All 1000 and 500 currency notes withdrawn by Government wef 09.11.2016

In a surprise move, the union government on Tuesday, announced that from midnight, Rs 1000 and Rs 500 currency notes would no longer be legal tender.

Going forward the government has also capped ATM withdrawals to Rs10,000 a day to Rs20,000 a week. It said this limit would be increased in coming days.

People can deposit Rs 500 and Rs 1000 notes in banks and post office savings accounts till 30 December. They can also exchange up to Rs 4000 at banks by showing their ID till 24 November. Those unable to deposit their Rs1000 and Rs500 notes by 30 December for some reason, can change the notes till 31 March, 2017 by furnishing ID proof.

All banks will remain closed on 9 November. ATMs will not work on 9 November and in some cases, even on 10 November. The government has said old Rs 500 and Rs 1000 notes will continue to be legal tender for 72 hours in petrol stations, government hospitals, and cremetoria.

The Reserve Bank of India (RBI) is expected to introduce new Rs 500 and Rs 2000 notes in limited quantities shortly.

In an address to the nation prime minister Narendra Modi said this decision had been taken to break the unholy nexus of corruption, black money and terrorism.

Implicitly, the Prime Minister is signalling an acceleration of the country towards a cashless economy.

“In every nation’s destiny comes a time when the actions taken have a defining impact on its destiny. We are at one such moment today,” Modi said.

The government’s actions come in the backdrop of a sustained effort to target black money in the country. Modi disclosed that so far the government has unearthed Rs1.25 trillion in black money.

It has just closed out a voluntary disclosure scheme, ahead of which the prime minister had warned that this was the last and final chance for the errant to come clean.

 “People with undisclosed assets have an opportunity to declare their assets before 30 September. This will also help them avoid difficulties which they might face later. We lose our peace by violating rules, why not give correct information about our income and assets to the government?” Modi said during his monthly radio address, Mann ki Baat, in June.

RBI governor Urjit Patel in a press conference said there hasn’t been a breach of security features but Rs500 notes and Rs1000 notes are in large circulation. “We have ramped up our production of lower currency denomination notes to meet the requirement,” the RBI governor said.

In a notification last Wednesday, RBI had asked banks to calibrate 10% of their ATMs to dispense Rs 100 notes exclusively on a pilot basis.

“In keeping with the objectives of Clean Note Policy and to ensure that genuine requirement of members of public for Rs100 denomination banknotes are met, the banks should increase dispensation of Rs100 banknotes through ATMs which are widely used for distribution of banknotes for retail use,” RBI said.

In a 21 October report, Business Line said that banknotes of the denomination of ₹2,000 will be in circulation soon. RBI has very nearly completed preparations for introducing this new high-value currency, the report said, citing unnanmed sources.

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