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Taking its strongest step yet to bring down black money and corruption in the economy, the government has said that currency notes of the denomination of Rs 500 and Rs 1000 will no longer be legal tender. This is effective starting Wednesday.
Citizens can deposit Rs 500 and Rs 1,000 currency notes with banks up to December 31, 2016 and withdraw in smaller notes, said Prime Minister Narendra Modi in an unscheduled address to the nation.
There is congruence of thought between the the government and the Reserve Bank of India on the issue, said governor Urjit Patel at a press conference. He added that the central bank, also the manager of currency in the country, has ramped up production of notes to be issued under the new series. We are ready to meet the requirements, said Patel.
According to the Department of Economic Affairs, there are 1650 crore notes of 500 denomination and 670 crore notes of 1000 rupees in circulation. The total amount that will be withdrawn works out to Rs 14.95 lakh crore.
The government has also announced the introduction of new Rs 500 and Rs 2,000 notes as part of the effort.
Notes of Rs 500 and Rs 1,000 will not be acceptable for transaction from midnight. Rs 500 and Rs 1000 rupee notes will become worthless pieces of paper starting midnight...To minimize difficulties of citizens, several steps are being taken. People can deposit these notes in banks and post offices starting November 10 till midnight of December 31. You have fifty days and there is no need for panic.Narendra Modi, Prime Minister of India
Also Read: Modi's Real Surgical Strike On Black Money
This is the biggest and the boldest step by the Government for containing black money. It is like a surgical strike on black money.
Also Read: Why The Rush? Government Moves To Scrap Large Currency Notes Overnight
It is a bold and fantastic move. The suddenness with which it has been announced may have taken us by surprise...There may be some impact on economic activity depending on how smoothly it is implemented.Ajit Ranade, Chief Economist, Aditya Birla GroupAlso Read: Withdrawal Of Currency Notes: The RBI Explains
This is a very abrupt measure. This measure is intended to curb the menace of black money as they don't still have an assessment of the problem. The government thinks that through this black money would be squeezed out of the system. This should have been done in a phased manner.Radhika Pandey, National Institute of Public Finance And PolicyDetails From Press Information Bureau Statement
- Rs 500 and Rs 1,000 currency notes will no longer be legal tender from midnight tonight
- Government will issue Rs 2,000 currency notes and new Rs 500 notes
- Notes of Rs 100, Rs 50, Rs 20, Rs 10, Rs 5, Rs 2 and Re 1 will remain legal tender and will remain unaffected by the decision today.
- Persons holding old notes of Rs 500 or Rs 1,000 can deposit these notes in bank or post offices from November 10 onwards till December 30
- There will be some limits placed on the withdrawals from ATMs and bank for the very short run
- On humanitarian grounds notes of five hundred and one thousand rupees will be accepted at government hospitals, pharmacies in government hospitals (with prescription of a doctor), booking counters for railway tickets, government buses, airline ticket counters, petrol, diesel and gas stations of PSU oil companies, consumer cooperative stores authorized by the state or central government, milk booths authorized by state government and crematoria, burial grounds.
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