Withdrawal of Legal Tender Character of the Old Bank Notes in the denominations of Rs. 500 and Rs. 1000 and The Specified Bank Notes (Cessation of Liabilities) Ordinance 2016

(Updated as on April 20, 2017)

1. Why was the Scheme of Withdrawal of Legal Tender Character of the old Bank Notes in the denominations of Rs. 500 and Rs. 1000 introduced?

The incidence of fake Indian currency notes in higher denomination has increased. For ordinary persons, the fake notes look similar to genuine notes, even though no security feature has been copied. The fake notes are used for antinational and illegal activities. High denomination notes have been misused by terrorists and for hoarding black money. India remains a cash based economy hence the circulation of Fake Indian Currency Notes continues to be a menace. In order to contain the rising incidence of fake notes and black money, the scheme to withdraw legal tender character of the old Bank Notes in the denominations of Rs. 500 and Rs. 1000 was introduced.

2. What is this scheme?

The legal tender character of the bank notes in denominations of Rs. 500 and Rs. 1000 issued by the Reserve Bank of India till November 8, 2016 (hereinafter referred to as Specified Bank Notes) stands withdrawn. In consequence thereof these Bank Notes cannot be used for transacting business and/or store of value for future usage. The Specified Bank Notes (SBNs) were allowed to be exchanged for value at RBI Offices till December 30, 2016 and till November 25, 2016 at bank branches/Post Offices and deposited at any of the bank branches of commercial banks/Regional Rural Banks/Co-operative banks (only Urban Co-operative Banks and State Co-operative Banks) or at any Head Post Office or Sub-Post Office during the period from November 10, 2016 to December 30, 2016.

3. What is the Specified Bank Notes (Cessation of Liabilities) Act 2017?

On February 27, 2017 Government of India notified the Specified Banknotes (Cessation of liabilities) Act 2017. The Act repealed the Specified Banknotes (Cessation of liabilities) Ordinance 2016 providing for cessation of liabilities for the Specified Banknotes (SBNs) and for matters connected therewith and incidental thereto, with effect from December 31, 2016. The SBNs cease to be the liabilities of the Reserve Bank under Section 34 of the RBI Act and cease to have the guarantee of the Central Government.

A grace period has been provided during which the Specified Bank Notes can be deposited at five RBI Offices (Mumbai, New Delhi, Chennai, Kolkata, and Nagpur by Indian citizens who make a declaration that they were outside India between November 9 and December 30, 2016, subject to conditions or any class of persons for reasons that may be specified by notification by the Central Government. The Reserve Bank, if satisfied after making the necessary verifications, that the reasons for failure to deposit the notes till December 30, 2016 are genuine, will credit the value of notes in the KYC (Know Your Customer) compliant bank account of the tenderer.

The grace period for resident Indians expired on March 31, 2017. For non- resident Indians (Indian passport holders), the grace period is till June 30, 2017.

For details on the exchange counter timings at the five aforesaid Regional Offices of RBI, read Below-

Counter Timings for Exchange of SBNs during Grace Period
Regional Office Counter Timings for Exchange of SBNs Days
Mumbai 10.30 am to 3.00 pm Monday to Friday
New Delhi 10.00 am to 2.30 pm Monday to Friday
Kolkata 10.00 AM to 2.30 PM Monday to Friday
Chennai 10.00 am to 2.30 pm Monday to Friday
Nagpur 10:15 am to 2:45 pm Monday to Friday

Any person aggrieved by the refusal of the Reserve Bank to credit the value of notes as mentioned above may make a representation to the Central Board of the Reserve Bank within 14 days of the communication of such refusal to him/her.

In terms of Section 6 of the Act, whoever knowingly or wilfully makes any false declaration shall be punishable with a fine which may extend to 50,000 INR or five times the amount of the face value of the SBNs tendered whichever is higher.

In terms of Section 5 of the Act, with effect from December 31, 2016 no person shall knowingly or voluntarily hold, transfer or receive any specified banknotes. After the expiry of grace period, holding of not more than 10 notes in total, irrespective of denomination or not more than 25 notes for the purpose of study/ research/ numismatics is permitted. Also, nothing contained in this section shall prohibit the holding of specified banknotes by any person on the direction of a court in relation to any case pending in the court.

In terms of Section 7, contravention of Section 5 shall be punishable with fine which may extend upto 10,000 INR or five times the face value of the SBNs involved in the contravention, whichever is higher.

In case the contravention/default in terms of Sections 6 and 7 is by a company, every person who was in charge of and responsible to the company at the time of contravention/ default shall deemed to be guilty and will be liable to be proceeded against and punished. If the offence is proved to be attributable to the conduct by any director/manager/secretary/officer/employee of the company, such person shall also be deemed to be guilty of the offence and will be liable to be proceeded against and punished accordingly.

4. How Indian citizens who were abroad exchange the SBNs?

In terms of the Specified Banknotes (Cessation of liabilities) Act 2017, a facility for exchange of SBNs is made available for the resident and non-resident Indian citizens (Indian passport required) who could not avail the facility from November 10 to December 30, 2016 on account of their absence from India during the aforementioned period. The facility was open for residents from January 2, 2017 to March 31, 2017 and for NRIs it will be till June 30, 2017 at five Reserve Bank offices at Mumbai, New Delhi, Chennai, Kolkata, and Nagpur.

The facility can be availed only in individual capacity and only on one occasion during the period. No third party tender is permissible under the facility.

This facility will not be available for Indian citizens resident in Nepal, Bhutan, Pakistan and Bangladesh.

The details of the facility including terms/ conditions and modalities thereof are available in our circular DCM (Plg) No 2170/10.27.00/2016-17 dated December 31, 2016.

Link to tender form for Resident Indians and NRIs (holding Indian passport) available here.

5. Is the facility for exchange of SBNs by NRIs available outside India?

No. For NRIs the facility is available from January 2, 2017 to June 30, 2017 at five Reserve Bank offices at Mumbai, New Delhi, Chennai, Kolkata, and Nagpur. The limit of exchange for NRIs will be ₹ 25000/-.

6. Is the facility available to Overseas Citizens of India (OCI)/Persons of Indian Origin (PIO)?

No, the facility is not available to people who are not Indian citizen.

7. Is the facility available to resident Indians?

The facility is no longer available to Resident Indians as the grace period has expired on March 31, 2017.

8. How much amount can I withdraw from an ATM?

With effect from February 1, 2017 limits on cash withdrawals from ATMs have been removed. Banks may, at their discretion, have their own operating limits as was the case before November 8, 2016, subject to the overall cash withdrawal limit for an account.

9. What are the cash withdrawal limits for accounts?

The limits imposed on cash withdrawals from accounts/bank branches/ ATMs in the wake of demonetisation stand completely withdrawn and status quo ante has been restored

10. Where can I get more information on this scheme/ Act?

Further information is available on our website (www.rbi.org.in) and the website of the Government of India (www.finmin.nic.in)

11. 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

More Under Fema / RBI


  1. Banshilal Purohit says:

    A employee retire 28.Feb.2017.
    He become In senior citizen which date 01.03.2017.
    Fy 2016-17 taxable income 508100.
    Rebate U/C 87A which applicable or not due to Senior Citizen.
    Pl. Advise and clarification.
    If possible send your whatsapp number.

    Banshilal Purohit, Nagaur

  2. Gopinadhan says:

    I am an Indian with Resident status.
    I have got ₹10000 in the demonitized ₹1000 Notes. It was kept inside a book. It was found out later. Me wants to encash it by tendering before The Reserve Bank of India.

    Please advise me as to how can I can encash it without penalty.

  3. I am overseas citizen of India . Have arrived in Delhi on 18 Feb from UK. Approached the Customs Officer to certify that i have brought old Rs 500 and Rs 1000
    notes from UK for exchanging into new notes (Rs 25000 in total). He showed me taxguru site which mentioned that OCI/PIO
    cannot exchange old notes. He , therefore, refused to certify. In the circumstances what option is available to me. Mine Rupees are hard earned and not black money.I am in India until 17 March 2017.

  4. Bharat Jain says:

    During the demonetization period my wife was at her native place and she gave birth to child by cesarean delivery and due to it she could not move from native place to Surat. Now she came to Surat after 3 months rest after delivery and she found some old currency notes in his locker.
    Now she want to exchange but we come to know that their is no any policy to exchange it for normal Indian People.

  5. MITHUN says:

    Some charitable, religious & educational institutes accepted donations, subscriptions & fees (tuition fees in case of educational institutes) in old notes after 08-11-2016 and deposited them in their bank accounts.

    Banks have also credited the same in their accounts and most of the money have been withdrawn now from these accounts.

    What is the legal validity of these deposits?

    What will Government do if these organizations show these amounts as their receipts and show matching expenses accordingly, as their income is already exempt under income tax?

  6. MITHUN says:

    Some charitable, religious & educational institutes accepted donations, subscriptions & fees (tuition fees in case of educational institutes) in old notes after 08-11-2016 and deposited them in their bank accounts.
    Banks have also credited the same in their accounts and most of the money have been withdrawn now from these accounts.

    What is the legal validity of these deposits?

  7. Subrahmanyam says:

    What about those Indian citizens who are touring outside, and who can not be back in India by 30th
    December 2016, and who have the old 500 and 1000 rupee notes( carried along with them abroad)
    Can they deposit those notes into their bank accounts upto 30th March 2016? The FAQ should have made this pint also clear. I have raised this quiry with RBI and PMO’s office, but no reply yet as anticipated

    1. Subhash says:

      My daughter is studying in USA and while going to USA in July, 2016, she was carrying some money in old Rs.500 and Rs.1000 notes. she will be able to come back in May, 2017 only.

      How she can exchange or deposit those money with her. Office of Indian embassy is also very far of place from her place of study.

  8. PRAVIN SHETH says:

    date 30 November 2016
    referring point no. 27, as regards to the issue of senior citizens, we do not find any separate icon board for senior citizens, at bank gate entry,
    i have visited axis bank , surat on 15th November 16 and SBI on 28 November , both at afternoon, there was lot of rush and big que, but when i inquired, where is separate que for senior citizens, and where is board, indicating it,the simple reason was WAIT, there is lot of rush AND WE WILL try, as if they are obliging senior citizens, and i saw also many senior citizen were in a que also, so, the ground truth is different, , HOPE , NECESSARY INSTRUCTIONS ARE PERCOLATED AT GROUND LEVEL ALSO, AND IF THEY ALREADY HAVE MADE SOME ARRANGEMENT, FOR A SEPARATE QUE FOR SENIOR CITIZENS, PL LET US SEE THE PHOTOGRAPH WITH DIGITAL DATE.

    how that to withdraw our own money,-( from closing balance prior to 8 November 16, ) or to deposit new notes, we have to go to our own principal bank where we have opened our account- is it not difficult for outstation customers to go al the way to their principal branch and is it not incurring unneccesarily additional cost, to customer, what is the value of gigitalisation!!!,
    more over, at ATM center also , there is no separate que.,
    we appreciate the present change over system BUT, pl. try to understand our constraints also,
    from our physical structuure, and appaearance, can bank not recognize, that at least we are senior citizens and to above 60 + !!!!, for such cases, bank should issue us a separate icard so that, no one can stop us and ask to stand in normal que,
    banjk shoukd learn lesion from railway- as there are separate boards for senior citizen, so no one can object on our priority.
    senior citizen, age 75, gujarat,
    pl, excuse for any english or any typing mistakes

  9. Ramana says:

    Dear Sir,
    My wife received a site from his father as gift. We sold the site in Aug 2016 and deposited sale consideration in my wife account. Is it necessary to pay tax? If yes what tax ? Which tax and what percentage? Or can we buy site with the same amount or use for construction of house? Please suggest us.

  10. T N PILLAI says:

    A Good FAQs and informative. But laws on violations and offenders are not listed. The law breakers will make all norms to break the schemes. Unless these cases are booked, full success is a question mark. Also Banks responsible for fraudulently exchanging currency must also be booked and investigated

  11. Hemant Taparia says:

    Can any one explain why there is a difference :

    Current a/c having cash credit (CC) facility is allowed to withdraw only 24000/- and having Normal current account can withdrawn 50000/-.

  12. Dr.Naresh L.Joshi says:

    It is really important bold step to demonetise of currency I support this patriotic action taken by GOI Good information given by RBI through FAQS.

  13. Auditor Ramani says:

    Choose a demonitisation day (say) once in 3 yrs. Let the next demonitisation day be (say) 30/09/2019. This can be announced in advance.. Ten days before that day all ATMs would stop functioning and cash will be filled in ATMs. From 01/10/2019 ALL currency of earlier period would be invalid and they can be deposited or exchanged only in bank/PO as the case may be till 31/12/2019. Just because we have lot of time RBI,Banks, households all can plan their requirements. Thus, after the said date the ALL old currency would be invalid and hence they have to come to the main stream before the due date. This way stacking of notes in sacks, under beds, in pillows, in lofts, etc.. would come to an end.Prices will automatically get settled. No currency and hence criminals will be away from politics and only genuine people who are not greedy about money will remain.All sorts of corruption will come to an end.. Most important the aspired cash less economy would start functioning as a miracle.

  14. Kochumani says:

    Modi Govt. has done a good work. But, instead of introducing 2000 note, should have instroduced Rs. 200 or 300 note as bribers again have a chance of hoarding black money. They can happily accept Rs. 2000/- note instead of Rs. 1000/- double benefit.

  15. VIVEKANANDAN M says:

    I have to come to USA on 04/11/2016 and planned to stay till 23/04/2017. I have some cash at home India which cannot accessed by anybody else. The cost of travelling going back to India Will be more than amount to be deposited in the Bank. I have sent a mail to RBI but till now no reply. How should I go about in this case.

  16. K.LAKSHMAN. says:

    Banks should be asked to open special counters for this purpose until the position eases.The tendency
    to direct customers to automated cash collecting machines should be curbed and every assistance provided for smooth transactions at the Branch, under these extraordinary circumstances. K.LAKSHMAN.

  17. N.k.chhabra says:

    I want to request the Finance Minister and Reserve Bank Governor to issue firm order that those who write on the currency notes shall not be able to make use the currency notes and the shall become void.
    This is very important and publicity should be given.
    All should feel because we love our country

  18. Nem Singh says:

    If you have much more money in stock deposit it in bank or distribute to zero balance account holders so that they can utilise your black money for personal needs and general public interest in place of agents in the market who assure you for safe custody of your money.

    Deposit in bank and pay tax and relax for future.

  19. Suresh B says:

    Problem in Repayment of Credit card with in due date or Payment of EMI against Personal Loan or Car Loan or Home loan will be affected due to inadequacy of cash deposit on 9th or 10th Nov’16.Will they waive off any financial charges levied by the Bank or Financial Institution or the party? and also waiving cheque bouncing charges?


    Dear Sir,
    We are running a car dealership company, i have one doubt regarding the acceptance of existing Rs.500 and Rs.1000 cash. Whether we can accept cash of such notes supported by a valid PAN of the customers. The same cash can be deposited within 31st December 2016?

    1. Airy and Associates says:

      You can accept such cash on your behalf as sale or revenue and you can deposit such amount by 30 Dec. 2016.
      You don’t need to take PAN of customers because a businessman may have thousands of customers and banks have not that time to see each and every PAN of your customer.

      For any query email us: airyandassociates@gmail.com

      1. Vidyadhar Swami says:

        Mr. Airy &…. are you really in air? Don’t misguide the public? How can a car dealer accept illegal currency? Kindly tell me Mr. Airy, who told you?

  21. Girish says:

    Well, Modiji has attempted a good move . However he should have brought in Rs 200 denomination notes instead of Rs 2000, the reason being as a common man for e.g if you have to do a transaction there is no one who will give you change for Rs 2000 denomination. This currency will further increase the problem of a common man for obtaining change.
    The hoarder the high-value denomination like Rs 2000 will be very easy to hoard.
    Experts in Finance deptt in Govt have left the loophole for the big timers.

  22. Sumit Kumar Swarnakar says:

    A landmark decision by Modi Sarkar. I Heartily welcome it.

    Similarly a Big Question was there on new Rbi governor Mr. Urjit Patel. Whether he is eligable or jot? whether he can fulfill the vacancy of Ex-Governor Mr. Raghuram Rajan?

    and what I personlly believes that “We got our Answer”

    1. Sunil Nagar says:

      Dear Sir
      I was purchased Plot in Jan 2013 & Construction House with Material from Contractor in Feb 2015. After Complete House in July 2015 I Want sale combined property (Plot+House) in Nov 2016 hence i want how to calculate Gain if Short Term ya Long Term

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