In the light of excessive black money circulation, Prime Minister Narendra Modi on Tuesday evening announced in what comes as a key economic decision, the demonetization of Rs 500 and Rs 1,000 currency notes with immediate effect.
In a televised address to the country directly, Modi said that from midnight of 8th November all Rs 500 and Rs 1,000 rupee notes would be illegal in all forms of transactions, except with certain conditions.
He addressed this as a solution to work towards hoarding black money and creating a new inflow of cash for the Indian economy.
Following are the significant takeaways from this decision:
Milk booths, crematoria, hospitals exempted from ban till November 11th
Upto November 24th exchanges of old currencies will be allowed in banks and Post Offices by showing ID proof like aadhaar card and PAN card.
An ATM upper limit withdrawal up to Rs. 4000 will be put into place for security reasons until all people have sufficient legal notes in place.
Old notes can be deposited in banks till Dec 30, 2016. All banks and ATMs will be shut on Nov 9.
The old notes can, however, be used to buy air and rail tickets at the counter for a certain period only.
Card payments and other online transactions will work as usual
Soon after the Prime minister’s address, the RBI governor Urijit Patel while briefing a press conference released displayed the "specimen" of new 500 rupee note that has an image of the Red Fort and will be known as Mahatma Gandhi series of bank notes. The Rs 2000 note has the Mangalyaan, signifying the importance of scientific contributions. The sizes, however, will be smaller than the current notes.
The RBI governor said, "Fake Indian currency notes of Rs 500 and Rs 1000 have been increasing" in circulation. The governor also said that production of lower currency denomination notes to meet the requirement has been ramped up.
In the last five years, circulation of Rs 500 notes has increased by 76% and Rs 1000 notes by 109%, while the economy has expanded at 30%, said Shaktikantha Das, secretary of Economic Affairs.
While the RBI committee continues to answer questions in the press conference, the following are the control room numbers they have released for safety and security purposes. 022- 22602944. 011-23090230. 22602201.
The RBI committee also appealed to the public that they should not approach people holding unaccounted/ illegal cash for exchanging lower denominations since the banks will be scrutinizing and keeping a tab over every note that is being exchanged.