The government has observed the growing menace of fake Indian currency notes and the black money’s use for financing terrorism across the border.
In the past fiscal year 2015-16, the Indian currency note’s circulation for the Rs.500 and Rs.1000 notes had rose to 76% and 109% and therefore, scrapping down these two high denominations of the Indian currency, is definitely one of the best ways to fight back the shadow of ghost economy that was damaging the real economy.
Prime Minister Narendra Modi said “starting midnight from Nov 8, these notes will only be “the paper they are printed on." The decision has come out to the public as a big surprise and their reactions on the social media show great support and enthusiasm upon the financial surgical strike.
Despite some inconvenience, the decision has been welcomed by the tax payers as this method of demonetization will cut the ties of black money hoarders/non-tax payers and bring down the use of counterfeit of the Indian currency for illegal purposes.
“There will be no change in any other form of monetary exchange -- cheque, DD, payment via credit or debit cards,” said the RBI governor.
People who possess currency notes of these denomination can exchange them in banks and head and sub post offices from November 10 to December 30, by providing a valid proof for identity such as Aadhar card, PAN card or voters ID card. Post December 30, these notes will be accepted only by the Reserve Bank of India after submitting a declaration. It is also been addressed by the PM in his first ever televised interview that, “From midnight today, till November 10, ATMs will not function. Banks will be closed for public transactions tomorrow.
He added in detail, “For a few days, cash up to Rs.2000/- only can be withdrawn from ATMs. This will be enhanced to Rs.4000/- later on. The withdrawal limit for ATM will eventually be fixed at Rs.10,000/- per day and Rs.20,000/-per week”.
There are some exemptions: Government hospitals, pharmacies at Government hospitals, public sector-run petrol bunks, and burial grounds. Airports will make arrangements to inform international travelers that the cash limit is Rs.5000.
All other denominations such as Rs.100, Rs.50, Rs.10, Rs.5, Rs.2 and Re. 1 note as well as coins will continue in circulation unaffected. Although, the legal status of the tender notes Rs. 500 & 1000 have cancelled with immediate effect, people will have about 50 odd days to get the exchange their total amount from banks.
There also this update that soon the new notes Rs.2000 & Rs.500 would be released for regular economic transactions, however the note of Rs. 1000 might not be rolled back. In the new specimens the government and the RBI have taken utmost care to avoid any kind of breach on its security.