Source: The Economic Times, Nov 09, 2016
MUMBAI: After the government made a surprise announcement of making Rs 1,000 and Rs 500 banknotes illegal from midnight, the monetary authority posted a 25-point detailed FAQs explaining the rationale behind the move.
The Reserve Bank of India said 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 assured the public that a person who changed his higher value cash will get exactly the equal amount in lower denominations.
“You will get value for the entire volume of notes tendered at the bank branches/RBI offices,” the central bank assured the public. But it was quick to add that there will be caps on the cash one can tender.
“One will get 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,” the RBI said pointing out that one cannot get the entire amount in cash as the scheme of withdrawal of old high denomination notes does not provide for it, given its objectives.
“The fake notes are used for anti-national and illegal activities. High denomination notes have been misused by terrorists and for hoarding black money. We as a nation remain a cash-based economy, hence the circulation of fake rupees continues to be a menace. To contain the rising incidence of fake notes and black money, the scheme to withdraw high-denomination notes has been introduced,” RBI said.
Explaining the importance of the scheme, the RBI said the legal tender character of the notes in denominations of Rs 500 and Rs 1,000 stands withdrawn. In consequence, the withdrawn old high denomination notes cannot be used for transacting business and/or store of value for future usage.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 old notes can be exchanged for value at any of the 19 offices of the Reserve Bank, any of the bank branches or at any head post offices or sub-post offices.
For those who need higher amount of cash over and above the permitted Rs 4,000, RBI said one can use balances in bank accounts to pay for other requirements by cheque or through electronic means such as online banking, mobile wallets, IMPS, credit/debit cards etc.
For those without any bank account, RBI said they can open an account with necessary KYV documents.
Even no frills accounts under the Jan Dhan Yojana can also avail of the exchange facility subject to the caps and other laid down limits in accord with norms and procedures.
But for all the exchanges, the person has to carry valid identity proofs. This can be done at any branches of the bank that one is banking with and can also be done at other bank branches provided one furnishes valid identity proof and bank account details.
A person with no personal account of her own can avail of this exchange facility via a relative/friend’s account with written permission. But while exchanging, one should provide the evidence of permission given by the account holder and own valid identity proof.
The exchange can also be done through a third party provided one gives a written authorisation letter with the bearer, who should also prove the identity.
On withdrawals/exchanges through ATMs, the RBI said banks will take time to recalibrate the ATMs. Once the ATMs are functional, one can withdraw upto a Rs 2,000 per card per day up to November 18. The limit will be raised to Rs 4,000 per day per card then onwards.
Even cash withdrawal through cheque/withdrawal slips is subject to a ceiling of Rs 10,000 in a day within an overall limit of Rs 20,000 in a week (including withdrawals from ATMs) for the first fortnight-up to November 24.
Higher value notes can be deposited/withdrawn through ATMs, cash deposit machines and cash recyclers.
But electronic transactions (NEFT/RTGS/IMPS/ online banking/mobile banking etc) can be done with no limits.
The scheme closes 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.
Those who are outside the country can get their exchanges done by authorising in writing another person in the country to deposit the notes into your bank account with the authority letter and identity proof such as Aadhaar card, driving license, voter ID card, passport, NREGA card, PAN card etc.
Even NRIs can also deposit the banned notes to NRO account. A visiting foreigner can purchase forex equivalent to Rs 5,000 using these illegal notes at airport exchange counters within 72 hrs after the notification, provided you present proof of purchasing these notes.
In case of emergencies like hospitalisation, travel, life saving drugs, one can use the old notes to pay for hospitalisation at government hospitals, to purchase bus tickets at government bus stands for travel by state or state PSU buses, train tickets and air tickets within 72 hrs after the notification.