In order to curb corruption, make efforts to recover ‘black’ or unaccounted money and use it for schemes for the welfare of the poor, Prime Minister (PM) Narendra Modi has declared that from midnight of November 8, 2016, currency notes of Rs 1000 and Rs 500 denomination will not be legal tender. People can deposit notes of Rs 1000 and Rs 500 in their banks from November 10 till December 30, 2016. However, he said that all notes in lower denomination of Rs 100, Rs 50, Rs 20, Rs 10, Rs 5, Rs 2 and Re 1 and all coins will continue to be valid.
After the government’s surprise decision the monetary authority posted a 25-point detailed FAQs (frequently asked questions) explaining the rationale behind the move. The Reserve Bank of India (RBI) has said that the most important reason for the ban was the abnormal rise in fake currencies of higher denomination and also the higher incidence of black money in the system, but it assured the public that a person who changed higher value cash will get exactly the equal amount in lower denominations up to Rs 4,000 in cash irrespective of the size of tender and anything over and above that will be receivable by way of credit to bank account as the scheme of withdrawal of old high denomination notes does not provide for it.
Explaining the importance of the scheme, the RBI said that the legal tender character of the notes in denominations of Rs 500 and Rs 1,000 stands withdrawn. In consequence, the withdrawn old high denomination notes cannot be used for transacting business and/or store of value for future usage. The scheme will close on December 30, 2016 until then one can exchange the banned notes at the branches of commercial banks, regional rural banks, urban cooperative banks, state cooperative banks and special RBI counters. And those who failed to do will be offered a limited opportunity at specified offices of the RBI, along with necessary documentation as may be specified by the central bank.
