In an historic move to counter the increasing issue of black money as well as to stop fake currency cash flow into the market as well as funding terrorism through these fake notes, the NDA government has withdrawn the legal tender of Rs. 500 and Rs. 1000 notes from November 9, 2016 at 12 am, Prime Minister Narendra Modi announced the same while addressing to the nation on Tuesday.

According to the reports, new computerized, Nano GPS Chip (NGC)-enabled Rs. 2,000 note will be introduced in the market by the Reserve Bank of India on November 10. New note of Rs. 500 will also be introduced.

To make the proper arrangements, PM Modi announced that the banks will be closed on Wednesday (November 9) for the public purpose.

People can exchange their old Rs. 500 and Rs. 1000 notes from any branches of their banks as well from RBI branches till December 31, 2016. However, bank will be providing the cash up to Rs. 4,000 in your hand, after the verification of the valid identity card, while the remaining cash will be automatically added to your bank accounts. PM Modi also added that as the banks will have to make extra arrangements in their Automated Teller Machines (ATMs) the ATMs will be closed on November 9 and 10.

If few people failed to exchange their notes from the banks till the deadline of December 31, 2016, people still can exchange their old Rs. 500, Rs. 1000 from the branches of the RBI after filling a declaration till March 31, 2017.

However, for the people’s ease, PM Modi said that old Rs. 500, Rs. 1000 notes will be accepted at hospitals, on train and bus ticket counters as well as airports and pharmacies along will all the counters of center and state products till November 11th, 2016. However, he added that the authorities will have to maintain a register of all the notes they would receive.

Till 18th November 2016 the maximum limit to take out cash from ATMs will be Rs. 2,000 per person per card. The government has added that the limit will be increased in later days.

Additionally the  PM Modi also added that the payments by cheques, electronic transfers and demand drafts as well as the other denominations of the money such as coins of Rs. 1, Rs. 2, Rs. 5 and Rs. 10 along with the notes of Rs. 1, Rs. 5, Rs. 10, Rs. 50 and Rs. 100 will not be affected by this move.

According to the experts, it is a great move by the Modi Government to stop the fake currency issue and to counter black money. For the majority of times  the transaction of black money happens in high denomination notes of Rs. 500, Rs. 1000 notes, which will be curbed through this move. However, they added that the government has to give clarification on the introduction of the new, Rs. 2,000 high denomination notes as it counters government’s own decision of curbing black money.

In the press conference taken by the RBI Governor Urjit Patel, minutes after PM Modi’s announcement, released the brand new design of the Rs. 500, Rs. 2,000 notes with the pictures of Mangalyan as well as the iconic Red Fort in Delhi. The new noted will be produced under the Mahatma Gandhi series. About the NGC in the Rs. 2,000 notes, the RBI has not confirmed the news, although various reports has acknowledged it.

The RBI as urged all the people of the country to not panic and to deposit their old notes in the banks and not to go for any different mode.  

To know more about the announcement, read the FAQ by the Reserve Bank of India

By Prajakt K.