AGENCY
NEW DELHI: Taking the nation by surprise, Prime Minister Narendra Modi announced demonetisation of Rs 1000 and Rs 500 notes with effect from Tuesday midnight, making these notes invalid in a major assault on black money, fake currency and corruption.
In his first televised address to the nation, Modi said people holding notes of Rs 500 and Rs 1000 can deposit the same in their bank and post office accounts from November 10 till December 30.
In his 40-minute address, first in Hindi and later in English, the Prime Minister said the notes of Rs 500 and Rs 1000 “will not be legal tender from midnight tonight” and these will be “just worthless piece of paper.”
However, he said that all notes in lower denomination of Rs 100, Rs 50, Rs 20, Rs 10, Rs 5, Rs 2 and Re 1 and all coins will continue to be valid.
He also announced that new notes of Rs 2,000 and Rs 500 will be introduced.
ATM withdrawals will be restricted to Rs 2,000 per day and withdrawals from bank accounts will be limited to Rs 10,000 a day and Rs 20,000 a week.
Banks will remain closed tomorrow and some (rpt) some ATMs will also not function on Wednesday and day after as RBI stocks banks and ATM machines with lower denomination notes, Modi said.
He expressed confidence that the staff of banks and post offices will rise to the occasion to introduce the new order within the available time.
He also expressed confidence that political parties, workers, social organisations and the media will go further than the government in making it a success.
Besides depositing money in bank accounts, the Rs 500 and Rs 1,000 notes can also be exchanged with lower denomination currency notes at designated banks and post offices on production of valid government identity cards like PAN, Aadhaar and Election Card from November 10 to November 24 with a daily limit of Rs 4,000.
Those unable to deposit Rs 1,000 and Rs 500 notes till December 30 this year can do so in designated RBI offices till March 31 next year after filling a declaration form along with proof and reasons, the Prime Minister said.
Rs 500 and Rs 1000 notes will be valid for transactions related to booking of air tickets, railway bookings, government bus ticket counters and hospitals till the midnight of November 11 and 12.
“Banks will be closed tomorrow. It will cause some hardship to you….Let us ignore these hardships… In country’s history, there comes a moment when people will want to participate in the nation building and reconstruction. Very few such moments come in life,” Modi said.
While making the announcement, the Prime Minister said the sweeping measures were aimed at curbing the “disease” of corruption and black money which have taken deep root.
“There is a need for a decisive war against the menace of corruption, black money and terrorism… Corruption, black money and terrorism are festering wounds which make the country hollow from within,” he said, adding such activities hold back the nation’s progress.
Describing illegal financial activities as the “biggest blot”, Modi said that despite several steps taken by his government over the last two-and-a-half years, India’s global ranking on corruption had moved only to 76th position from 100th earlier.
“This shows the extent of the web of corruption in the country. The disease of corruption is the domain of some veted people who are flourishing. Some people have misused their positions and benefitted. On the other hand, honest people are suffering,” he said.
He linked fake currency to terrorism and questioned how enemies of the countries are using such methods to harm India.
“We have to get rid of this termite of corruption,” he said.
It hit middle class, small traders: CPI (M)
Kolkata: Hitting out at Prime Minister Narendra Modi’s “absurd” announcement of scrapping Rs 1,000 and Rs 500 notes with effect from midnight, Congress and CPI(M) on Tuesday night said the decision would have a drastic impact on the financial health of middle class and small traders.
“We are always in support of unearthing black money. But after 2.5 years of silence on the issue, the Centre all of a sudden decided to scarp the Rs 500 and Rs 1,000 notes. This is nothing but absurd. This decision will have a drastic impact on small traders and the middle class,” CPI(M) politburo member Mohammed Salim said.
Former PCC president and Congress MP Pradip Bhattacharya too termed the decision as “arbitrary and anti-poor”.
“Tomorrow when people of India will wake up, they will be unable to use the Rs 500 and Rs 1,000 notes. What will they do then? This is nothing but an arbitrary decision which will impact small traders, middle class and poor people of the country. Many people of our country still do not have access to banks. What will they do?,” he asked.
Taking the nation by surprise, the Prime Minister tonight announced demonetisation of Rs 1,000 and Rs 500 notes with effect from midnight, making the notes invalid in a major assault on black money, fake currency and corruption.
Banks to open more counters, work extra hours to exchange notes
New Delhi: Banks will open additional counters and work extra hours beginning Thursday to help people exchange Rs 500 and Rs 1000 notes that have been declared invalid from midnight tonight.
Anticipating panic and rush at bank counters, RBI as well as government has set up control rooms in Mumbai and the national capital to avoid any crisis, Department of Economic Affairs Secretary Shaktikanta Das said.
Banks will remain shut on Wednesday to allow stocking of smaller currency notes and public will be allowed to tender their now invalid Rs 500 and Rs 1000 from November 10.
They can deposit any amount of the invalid currency in their bank account till December 30 and also exchange them for lower banknotes at special counters at banks and post offices till November 24 but with limit of Rs 4,000 in a day. Bank will however report any unusual transaction to Financial Intelligence Unit and tax authorities for scrutiny.
RBI Governor Urjit Patel said the central bank had ramped up production of the new higher security currency notes of Rs 5,00 and Rs 2,000 that will replace the notes being taken out of circulation.
The new notes will come into circulation from November 10, he said.
He linked the government decision to use high denomination currency notes for terrorism financing and also for holding black money.
While overall currency circulation had increased by 40 per cent during 2011 to 2016, Rs 500 banknotes in circulation had gone up by 76 per cent and that of Rs 1000 by 109 per cent.
As many as 16.5 billion notes of Rs 500 denomination are in circulation currently while 6.7 billion Rs 1,000 notes are in market.
While the government imposed strict cash withdrawal limits – Rs 2000 from ATM and Rs 10,000 from bank account in a day and Rs 20,000 in a week, Patel said there will be no impact on liquidity in the markets including financial markets.
The cash withdrawal limits will be relaxed gradually as small currency denomination notes are adequately stocked with banks and ATMs and new currency notes come into wide circulation.
A high-security Rs 1000 currency note will be re-introduced at a later date, Das said.
Das said infusion of Rs 2,000 note will be closely monitored and regulated by RBI.
A bold decision: SIT ON BLACKMONEY
New Delhi: The Special Investigation Team (SIT) on black money on Tuesday called Prime Minister Narendra Modi’s announcement of demonetisation of Rs 1,000 and Rs 500 notes with effect from midnight a “bold” step, saying this would help in curbing the menace of stash funds.
“This is a very good decision. It is a bold step and will help to curb the menace of black money,” SIT Chairman Justice (retd) M B Shah said.
He said those people “holding untaxed assets and income” and who did not declare it under the two black money declaration windows announced by the government in the last two years “will suffer”.
“Those people who have accumulated black money through corrupt means … such money was in a few hands … they will be affected and that is a good thing. At this time, this is a very good step taken by the government,” he said.
“Such a step was necessary,” Shah said.
The SIT on black money was notified by the government, on the directions of the Supreme Court, in 2014.
In the biggest ever blackmoney disclosure, at least Rs 65,250 crore of undisclosed assets were declared under the one-time compliance window, also called the Income Declaration Scheme (IDS) that ended on September 30.
Last year, under a similar scheme for foreign black money holders, 644 declarations of undisclosed foreign income and assets were received, and just Rs 2,428 crore was collected in taxes.
However, senior Income Tax department officials have said that despite these two windows being operationalised the taxman was encountering black funds during their search and survey operations including a recent search in Kolkata where a businessman who declared Rs 3 crore under IDS was caught with possessing another Rs 30 crore untaxed assets.
HIGHLIGHTS
The government has outlined following steps to make it easier for citizens for the transition:
For the next 72 hours —
Government hospitals will continue to accept old Rs 500 and Rs 1000 notes for payments.
Ticket booking counters of railway, government busses and airlines counters at airports will accept the old notes for purchase of tickets.
Petrol, diesel and gas stations authorised by public sector oil companies to accept old notes.
Consumers cooperative stores authorised by state or central government, state government authorised milk booths will accept the old Rs 500 and Rs 1000 notes.
Crematoria and burial grounds will also accept the old notes.
In order to exchange the old notes, public can —
Deposit the old notes of Rs 500 and Rs 1,000 in banks or post office accounts from November 10, till December 30, 2016 without any limit.
There will be a limit on withdrawal of Rs 10,000 per day and Rs 20,000 per week. This limit will be increased in the coming days.
ATMs will not work on Nov 9 -10.
In the first few days there will be a limit of Rs 2,000 per day per card. This will be raised to Rs 4,000 later.
Exchange old notes of Rs 500 and Rs 1,000 at any bank or head post office or sub-post office amounting to Rs 4,000 while showing ID proof up to November 24.
No restriction of any kind of non-cash payments by cheque, demand draft, credit cards and electronic fund transfer.
