To break the grip of corruption and black money, we have decided that the 500 rupee and 1000 currency notes presently in use will no longer be legal tender from midnight tonight, that is 8th November 2016, announced PM Modi on 8 Nov 2016 . This article talks about the Ban on 500 Rs and 1000 Rs note, when such demotization was done earlier? Video of PM Narendra Modi speech,Excerpts from PM speech , new 500 and Rs 2000 note, how many 500 Rs and 1000 Rs notes are out in circulation, the reaction to Indians to ban.
Our article Demonetization in India 2016: Success or Failure talks about after 2 years we look at Was Demonetization a Success or Failure and see if we have met the objectives of Demonetization? if not how. Which countries also had demonetization and which were Successful and which were failure.
500 rupee and 1000 currency notes presently in use will no longer be legal tender from midnight of 8th November 2016 Please note There is no restriction of any kind on non-cash payments by cheques, demand drafts, debit or credit cards and electronic fund transfer. Your money is yours. The current 500, Rs 1000 notes are not useless. You can deposit your 500 Rs, 1000 Rs note in your own account. After depositing your money in your account, you can draw it when you need it. Five hundred and thousand rupee notes will not be legal tender from midnight of 8 Nov 2016. Details in Finance Ministry press release
- From 24 November, 2016 you cannot exchange old Rs 500 and Rs 1,000 note from any banks. But you can exchange at RBI offices. Our article How to Exchange Rs 500 and Rs 1000 Notes ? discusses it in detail.
- You can use old Rs 500 note at certain place from 24 Nov to 15, December, 2016. List of places where you can use old Rs 500 note are given in image below.
- Rs 1,000 cannot be used, only thing you can do with these note is to deposit old Rs 1,000 in your bank account only.
- You can only deposit those Rs 500 and Rs 1,000 note in your bank account and withdraw the desired amount from your bank account through cheque or ATMs.
- Old Rs 500 and Rs 1000 note can be deposited in your bank account upto 31 Dec, 2016 and after that with RBI branches upto March 2017. But in case of deposit at RBI you have to give declaration also.
- Weekly withdrawals limit of Rs 24,000 is unaltered. It mean that maximum withdraw you can do from your bank account in a week is Rs 24,000 only.
- Reserve bank of India (RBI) has doubled the limit on digital transactions through e-wallet like Paytm from 10,000 per month to Rs 20,000 per month.
- Daily ATMs withdrawal limit is Rs 2,500.
Table of Contents
What should you do with old Rs 500 and Rs 1000 notes
- From 24 November, 2016 you cannot exchange old Rs 500 and Rs 1,000 note from any banks. But you can exchange at RBI offices, given below.
- The limit has been decreased from the existing Rs 4,500 to Rs 2,000. The reduced limit is applicable from 18th November, 2016.
Our article How to Exchange Rs 500 and Rs 1000 Notes ? discusses it in detail.
Has something similar or Demontization done earlier?
It the third time that it has been done in India in 1946, in 1978 and now in 2016. Demonetization is the act of stripping a currency unit of its status as legal tender. Demonetization is necessary whenever there is a change of national currency. The old unit of currency must be retired and replaced with a new currency unit.
1946: Rs 1,000 and Rs 10,000 banknotes, which were in circulation, were demonetized in January 1946, primarily to curb unaccounted money. The higher denomination banknotes in Rs 1,000, Rs 5,000 and Rs 10,000 were reintroduced in the year 1954
In 1978, when the Janata government headed by Morarji Desai came to power, defeating the Congress after the emergency, the rationale for doing away with high denomination notes — of Rs 1,000, Rs 5,000 and Rs 10,000 was that it could help curb check illicit transfer of financing which was harmful to the national economy or for other illegal purposes. On January 16, 1978, the government said that high value notes would cease to be legal tender at the close of banking hours on that day and that all banks and treasuries of governments would remain closed for transactions — the next day on January 17. The High Denomination Bank Notes (Demonetisation) Act, 1978, kicked in which barred the transfer and receipt of high denomination bank notes. That law made any contravention including false declaration by depositors and others punishable — with a fine or a three year prison term. At that time gold and commodity prices fell sharply. But the impact was limited. Yet, ironically, a government committee headed by the chairman of CBDT, had in 2012 said in a report that demonetisation may not be a solution for tacking black money in the economy which it said was largely held in the form of benami properties, billion and jewellery. It would only increase the cost as more currency notes may have to be printed for disbursing the same amount. It could also have an adverse impact on the banking logistics.
How many Rs 500 and Rs 1000 rupee notes have to be replaced?
Short ans: Roughly around 2,300 crore pieces of Rs 500 and Rs 1,000 notes
Prime Minister Narendra Modi’s announcement to disallow use of existing Rs 500 and Rs 1,000 notes from midnight of 8 caught everyone by surprise.
According to Reserve Bank of India data, the total outstanding currency in circulation in the Indian economy as on October 28 stood at Rs 17.77 lakh crore. We don’t know how much of this comprises Rs 500 and Rs 1,000 notes.
But an indicator of what it could be can be seen from the RBI’s latest Annual Report. This data shows that out of the total Rs 16.42 lakh crore value of bank notes in circulation as on March 31, 2016, as much as Rs 14.18 lakh crore, i.e over 86 per cent, consisted of Rs 500 and Rs 1,000 notes. In terms of volumes, out of the total 9026.6 crore banknote pieces, 2,203 crore or 24 per cent-plus were of Rs 500 and Rs 1,000 denomination.
How many 500 Rs and 1000 Rs notes were in circulation
New Rs 2000 and 500 Rs notes
New Rs 500 and Rs 2000 notes will be introduced by RBI. The images released by RBI for Rs 500 and Rs 2000 rupee note are as follows. Our article New Rs 500 and Rs 2000 notes : Features,Comparison discusses these in detail.
New 500 Rupee Note
New 2000 rs note
New 2000 Rupee Note
PM Narendra Modi Speech
Excerpt of PM Speech of why 500 Rs and 1000 Rs note were stopped as legal tender is given below. You can read full text of PM Speech on Narendra Modi’s site and view YouTube video,given below here.
The magnitude of cash in circulation is directly linked to the level of corruption. Inflation becomes worse through the deployment of cash earned in corrupt ways. The poor have to bear the brunt of this. It has a direct effect on the purchasing power of the poor and the middle class. You may yourself have experienced when buying land or a house, that apart from the amount paid by cheque, a large amount is demanded in cash. This creates problems for an honest person in buying property. The misuse of cash has led to artificial increase in the cost of goods and services like houses, land, higher education, health care and so on.
High circulation of cash also strengthens the hawala trade which is directly connected to black money and illegal trade in weapons. Debate on the role of black money in elections has been going on for years.
To break the grip of corruption and black money, we have decided that the five hundred rupee and thousand rupee currency notes presently in use will no longer be legal tender from midnight tonight, that is 8th November 2016. This means that these notes will not be acceptable for transactions from midnight onwards. The five hundred and thousand rupee notes hoarded by anti-national and anti-social elements will become just worthless pieces of paper. The rights and the interests of honest, hard-working people will be fully protected. Let me assure you that notes of one hundred, fifty, twenty, ten, five, two and one rupee and all coins will remain legal tender and will not be affected.
So, in this fight against corruption, black money, fake notes and terrorism, in this movement for purifying our country, will our people not put up with difficulties for some days? I have full confidence that every citizen will stand up and participate in this ‘mahayagna’. My dear countrymen, after the festivity of Diwali, now join the nation and extend your hand in this Imandaari ka Utsav, this Pramanikta ka Parv, this celebration of integrity, this festival of credibility.
This step will strengthen the hands of the common man in the fight against corruption, black money and fake currency. To minimise the difficulties of citizens in the coming days, several steps are being taken.
How Indians have reacted to Scrapping of Rs 500 and Rs 1000 note?
The announcement was met with widespread shock and confusion as people try to make sense of how it will impact their transactions of all kinds. Some are calling it a surgical strike of a different kind. Still others, an example of Modi ‘Trump’ing over one of the biggest roadblocks in India’s path to prosperity.
President Pranab Mukherjee called upon people not to panic and follow Govt guidelines for exchange of Rs 1000/500 notes. He welcomed bold step of Government of India which will help unearth unaccounted money & counterfeit currency
West Bengal Chief Minister Mamata Banerjee called it “a drama”. “The PM could not get back the promised black money from abroad from the rich so a drama to divert his failure…” she tweeted. “I want to know from PM how my poorest brothers sisters, who’ve received their week’s hard earned wage in one 500 rupee note will buy atta, chai tomorrow? Heartless and ill- conceived blow on the common people and the middle class in the fake name of anti-corruption,” Ms. Banerjee tweeted.
- @SrBachchan Amitabh Bachchan T 2435 – the new 2000 rs note is PINK in colour … the PINK effect ..!!
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@Paytm We have got two words for you: Paytm Karo.
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@ashoo_k America counting votes, India counting notes
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@AdityaRajKaul Best news of the day: Just found my wallet is empty. No currency notes.
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@hankypanty Value of Rs. 100 will be more than value of Rs. 500 for two days. This is inflation!#BlackMoney
Demonetisation of Rs 500 and Rs 1000 note and black money, Elections, Terrorists?
The common understanding is that “black money” consists of loads of cash which are stored in trunks or pillowcases or buried under the earth. It is then proposed that if Rs 500 and Rs 1,000 notes are demonetised, or, in other words, discontinued, then people going to banks to exchange large amounts of cash for the new legal currency would make the banks suspicious; and banks would in turn pass on their doubts to the tax authorities who might then catch the offenders. In this way, “black money” would get uncovered, and this would discourage corruption in the future.
Wouldn’t the Rs 2,000 note pace up corruption at the double rate? People who were capable of hiding Rs 200 crore will now be able to stash Rs 400 crore more conveniently?
Just within hours of the announcement made by Modi on November 8, many rushed to the jewellery store. The price of gold surged. Previously, it was Rs 30,000 for 10gm but ended at Rs 34,000. This shows how quickly black money can be converted into “golden money”.
Banning the Rs 500/1,000 note will tackle black money in the form of hard cold cash, but won’t have any effect on other forms of illicit money. The declaration of a Rs 2,000 note alongside another Rs 500 note does not prevent future possible circulation of counterfeit cash. We are living in a technologically advanced world where counterfeiting Rs 2,000 denomination notes wouldn’t be a great deal.
By the PM’s own confirmation, the main part of black money generation and storage is in foreign bank accounts. Counterfeit money can be produced for any denomination. The recently leaked Panama Papers revealed that a number of high net worth individuals in India have large sums of money stashed abroad, taking advantages of legal loopholes outside the country.
The demonetisation move is also made on suppositions that Pakistan prints a considerable measure of counterfeit money and funds terrorist activities in India. There are no figures accessible about this amount, regardless of the possibility that it is valid. Even if it is true, the amount is probably going to be meagre. Nobody would expect terrorists to carry a trunk full of Indian currency for surviving in India. It is a known fact that terrorist reserves move through electronic exchange and not cash exchange.
BJP supporters are under the impression that scrapping Rs 500 and Rs 1,000 notes will cause trouble for the Congress, Samajwadi Party and Bahujan Samaj Party in the upcoming UP elections. This was exactly the stand Morarji Desai took in 1979 when he demonetised Rs 1,000, 5,000 and 10,000 denomination notes. But Indira Gandhi was re-elected in a massive victory in 1980. The main failure of the Janata Party government was the economic failure.
The government wants to drive citizens into a cashless economy. is India prepared for a cashless world?
Related articles:
- New Rs 500 and Rs 2000 notes : Features,Comparison
- How to Exchange Rs 500 and Rs 1000 Notes ?
- Withdrawal of Pre 2005 Indian Currency Notes
- Indian Currency
- Currency
[poll id=”98″]
What do you think about the ban on Rs 500 and Rs 1000 note? Should it been handled better?
Well written and very valuable knowledge is given through this article, Great.
That’s very good to change ruppes of 500 and 1000 notes
I was one of the thousands who thronged yesterday in front of a premier private bank of India for need of some money. There were only 2 counters opened for the needy. One for exchange of old 500/1000 and the other for withdrawal/deposit. I had to wait for almost 5 hours for my turn. I was losing my patience at that time, however right now what I want to convey the public is some other nerve racking news which made me more angry and disappointed than ever. while I was waiting in the line, one of the bank employee took our cheques and id cards for verification. At one point she got a call and was saying ‘Sir kitna black money rakhoge, bank mein jama kar do’. I was like may be she was cracking some jokes with some known friend. Next what I heard is ” 5 lakh hai na apke paas. koi baat nhi hum 2 account banwa denge bank mein. tension mat lo….(this is not the end). “Accha apke paas 30 lakh hai…to thoda mushkil hai sir…lekin aap tension mat lo. Hum sab sambhal lenge. main ati hun apke ghar evening ko set karadete hai aap bilkul tension mat lo…baat karte hai acche se”….SERIOUSLY…the last sentence made me mindf****d. I thought of recording the entire conversation but she was too cunning to cut the call. The common man is waiting for 6 hours just to get 4000 bucks and the so called rich man is fixing up his lakhs/crores just with a mere phone call…..HUH
CONCLUSION:I m sure modi sarkar have made all the necessary calculation,legwork, studies and also planned the repurcussion for implementing this surgical modus operandi. However, people with black money will leave no stone unturned to make their assets pure white and wont even panic to go the world’s end if they think that will save their day.This is just another live example of how even the bank people (especially private banks) will try to make the most of this sudden operation.
My earnest request to Modi govt is please investigate all the nook and corner and shortcomings of this modus operandi and make it a grand success. We the citizens of india promise to support this with all our heart and make INDIA a better and corruption free country in the world.
WEll-researched article. We all know that black money is dumped outside the country in Swiss banks. Many have raised a question whether this step will bring back that, and, if not, what’s the use of this ban. I think, while a good percentage of black money is outside India, a considerable percentage is right here. This decision will definitely help to recover a pretty good amount of that.
While Government has banned the circulation of existing Rs500 and Rs1000 currency notes, the premium for exchange of such notes has already started. In many cities the premium has touched 40% while in some other states the premium on exchange of such notes is about 30% Read Here for details
20 FAQs Regarding the Ban of Rs 1,000 and Rs 500 Currency Notes.
More info@ https://www.moneydial.com/blogs/20-faqs-of-common-man-regarding-the-ban-of-rs-1000-and-rs-500-currency-notes/
Mr BEMoneyAware, you didnt state what is your view on this, pls state what is your view and what you think common man will do. That could be a good discussion point
The exercise was okay, but implementation was poor. Better planning would have caused lesser hardships and the cost would have been lesser.
The exercise has not impacted black money as severely as is being advertised or as common people are tending to believe.
No Major Impact on Black Money
Future generation of black money will continue almost as before 08 Nov 2016.
Black money held as foreign investments, foreign currency, real estate, shares, and Gold remains unaffected.
The big fishes holding black money have been not as severely affected as the poor and rural population.