Friday, 11 November 2016

Demonetization of Indian Currency

Tanish Khandelwal student of BBA LLB
Tanish Khandelwal
Student, BBA-LLB(Hons.)
The NorthCap University, Gurugram

Summary of PM Shri Narendra Modi’s Statement:

Enough is Enough! Need to take a strong step! Need to stop black money and corruption!

Earlier Steps’ Outcome:

In the past two and a half years, over Rs1.25 lakh crores of black money had been recovered from outside India.

New Law:

From 12:00 am of 9th November 2016, currency notes of Rs500 and Rs1000 become void. It will not be in circulation.

Procedure for conversion/ deposit of old currency notes:
  1. From 10th November 2016 to 30th December 2016, a person can deposit in Banks or in Post offices. (An appropriate 50 days of time span is allowed)
  2. From 10th November to 30th December 2016, a person can withdraw from Banks, Post offices and Sub Post offices by producing any valid nationality card like Aadhar Card, Voter Card, Ration Card, Pan Card, Passport etc. as evidence and exchange his/ her money.
  3. A person needs to deposit the old currency notes in his/ her bank account. 
  4. For now, the limit for withdrawal from bank accounts is maximum of Rs 10,000 per day uptoRs 20,000per week. (It may increase as per time).
  5. For them who are unable to exchange upto 30th December 2016, for any reason, they will get a chance to deposit till 31st March2017 in any RBI branch with a valid declaration letter.
ATM Procedure:

Initially the limit on withdrawal from ATMs will be Rs2,000 per day per card, which will later be increased to a limit of Rs 4,000 per day.

Exemptions:

Some exemptions are allowed on humanitarian ground and situations of emergency.
A time period of 72 hours is allowed i.e. from 9th November to 11th November 2016 midnight.

Transaction of old currency notes of higher denomination is acceptable:
  • In Government Hospitals and Pharmacies.
  • In purchasing of tickets of Railways, Airlines, Buses (only for purchasing of tickets).
  • at permitted Ration Shops by Central Government and State Governments, subject to the condition that these shops have to keep the records in proper register on daily basis.
  • In payment for CNG, Petrol etc. of Public Sector Undertakings (record on daily basis).
  • For International Airports the limit is of 5k, same with of foreign currency.
Important Notes:
  1. It will not affect the e-transactions or non-cash transactions i.e. payments by checks, demand drafts, debit credit cards.
  2. RBI has taken a decision for all Banks to be closed on 9th November 2016 and open on 12th and 13th November 2016.
  3. Notes of Rs100, 50, 20, 10, 5, 2 and 1 will have no effect.
Reasons for the Change:
  1. The Berlin-based corruption watchdog Transparency International (TI) has put India at rank 76 out of 168 countries in its latest Corruption Perception Index.
  2. Counterfeit currencies are being used for financing terrorism.
Prime Minister’s Appeal:
  • Need for corporation.
  • No need to hurry.
  • Your money will be yours only.

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