Why India Banned 500Rs 1000Rs Notes
India Banned 500Rs 1000Rs Notes: At 8 pm on Tuesday, when Prime Minister Narendra Modi began his first ever televised address to the nation, there was a great deal of curiosity among the people. This particular broadcast was not widely publicized, as is norm for any such broadcast, nor was it preceded by some occasion that would otherwise warrant a prime ministerial address of such a nature.
Halfway through his speech, Modi dropped the bombshell, which BJP Amit Shah later called as a “surgical strike against black money”, surprising the nation at large and shocking a large number of people across the spectrum who had hoards of unaccounted black money. He announced that at the stroke of midnight on 8 November, 2016, the Rs 500 and Rs 1000 currency notes ”would become waste paper.”
This is the biggest ever crackdown on black money; a shocker to black marketers, hoarders and corrupt persons of all hues and in all walks of life. No one could have ever imagined such a bold, brave or even harsh move.Perhaps, no such emergency measure has been employed anywhere else in the world.
The prime minister needs to be complimented for showing this kind of courage and conviction, for the move may cut both ways – as it’s not like the guys in BJP or those supporting BJP didn’t have black money, or that they didn’t have loads of cash stashed away at their homes, offices and their benami properties.
Modi, RBI governor Urjit Patel, Secy Department of Economic Affairs Shaktikanta Das and other senior officials who spoke on the matter, highlighted that the move was necessary as black money was being used to spread terror in the country.
They also pointed out that millions of fake currency notes were being smuggled into India from across the border to finance the menace of terrorism, in all its forms. When the prime minister and other topmost officials in the government narrow down on this terror financing mechanism, they are not joking; thus, this threat needs to be taken seriously.
Though the move will cause temporary inconvenience to even the most honest people living in India – short term restrictions on ATM usage, limits on maximum amount withdrawn from ATMs, banks being closed for public transactions on Wednesday, and so on.
In the currency based economy of the country, even the daily wage earners and causal low income group workers are paid in Rs 500 and Rs 1000 denominations. They will be hard pressed to understand the new mechanism and will end up knocking on banks doors in the days to come. Small traders and hawkers have to pick goods and pay cash, to sell or to sustain their livelihood. They would not know how to react to this move or how to survive in the next few days.
That is the collateral damage of the Modi government’s fight against black money. This could possibly explain why Modi was so insistent on opening bank accounts for all Indians. He may or may not have planned it that way, but the move certainly had its own merits.
As one can perceive it, there would be no parallel economy in the country for the months and and years to come. It was all done away with in one single stroke. Real estate dealers and magnates, political parties of all hues – particularly those contesting in the elections due in a few months – the bullion market and so on, would be the worst affected by the move.
Those who kept cash beneath their beds, strong rooms, customized cavities in walls and wardrobes would be getting strokes of all kinds following the crackdown.
“There comes a time in the history of a country’s development when a need is felt for a strong and decisive step. For years, this country has felt that corruption, black money and terrorism are festering sores, holding us back in the race towards development. 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. In spite of all these efforts, there may be temporary hardships faced by honest citizens. Experience tells us that ordinary citizens are always ready to make sacrifices and face difficulties for the benefit of the nation,” Modi said in his address to the nation.
The fact that a decision of this magnitude was kept under wraps, as a closely guarded secret, is a remarkable achievement on part of Modi and his select team. There was no leak, not even slightest hint of such an extreme measure.
The timing of the announcement was also critical. By the time he made this announcement, most shops usually shut down their shutters; thereby, leaving no time for black money hoarders to engage in high value shopping.
Over 60 years ago, when India was about to attain freedom on 14 August, 1947, Jawaharlal Nehru had said:
“Long years ago we made a tryst with destiny, and now the time comes when we shall redeem our pledge, not wholly or in full measure, but very substantially. At the stroke of the midnight hour, when the world sleeps, India will awake to life and freedom. A moment comes, which comes but rarely in history, when we step out from the old to the new, when an age ends, and when the soul of a nation, long suppressed, finds utterance.
It is fitting that at this solemn moment we take the pledge of dedication to the service of India and her people and to the still larger cause of humanity.”
Interestingly, with a bit of paraphrasing, this part of Nehru’s speech would hold true for Modi and the nation he now leads.
India Banned 500Rs 1000Rs Notes – find Answer for all your FAQs
1. Why this now?
There has been a rise in the incidence of fake Indian currency notes in higher denomination. More often that not, the common man fail to distinguish between original and fake notes. Fake notes are used for anti-national, illegal activities, misused by terrorists and for hoarding black money. As India remains a cash based economy and there is a rise in the circulation of fake Indian currency notes, the withdrawal has been introduced to contain the fake note circulation and to hurt those who keep unaccounted money.
2. What exactly is this?
The legal tender character of the notes in denominations of 500 and 1000 stands withdrawn. In simple terms, all the 500 and 1000 rupee notes will be just paper, these cannot be used for transacting business and/or store of value for future usage.
3. How much is my Rs 500/1000 note worth now?
Your 500/1000 notes are worth its value till December 30, provided you deposit it in your bank account.
4. Can I get all in cash?
No. You will get up to Rs 4,000, per person, in cash and if you need more, you can get it credited to your bank account.
5. Why can I not get the entire amount in cash when I have surrendered everything in cash?
The scheme does not provide for it, given its objectives.
6. Rs 4,000 cash is insufficient for my need. What to do?
You can use mobile wallets, online payment methods, IMPS, debit/credit cards, and you can also pay by cheque.
7. What if I don’t have any bank account?
Don’t worry. Pick the bank of your choice, and get a bank account opened. Carry the necessary documents required for fulfilling the KYC requirements.
8. What if I have only a Jan Dhan account?
You can avail the exchange facility subject to the caps and other laid down limits in accord with norms and procedures.
9. Where can I go to exchange the notes?
You can exchange the notes at all Issue Offices of RBI and branches of commercial banks/RRBS/UCBs/State Co-op banks or at any Head Post Office or Sub-Post Office.
10. Will I have to go to my bank branch itself?
For exchange up to Rs 4,000 in cash you may go to any bank branch but do carry a valid identity proof.
For exchange over Rs 4,000, 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 and bank account details required for electronic fund transfer to your account.
11. Can I go to any branch of my bank?
Yes, you can go to any branch of your bank.
12. Can I go to any branch of any other bank?
Yes, you can go to any branch of any other bank. But in this case, you have to furnish valid identity proof for exchange in cash; both valid identity proof and bank account details will be required for electronic fund transfer in case the amount to be exchanged exceeds Rs 4,000.
13. I have no bank account but my relative / friend has an account, can I get my notes exchanged into that account?
Yes, you can do that if the account holder, that is your relative / friend, gives you permission in writing. While exchanging, you need to show this proof and your valid identity card at the bank.
14. Should I go to bank personally or can I send the notes through my representative?
It is better if you can visit the branch. In case you are sending a representative, do give him an express mandate, that is, a written authorization. While tendering the notes, this representative will have to produce the authorization letter and a valid identity proof.
15. Can I withdraw from ATMs?
ATMs and banks will remain closed on November 9. It may take a while for the banks to recalibrate their ATMs, and once it’s done, you can withdraw up to a maximum of Rs 2,000 per card per day till November 18. The limit will be raised to Rs 4,000 per day per card from the November 19 onwards.
16. Can I withdraw cash against cheque?
Yes, you can withdraw cash against withdrawal slip or cheque subject to ceiling of Rs 10,000 in a day within an overall limit of Rs 20,000 in a week (including withdrawals from ATMs) for the first fortnight, that is up to November 24, 2016.
17. Can I deposit withdrawn notes through ATMs, Cash Deposit Machine or cash Recycler?
Yes, notes can be deposited in Cash Deposits machines / Cash Recyclers but not on November 9.
18. Can I make use of electronic (NEFT / RTGS / IMPS / Internet Banking / Mobile banking) mode?
Yes, these facilities will come handy. You can use NEFT/RTGS/IMPS/Internet Banking/Mobile Banking or any other electronic, non-cash mode of payment.
19. How much time do I have to exchange the notes?
The scheme closes on December 30, 2016. The banknotes can be exchanged at branches of commercial banks, Regional Rural Banks, Urban Cooperative banks, State Cooperative Banks and RBI till this date.
If you fail to exchange these notes on or before December 30, an opportunity will be given at specified RBI offices. You will have to provide necessary documentation as specified by the Reserve Bank of India.
20. I am right now not in India, what should I do?
You can authorise someone who is in India by giving an authorisation letter and get the notes deposited into your bank account. This person will have to go to the bank on your behalf, with a valid identity card and your permission letter.
21. I am an NRI and hold an NRO account, can the exchange value be deposited in my account?
Yes, you can deposit the scrapped banknotes to your NRO account.
22. I am a foreign tourist, I have these notes. What should I do?
You can purchase foreign exchange equivalent to Rs 5,000 using these notes at the airport exchange counters within 72 hours after the notification, but you will have to present proof of purchasing these notes.
23. If I have an emergency (hospitalization, travel, life saving medicines) and is in need of cash,then what should I do?
You can use Rs 500, 1000 notes for paying off your hospitalization 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.
24. What is proof of identity?
Valid Identity proof is any of the following: Aadhaar Card, Driving Licence, Voter ID Card, Pass Port, NREGA Card, PAN Card, Identity Card Issued by Government Department, Public Sector Unit to its Staff.
25. Where can I get more information on this scheme?
Further information is available on www.rbi.org.in
26. If I have a problem, whom should I approach?
You may approach the control room of RBI by email. You can mail to email@example.com or call 022 22602201 / 022 22602944.