No more exchange of old Rs 500 and Rs 1000 notes

From today, Rs. 1,000 notes can be deposited in accounts only.

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Tightening its demonetisation policy, the Centre has announced that it would no longer allow over-the-counter exchange of old Rs 500 and Rs 1000 notes from Saturday. Another major aspect of the announcement was that the only way to use the old Rs 1000 notes+ would be to deposit them in a bank account.

It has been observed that over the counter exchange of the old currency notes of Rs 500 and Rs 1000 denomination has shown a declining trend,” read a government statement announcing the move.

It has further been felt that people may be encouraged and facilitated to deposit their old Rs 500 and Rs 1000 notes in their bank accounts. This will encourage people who are still unbanked to open new bank accounts. Consequently, there will be no over the counter exchange of old Rs 500 and Rs 1000 notes after midnight of 24.11.2016,” the statement added.

Bank deposits would benefit due to demonetisation, S&P said on Thursday. File Photo
Bank deposits would benefit due to demonetisation, S&P said on Thursday. File Photo

The announcement comes a day after the Reserve Bank of India issued a circular to all banking institutions asking them to take steps to ensure their staff members do not subvert the rules by facilitating exchange of currency notes illegally.

The Centre also announced that some of the exemptions that are in place for the use or exchange of the old currency notes would be extended till December 15. It however tightened the squeeze, saying the exemptions would only accept the use of the old Rs 500 notes. This means Rs 1000 notes will now be accepted only for deposits into bank accounts.

Payment of utility bills and arrears will continue to be accepted, but these payments have now been limited to water and electricity, and that too only for individuals and households.

Foreign citizens will be permitted to exchange foreign currency upto Rs 5000 per week, with entries of these transactions recorded in their passports.

Other exemption categories that will continue for the use of the old Rs 500 notes are the payment of school fees up to Rs 2000 in government-run schools and colleges; mobile phone top-ups up to Rs 500 and purchases from Consumer Cooperative Stores up to Rs 5000 at a time.

The old currency notes would also be accepted for payments at toll plazas from December 3 to 15, with the toll suspensions continuing till December 2.

This leaves a decreasing number of avenues for the use of the now-demonetised high-value notes – deposits into bank accounts or payment of dues and arrears to select government departments – and pushing towards the government’s idea of a cashless economy. Earlier in the day, Union Finance Minister Arun Jaitley had said there are 80 crore debit cards in the country, of which 40 crore are active.

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