11 Nov 2016

Rishabh Tripathi

Ban On Rs 500 and Rs 1000 Notes - All the Knows And Hows You Should Know

The bold move taken by the Prime Minister has taken whole of the country by surprise . The demonetisation  of current series of Rs 500 and Rs 1000 notes with immediate effect has left people with a bundle of questions and confusions about the new big move. Here I've tried to answer all your queries and confusions.


What is this demonetisation scheme ?
The Old High Denomination ( OHD) notes means Rs 500 and Rs 1000 notes cannot be used for any type of transaction and of any store of value for future storage. The legal tender character of the notes in denominations of Rs 500 and Rs1000 stands withdrawn. 

Why this Scheme ?
The black money and the other terrorist fundings , smuggling and the fake currency and other illegal activities were executed by the misuse of OHD's i.e. Rs 500 and Rs 1000 notes. India remains a cash based economy hence the circulation of Fake Indian Currency Notes continues to be a menace. So in order to take control of such activities the bold step is taken.

How much value of money will I get ?
You will get entire amount at bank branches and RBI offices.

Can I exchange whole of the amount I have in cash ?
No. You will get upto Rs 4000 per person in cash irrespective of the size of tender and anything over and above that will be receivable by way of credit to bank account. 

What is the time period of exchange ?
The OHD banknotes can be exhanged upto 30th December 2016. For those who are unable to exchange their Old High Denomination Banknotes on or before December 30, 2016, an opportunity will be given to them to do so at specified offices of the RBI, along with necessary documentation as may be specified by the Reserve Bank of India. 

Can I withdraw from ATM ?

Once the ATM's are functional you can withdraw Rs 2000 per day per card upto 18th November. The limit will be raised to 4000 per day per card from 19th November onwards.

What if I have an emergency ( hospitalisation, travel , life , medicines ) ?
You can use the OHD notes for paying for your hospitalisation charges at government hospitals, for purchasing bus tickets at government bus stands for travel by state government or state PSU buses, train tickets at railway stations, and air tickets at airports, within 72 hours after the notification. 


Need I go to my bank branch only ? 
For exchange upto 4000 in cash you may go to any bank branch with valid identity proof. 
For exchange over 4000, which will be accorded through credit to Bank account only, you may go to the branch where you have an account or to any other branch of the same bank. 
In case you want to go to a branch of any other bank where you are not maintaining an account, you will have to furnish valid identity proof .

But the move has its limitations too. It will be quite difficult for the poor or the underprivileged who do not have a bank account to exchange their OHD's. Also there will be people in the rural most sections of the country and in the remotest corner of the country  who will be unaware of the process of exchange and other measures taken.
 Credit (loans) will become easier and interest rates may come down. More loans given out increases broad money supply and creates inflation. But this will happen slowly, not over-night.

Whatever be its after effects but the move will surely help in curbing the black money and fake currency issue which will eventually reduce the terrorist activities