1. Demonetisation of old Rs 500 and Rs 1000 notes: 10 developments so far that you should be aware of

Demonetisation of old Rs 500 and Rs 1000 notes: 10 developments so far that you should be aware of

Demonetisation: From extending use of old Rs 500 and Rs 1000 currency notes for certain transactions to hiking withdrawal limits from ATMs and banks, we take a look at 10 things we know so far

By: | Updated: November 15, 2016 1:17 PM
Demonetisation, Demonetisation of currency, Demonetisation in India, Demonetisation of 500 note, Demonetisation of 1000 note RBI and government are regularly reviewing cash withdrawal limits at banks and ATMs to reduce the inconvenience to common man. (PTI Photo)

Even as Narendra Modi government’s massive demonetisation drive plays out, the RBI and government are regularly reviewing cash withdrawal limits at banks and ATMs to reduce the inconvenience to common man. The government has clearly said: There is enough cash in the system to meet the requirement. Members of the public are, therefore, advised not to have any sense of panic. However, reports from across the country indicate that people are queuing up to exchange old notes and withdraw money day after day. Many banks and ATMs are running out of cash to cater to the demand. The government has announced a series of new steps to improve the situation. From extending use of old Rs 500 and Rs 1000 currency notes for certain transactions to hiking withdrawal limits from ATMs and banks, we take a look at 10 things we know so far about the big reform and its implications for the public:

1) How much can you withdraw from the bank? The withdrawal limit of Rs 20,000 per week has been enhanced to Rs 24,000. The withdrawal limit of Rs 10,000 per day has been removed.

Business entities having Current Accounts which are operational for last three months or more will be allowed to draw Rs 50,000 per week. This can be done in a single transaction or multiple transactions.

2) How much can you withdraw from the ATM? The ATMs are progressively getting recalibrated. As and when they are recalibrated, the cash limit of such ATMs will stand enhanced to Rs 2500 per withdrawal. This will enable dispensing of lower denomination currency notes for about Rs 500 per withdrawal. Other ATMs which are yet to be recalibrated, will continue to dispense Rs 2000 till they are recalibrated.

Also read: Modi government may restrict your cash holdings and transactions above certain limit: Report

The limits are likely to be raised to Rs 4,000 per day per card from November 19, 2016. Banks have been advised to provide all cash withdrawal transactions at their ATMs free of cost to their customers till December 30, 2016.

3) What is the new limit for exchanging old Rs 500 and Rs 1000 notes? The limit of Rs 4000 for over the counter exchange against old Rs 500 and Rs 1000 notes has been increased to Rs 4500. This will enable the Banks to give lower denomination notes for Rs 500 while dispensing the remaining Rs 4000 through Rs 2000 notes. Carry a valid proof of identity, along with its photocopy, for availing this exchange facility.

Also, you are allowed to exchange up to Rs 4,500 only ONE time. To prevent people from exchanging their old notes multiple times, the government has decided to use indelible ink on the finger of the person who is exchanging notes.

4) Additional steps for convenience:

  • Banks have been advised to arrange separate queues in their branches for senior citizens and divyang persons; customers for transactions against accounts held with the Bank; and exchange of notes. There will, therefore be, three or more separate queues in every branch.
  • Micro ATMs will be deployed to dispense cash against Debit/Credit cards up to the cash limits applicable for ATMs. The handheld Micro ATMs have the facility of mobility and deployment at the required places. This would specially help to ease cash crunch in rural and semi-urban areas.
  • The toll suspension for all national highways has been extended till midnight of 18th November. Also, parking at all Indian airports will be free until November 21.
  • There are reports that the government has decided to take the help of Indian Air Force (IAF) to transport the newly-minted cash to the banks. Reserve Bank of India has already sent new currency notes to banks and ATMs in Jharkhand’s Bokaro by helicopters.

5) Use of old Rs 500 and Rs 1000 notes extended till? The existing exemptions for acceptance of old Rs 500 and Rs 1000 notes for certain types of transactions are being extended beyond 14th November, 2016 midnight up to 24th November, 2016 mid night. This implies that you can use your old notes at authorised public sector oil companies’ petrol, diesel and gas stations, government hospitals, railway ticket booking, ticket counters of government buses and airline ticket counters at airports. You can also use them at milk booths authorised by state governments, crematoria and burial grounds, consumer co-operative stores authorised by State or Central government.

6) Deposits of Rs 2.5 lakh and above to attract 200% tax: Cash deposits above Rs 2.5 lakh threshold under the 50-day window could attract tax plus a 200% penalty in case of income mismatch. A case of mismatch would be treated as tax evasion. “This would be treated as a case of tax evasion and the tax amount plus a penalty of 200 per cent of the tax payable would be levied as per the Section 270(A) of the Income Tax Act,” Revenue Secretary Hashmukh Adhia has said.

7) E-payments: There is no restriction of any kind on non-cash payments by cheques, demand drafts, debit or credit cards and electronic fund transfer.

8) Postal network: There are about 1.3 lakh Branch Post Offices in the country. It has been decided to enhance the supply of cash to Branch Post Offices to facilitate cash withdrawals from Postal Accounts. It may be noted that with 1.2 lakh BCs and 1.3 lakh branch Post Offices getting further activated, a total number of 2.5 lakh points in rural areas will be available to disburse cash and facilitate cash withdrawals from Bank Accounts.

Also read: 7 vital financial & home lessons for you from cash crunch post ‘demonetisation’ of Rs 500, Rs 1000 notes

9) What if you are unable to exchange your old notes by December 30, 2016? If you are unable to exchange or deposit the specified banknotes in your bank accounts on or before December 30, 2016, you will be given an opportunity to do so at specified offices of the Reserve Bank or such other facility until a later date as may be specified by the Reserve Bank. PM Modi in his address has said that this extended deadline would be till March 31, 2017 and will need you to submit a declaration form.

10) New Rs 1,000 notes coming soon: The Rs 1,000 note will return in a new avatar soon, with a major overhaul and image makeover. haktikanta Das, Department of Economic Affairs (DEA) Secretary has said in the next few months, new color combination, new dimension and design 1000 rupee notes will be released.

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