Currency Note Demonetization- All You Need to Know

In a sweeping move, PM Modi has taken a hard stance on black money circulation in India by demonetisation.

Latest Update

From the week beginning 14 November 2016, the withdrawal and exchange limits have been increased. Weekly withdrawal limit has been enhanced to ₹24,000/-, daily exchange limit extended to ₹4,500/- and daily ATM withdrawal limit enhanced to ₹2,500/-

The Prime Minister has announced the following moves as part of the demonetisation of old currency notes:

• Existing Rs 500 and Rs 1,000 currency notes will not be valid from 8th November midnight
• All banks and ATMs will remain closed on 9th November
• All Rs 500 and Rs 1,000 notes to be deposited into banks or post offices from 10th November to 30th December 2016
• After 30th December 2016, Rs 500 and Rs 1,000 notes will be accepted till 31st March 2017 in several RBI branches after taking declaration from RBI
• Cash withdrawals from ATM will be limited to Rs 2,000 per day for some time
• Cash withdrawals from banks to be limited to Rs 10,000 per day and Rs 20,000 per week for some time
• New Rs 500 and Rs 2,000 currency notes to be issued by RBI
• Essential services like government hospitals, burial places, rail bookings and air bookings to continue to accept old currency notes to some time
• On international airports, old currency notes of up to Rs 5,000 can be exchanged for the next 72 hours
• Chemists, Archaeological Survey of India monuments counters, LPG distributors and railway caterers will also be accepting payments in Rs 500 and Rs 1,000 notes
• All banks will remain open on this Saturday and Sunday to facilitate exchange and deposit of old notes
• ATMs will open for operation on Friday and dispense notes in only Rs 50 & Rs 100 denominations for a few days

While all of this is difficult news for the common taxpayer to digest right now, what is important to understand is that you shouldn’t panic. There is no need for anyone to take drastic steps at the moment because of the demonetisation of old notes. The entire picture will get clearer in the coming few days. Meanwhile, if you have any issues related to demonetisation and income declaration, reach out to us and we’ll help you out. This is how the request slip for exchange of currency notes looks like. Make sure you fill it out correctly to exchange notes in a quick and easy manner.  

Frequently Asked Questions

Why has the government cancelled Rs 500 and Rs 1,000 currency notes as legal tender?

The government has introduced demonetisation to curb financing of terrorism through the proceeds of fake currency notes. Such funds are also used for espionage, smuggling of arms, drugs and other contrabrands and for eliminating black money.

Why the ban on only Rs 500 and Rs 1,000 notes?

As per the government’s press release, notes of these denominations are comparatively larger as compared to other denominations. Use of high denomination notes for storage of unaccounted wealth has also been evident. This is why the government has chosen to carry out demonetisation of notes of Rs 500 and Rs 1,000.

Will the government be introducing new notes?

Yes. The government will introduce new currency notes of Rs 500 and Rs 2,000 into circulation from 10th November 2016.

What is the reason behind this sudden demonetization?

Over the past two years, the government has taken a number of steps to curb black money in India. The government also set up a Special Investigation Team to enact a law regarding undisclosed income. The government’s endeavours have been ongoing for the past few years. It has wanted to take stock of black money and hence, this demonetisation move cannot be said to be a sudden one.

What should I do if I have currency in Rs 500 and Rs 1,000 notes?

You can deposit these notes into your bank accounts or they can be exchanged at bank branches till 30th December 2016. Bank notes of the combined value of Rs 4,000 only can be exchanged. Similar facilities will also be made available at Post Offices.

How much can I withdraw from my bank account?

From your bank account, you will be able to withdraw Rs 10,000 a day and Rs 20,000 a week for some time. At the same time, withdrawals from ATMs will be restricted to Rs 2,000 per day for now.

Can I still transact using other means like cards?

Yes. There is absolutely no restriction on the use of non-cash methods like cheques, credit cards, debit cards, mobile wallets and electronic fund transfers.

How much value will I get of the notes I deposit in banks?

You will get the entire value of the notes that you tender at banks and RBI offices.

Can I get all in cash?

No. You will get up to ₹4000 per person in cash irrespective of the size of tender and anything over and above that will be receivable by way of credit to bank account.

Why can’t I get the entire amount in cash when I have surrendered everything in cash?

The demonetisation scheme of withdrawal of old high denomination (OHD) notes does not provide for it.

₹4000 cash is insufficient for my needs. What to do?

You can use balances in bank accounts to pay for other requirements by cheque or through electronic means of payments such as Internet banking, mobile wallets, IMPS, credit/debit cards etc.

What if I don’t have any bank account?

You can always open a bank account by approaching a bank branch with necessary documents required for fulfilling the KYC requirements.

Do I need to go to my bank branch only?

For exchange up to Rs 4000 in cash you may go to any bank branch with valid identity proof. For exchange over Rs 4000, which will be accorded through credit to Bank account only, you may go to the branch where you have an account or to any other branch of the same bank. In case you want to go to a branch of any other bank where you are not maintaining an account, you will have to furnish valid identity proof and bank account details required for electronic fund transfer to your account.

I have no account but my relative/friend has an account. Can I get my notes exchanged into that account?

Yes, you can do that if the account holder relative/friend etc gives you permission in writing. While exchanging, you should provide to the bank, evidence of permission given by the account holder and your valid identity proof.

I am right now not in India. What should I do?

If you have old currency notes in India, you may authorise in writing enabling another person in India to deposit the notes into your bank account. The person you authorise has to come to the bank branch with the old notes, the authority letter given by you and a valid identity proof.

I am an NRI and hold NRO account. Can the exchange value be deposited in my account?

Yes, you can deposit the old banknotes to your NRO account.

I am a foreign tourist, I have these notes. What should I do?

You can purchase foreign exchange equivalent to ₹5000 using these OHD notes at airport exchange counters within 72 hours after the notification, provided you present proof of purchasing the OHD notes.

I have emergency needs of cash (hospitalisation, travel, life saving medicines). What I should do?

You can use the OHD notes for paying for your hospitalisation charges at government hospitals, for purchasing bus tickets at government bus stands for travel by state government or state PSU buses, train tickets at railway stations, and air tickets at airports, within 72 hours after the notification.

Where can I get more information on this demonetization scheme?

Further information is available at our website and GoI website.

If I have a problem, whom should I approach?

You may approach the control room of RBI by email or on Telephone Nos. 022 22602201/022 22602944