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Prime Minister Narendra Modi announced that from midnight of November 8, 2016, currency notes of 500 and 1,000 denominations will cease to be legal tender. The move is part of a concerted effort to curb the proliferation of black money in the Indian economy.

Modi declared that current ₹500 and ₹1000 notes would be rendered invalid starting 09/11/2016. “This government is dedicated to the poor, and will continue to be so,” said Modi, who completes two-and-a-half years of rule on November 8. Black money to the tune of Rs 1.25 lakh crore has been unearthed in the last two-and-a-half years.

According to the Prime Minister, corruption, fake currency, and terrorism are festering wounds that are holding back the economy. He has expressed tremendous confidence that the bank staff, post offices, political party workers, social organisations and the media will take a step forward to make this declaration a grand success.

 

Developments declared by the PM:

  • ATM withdrawals will be restricted to Rs 2,000 per day till November 18, 2016.
  • Withdrawals from bank accounts will be limited to Rs 10,000 a day and Rs 20,000 a week till November 24th, 2016.
  • Rs 500 and Rs 1000 notes will be valid for transactions related to booking of air tickets, railway bookings, government bus ticket counters and hospitals till the midnight of November 11 and 12, 2016.
  • Banks and ATMs will be closed on November 9, 2016.
  • Some medical facilities will be exempted from this for the time being.
  • 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.
  • A Special Investigating Team is making progress to identify who has sent money abroad by means other than banks.

 

Efforts to regularise the day-to-day transactions:  

  • For the next 50 days, up until 30 December 2016, citizens can deposit the old currency notes of Rs 500 and Rs 1,000 denominations in post offices and banks. One will need to carry Aadhaar card and PAN card for exchange of these notes.
  • New notes of Rs 500 and Rs 2,000 will be made available soon. The Reserve Bank of India’s proposal to circulate new Rs 500 and Rs 2,000 notes has been accepted. Stating from February 2017, the RBI will start issuing Rs 2,000 notes as well.
  • Those who fail to meet the deadline can submit the notes to the RBI till March 31st, 2017 by providing a declaration.
  • For the next 72 hours special arrangements have been made to accept Rs 500 and Rs 1,000 notes at hospitals, airports, railways stations, petrol stations.
  • Citizens will get Rs 4,000 in cash and rest will be deposited in the respective bank accounts.
  • In case one falls short on cash (in an emergency, for instance) internet banking, credit, cheques, demand drafts and debit cards can be used.

The surprise step appears to be designed to bring billions of dollars worth of cash in unaccounted wealth into the mainstream economy. “The black money recovery scheme has brought Rs 65,000 crore into the treasury,” the PM said. The move will bring financial affluence into the lives of the lower middle class, he added, and will be an effective step in reining in terrorism.

In case of any unanswered queries, citizens can write to publicquery@rbi.org.in or dial 022-22602201 / 022-22602944 operational from November 9, 2016 [8:00 am onwards].

Further detailed information is available here.

 

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