B.Ramana Kumar, M.Com., LLB, FCA, Advocate
Demonetisations of the Higher Denomination Notes by Government of India – synopsis, consequence and duties
Introduced on the evening of 8th November 2016, the Government announced the decision to scrap the Rs. 500/- and Rs. 1,000/- notes with the aim of combating Corruption, black Money and cross border terrorism via counterfeiting. Prime Minister Narendra Modi was quoted to be saying that the above mentioned notes will only be “worth the paper they are printed on,”
Further, the Reserve Bank of India as approved and cleared a proposal for a new Rs. 500/- and Rs. 2,000/- currency notes abandoning Rs. 1,000/- currency notes for the time being.
On a broad basis, it should be noted that all other transaction, such as those done via cheque, DD, payment via credit or debit cards does not have any restrictions and will thus not be affected.
The Government has issued a timeline within which they aim to remove the old Rs. 500/- and Rs. 1000/- notes from circulation, of which the important parts are as follows.
A brief summary of the dates, events and remarks are given below for a glance
|Start Date||Particulars||End Date||Limits (Rs.)||Remarks|
|8-11-2016||Old Currency notes are no longer valid. Certain specified outlets still accept the old currency till the end date.||11-11-2016||–||will still be accepted in Petrol Pumps, government hospitals, Railway, airline, government bus ticket booking counters, Consumer co-operative stores run by state or central government, Milk booths authorized by state governments, Crematoriums and burial grounds till 11th November 2016.|
|9-11-2016||ATMs shut down and Banks closed to public.||10-11-2016||–||ATMs will not work and banks will not be accessible to public to adjust to the changes made.|
|10-11-2016||Old Notes can be deposited in banks||30-12-2016||–||Valid Bank Account or Post Office saving account|
|10-11-2016||Old Notes can be exchanged for new ones.||24-11-2016||4,000/- amount to be reviewed later||Original Identity Proof with a copy in the form of Aadhaar card, PAN Card, ration card, passport, driver license. Exchange can be made in all branches of commercial banks/RRBS/UCBs/State Co-op banks or at any Head Post Office or Sub-Post Office and all Issue Offices of RBI|
|10-11-2016||Money can be withdrawn from ATMs.||18-11-2016||2,000/- per day||–|
|10-11-2016||Money can be withdrawn from Banks||–||10,000/- per day limited to 20,000/- per week||Weekly amount includes amount withdrawn from ATMs.|
|19-11-2016||Amount that can be withdrawn from ATMs is increased.||–||4,000/- per day||–|
|31-12-2016||Old Notes can be deposited in cases where depositing before 30-12-2016 was not possible.||31-3-2017||–||ID Proof, Pan & Declaration Form|
|Foreign Tourists||within 72 hours after the notification||foreign exchange equivalent to Rs. 5,000/-||provide proof of purchasing the old notes|
|Person not in India||authorize in writing enabling another person in India to deposit the notes||Same as for any Indian||Same as for any Indian||person so authorized has to come to the bank branch with the old notes along with the authorization letter and a valid identity proof|
|NRIs||Same as for any Indian||Same as for any Indian||deposit the old banknotes to their NRO account.|
It seems that baring a very few individuals, almost all in this nation have welcomed the move of the Government. It seems to have been a well thought out scheme with almost all modalities worked out in detail.
At the time of writing this article, the initial euphoria, shock, surprise, disbelief, fear, etc. have all died down and the citizens have accepted this for many reasons, a few of which are below.
a. This was to be done long before, to root out corruption. The virus had impacted almost each citizen, right from the local rickshawala to bribe the police constable to the highest level of defense deals etc.
b. There is no other way to handle this menace other than by making the hoarded currencies invalid.
c. This would impact only the hoarders of currency and not the common man.
d. The timing was perfect, 8pm, on a US election eve.
e. There was initial panic and no more. The establishment had made adequate arrangements to handle this. All banks were properly and sufficiently educated and had a fair amount of money to dispense
The social media also played an effective part in this campaign post announcement by the Honorable Prime Minister. While tons of satire and comedy made way, many useful and educating tips were also circulated.
Like the Japanese earthquake situation, citizens began to act responsibly, which is generally unseen in Indian scenario in situations like this. It seems that the general public in fact have realized that they need to withdraw/exchange only that much needed for the time being and wait till the situation eases to withdraw/exchange the balance. This reflects a healthy understanding of the citizen and maturity in crisis handling.
It is heartening to see that the tales of sacrifice, valor etc. in this time of crisis. One interesting anecdote is that of my barber. When went for an haircut, after the cut, he offered me not to pay now saying that his service is not an emergency one, and one could keep the money for immediate purchase of essentials and pay him later. I was overwhelmed with this and appreciated his social responsibility. Definitely he has risen very high in my eyes and would always henceforth give him that respect that he deserved for being so empathetic.
Petrol pumps and general grocery shops have been generally open in accepting the OHD notes at least up to 11th November.
It is the duty of every professional and informed citizen to educate the less informed brothers and sisters in the vicinity to prevent any panic satiation. One good way would be to offer help to the domestic maid, drivers, security watchmen, by educating them. On other way would be to provide them with short term loans to tide over the situations. Assist them to exchange the notes they have before 24th November.
Some unscrupulous elements are resorting to giving the legal tender money by taking around 20% commissions. Ie, for every 500 rupee note, the person is paid only 400/-. The uneducated and the gullible are being cheated mainly due to their ignorance and insecurity
The senior citizens and the physically challenged are equally insecured so much so that many are rushing to the banks to deposit their little OHD notes, thereby creating tension to themselves and also to the other public who have to withdraw money. Let us try to educate them on the scheme and the time lines, else allow them to withdraw, as the separate lines for them are not feasible at this point in time.
On the flip side, it has been criticized that the new rules make difficulties for people who keep their cash at home rather than in a bank account and for people with large rupee cash reserves who reside abroad.
However, the Government has given assurances that if legitimate reasons are provided, then there will be few, if no difficulties.
In conclusion, there might be some discomfort or inconvenience here and there for the general public. When a change of this magnitude is underway, such discomforts are inevitable. These are definitely not as much as our soldiers face at Siachen Glacier, the Thar Desert or the other border posts guarding our country. It is time we also take part as citizens in this war against corruption and terrorism and do our bit also for the nation.
As the Prime Minister in his speech has described this as a Maha Yagna, it is so and it is time all the citizens unite in this yeomen and critical task for the nation and offer our part to it. The professionals, the educated, and the well informed will be the high priests of this Maha Yagna!
(The author is an Advocate practicing in Chennai and can be reached at firstname.lastname@example.org)