to an overall limit of Rs. 20,000/- in a week till 24th November 2016
- No restrictions or changes on the use of any non-cash method of operating the account including cheques, demand drafts, credit/debit cards, mobile wallets and electronic fund transfer mechanisms.
- Withdrawal from ATMs would be restricted to Rs.2,000 per day per card up to November 18, 2016. The limit will be raised to Rs.4,000 per day per card from November 19, 2016 onwards.

Where can you still use Rs 500 and 1000 notes

- Cash withdrawal from a bank account, over the counter will be restricted to Rs.10,000/- subject to an overall limit of Rs. 20,000/- in a week till 24th November 2016
- No restrictions or changes on the use of any non-cash method of operating the account including cheques, demand drafts, credit/debit cards, mobile wallets and electronic fund transfer mechanisms.
- Withdrawal from ATMs would be restricted to Rs.2,000 per day per card up to November 18, 2016. The limit will be raised to Rs.4,000 per day per card from November 19, 2016 onwards.

Withdrawal Limits

To avoid inconvenience to the public for the first 72 Hours (till 11th November 2016), Rs 500 and 1000 bank notes will continue to be accepted at:
- Government Hospitals/Pharmacies in these hospitals
- Railway ticketing counters/ticket counters of Government/Public Sector Undertaking buses and airline ticketing counters at airports
- For purchases at consumer co-operative societies, at milk booths
- At crematoria/burial grounds,
- At petrol/diesel/gas stations of Public Sector Oil Marketing Companies
- For arriving and departing passengers at international airports and for foreign tourists to exchange foreign currency at airports up to a specified amount.

New notes in circulation

- New notes for denomination of Rs. 500 and Rs. 2000 to be released starting 10th November in banks
- New notes to have latest security measures. Some reports show that Rs. 2000 note will also have a GPS chip to track large stash of money at suspicious locations but it has not been confirmed by RBI

Things to remember

- Banks will have video cameras for all transactions, people must be careful while exchanging cash
- Do not exchange notes for someone else as it might be illegal or unaccounted cash. FIU of India get info about transactions from banks. During this period, banks will take extra precaution. Banks will share info with Income Tax dept. as deemed fit.

Comments from ABS

We at ABS applaud the government for such a bold move. This might prove to be a powerful measure in combatting black money, corruption and terrorism. People may face a few days of inconvenience but this move should benefit the economy in a long run.

We would also like to hear from our readers on their experience and opinion on the issue. Please send your articles at allbankingsolutions@gmail.com or comment below.

Click Here to download the GOI Press Release on this momentous decision.