₹500 and ₹1000 Banknotes are No More Legal Tender

[Figleaf]

Still, the function of a reserve is not being used but being there. If for some reason, a shortage of banknotes would have developed and there had been no reserve, RBI would have been criticised also. You can quibble about the size of the reserve, but not about it being there.

Peter

[Bimat]

RBI says ban on Rs 1000, Rs 500 notes proposed hours before telecast of PM's speech

Updated: Dec 24, 2016 07:24 IST
Aloke Tikku
Hindustan Times, New Delhi

The Reserve Bank of India (RBI) recommended demonetisation of 500- and 1,000-rupee banknotes hours before Prime Minister Narendra Modi announced the surprise move in a televised address to the nation in the evening of November 8.

The government and the RBI have kept the consultation process that led to the decision to demonetise 86% of India's cash in circulation a closely-guarded secret. Both, however, have insisted that the demonetisation plan had been under discussion for long and consultations were being held.

Economic affairs secretary Shaktikanta Das told reporters on November 8 that there was "no need to go into the process which led to this decision. I think what we should be focusing on is the outcome and the decision itself".

The government's shock move has led to a severe cash crunch, forcing millions of people to line up at banks and ATM kiosks for more than a month. Cash withdrawals have been restricted, but most banks are unable to provide even that. The Opposition's protests over the demonetisation move have washed out the winter session of Parliament.

The Reserve Bank of India Act, 1934, empowers the Union government to demonetise any series of banknotes. The government, however, cannot take this decision on its own, but only on the recommendation of the RBI's central board.

In response to a right to information request, which Hindustan Times has sought, the RBI said the bank's central board of directors made the recommendation at its meeting in New Delhi on November 8. Only eight of the 10 board members attended the crucial meet.

Apart from RBI chief Urjit Patel and economic affairs secretary Das, the meeting had RBI deputy governors R Gandhi and SS Mundra, Nachiket M Mor, the country director for the Bill and Melinda Gates Foundation, Bharat Narotam Doshi, former chairman of Mahindra and Mahindra Financial Services Limited, former Gujarat chief secretary Sudhir Mankad, and financial services secretary Anjuly Chib Duggal.

The law provides for a 21-member board, including 14 independent members, but the central bank has been operating with less than half.

Between the RBI board meeting and Modi's demonetisation announcement, the government just had a couple of hours to process the bank's formal recommendation.

Prime Minister Modi had convened a meeting of his cabinet later in the day when they were told about the decision. The ministers — who had to leave their mobile phones outside — were told to stay back till his address was telecast.

It isn't that the RBI or the government hadn't been making preparations for the mammoth notes recall exercise. The bank had already printed Rs 4.94 lakh crore in Rs 2,000 notes by November 8.

But former RBI officials said this implies that the board's approval was a formality.

The way the demonetisation decision was taken was "highly irregular", said a former top RBI official, who didn't wish to be named. He said he did not believe the government and RBI had taken "adequate steps" to minimise harassment of people.

Another said he was concerned at the large number of vacancies in the central board. Of the 14 independent directors, the board has just four.

"According to the RTI reply, only three of them were present (at the meeting). That is the quorum," he said.

Source: Hindustan Times

[Bimat]

Nashik (Nasik) police recently busted a racket where a gang of criminals was printing OLD ₹500 and ₹1000 banknotes! They were producing the old banknotes with the same serial number, and the quality of the notes was really high. They even successfully managed to deposit them in the bank accounts through various means. As December 31 gets closer, such attempts would rise IMO.

No wonder RBI has stopped publishing data of how many banknotes have been deposited in the banks so far... (RBI even deleted some of its press releases after discrepancies were pointed out between RBI's own statements/government's statements). I think 15 Lakh+ cores have already been deposited and we still have a week. The process is going to continue even after December 31, till March 31, 2017, only through RBI offices though. Add to that currency held by Nepalese/Bhutanese nationals, as Indian government is yet to decide the mechanism through which these banknotes are going to be exchanged with them.

Aditya

Edit: NITI Aayog head yesterday compared demonetization decision by this government to hurricane Katrina. Deliberate, or just a slip of tongue?

[Bimat]

As December 30 comes closer, government is now thinking beyond: According to some reports, you can keep old notes of ₹500/₹1000 upto a maximum total value of ₹10,000 (Rupees Ten Thousand) after December 30, 2016. If found with more notes than this allowable limit, a fine of ₹50,000 or 5 times the confiscated amount (whichever is higher) will be charged.

Aditya

[Bimat]

Old Notes that the Less Well-Off Sold Short are Now Selling at a Premium

BY M.K. VENU ON 28/12/2016

Prime Minister Narendra Modi's demonetisation program has hit the various stakeholders of the rural and informal economy in different ways over the last 50 days.

However, one recent phenomenon really takes the cake.

Smaller players in the informal economy – workers, traders, farmers and mom-and-pop shop owners – sold their Rs 500 and Rs 1000 notes in desperation at a discount of 20% to 30% during November. In almost all cases, this was legitimately earned money, and not black money. Shakuntala, who works as a part-time cook in three houses every day, had Rs 4,000 in old 1000 rupee notes when Modi made his demonetisation announcement. After standing in line for three hours to exchange them, she was forced to sell her notes for Rs 3,000 in valid notes, taking a hit of 25%, in order to make it to work on time. These kinds of distress sales were widely reported by the media in the first days of demonetisation.

Now, according to senior government officials, those very 1000 and 500 rupee notes were aggregated by middlemen and sold to businesses at a premium of 20% in December. Thus, the 'demonetised' 500 and 1000 rupee note became a commodity much like farm produce, which is picked up cheap by middlemen and sold in urban markets later at a premium. This bizarre commodification of the Indian currency notes happened, according to industry observers, due to the flawed implementation of the demonetisation programme.

While smaller players in the informal sector of the economy were getting rid of their 1000 and 500 rupee notes, as they had limited access to banking services and needed cash to spend urgently, various middlemen and hawala traders were quietly aggregating the notes (at a discount) for future trade (at a premium) with businesses which needed those 1000 and 500 rupee notes desperately.

What kind of businesses would buy old notes, and that too at a premium? Economic intelligence officials in the government confirmed that the demand for 1000 and 500 notes reached its peak in mid December. This is when businesses were willing to pay a premium for the old notes because on their balance sheets, on the asset side, they had "cash in hand" listed without necessarily having actual cash to back it up.

How did this happen?  After demonetisation was announced, many medium-size businesses, which typically have up to 30% of their working capital from the parallel cash economy, needed to push that black cash into some legitimate accounts in the balance sheet. 

So these small businesses started approaching providers of shell companies in money laundering hubs like Kolkata, Jaipur and Surat where ready-made company balance sheets are offered with a "cash-in-hand" component without the physical cash being there.  These balance sheets are legitimate as they are filed with the relevant company law and income tax authorities. Normally the tax authorities do not question or verify higher cash-in-hand shown in the balance  sheet  as they are only suspicious against businesses who show less profits and less cash. Something like Satyam Computers, which showed much higher quantum of bank deposits in the balance sheet  for many years without being detected.

So many small businesses hurriedly got access to fresh quotas of "cash in hand" through shell companies and started pushing their black cash into those balance sheets which were already filed with income tax department. Thus the black money got legitimately pushed into the system, through the "cash-in-hand" quotas provided by numerous shell companies. All of this happened over the past 50 days.

The demand for 1000 and 500 rupee notes peaked in mid-to-late December because of the rush to physically disclose the "cash-in-hand" quotas of thousands of shell companies serving as money laundering vehicles. The tax department along with the cooperation of various banks will have the near-impossible task of identifying these in the next few months.

What this whole process has ended up doing is that it has forced struggling, small traders to sell their notes at a discount in order to legitimise fake "cash-in-hand" accounts held by businesses.

Thus it is evident that the rich have devised ingenious ways to push their cash into the banking system while the poor have been forced to sell their currency at a discount. A chartered accountant, who did not want to be named, said it would be nearly impossible for the tax department to investigate millions of balance sheets of small companies which may have pushed their cash as "legitimate assets" in the balance sheets of shell companies. Indeed,  the poor have totally lost out in this bizarre game when they sold their currency at a discount only to help hawala dealers and middlemen make huge profits.

Source: The Wire

[Bimat]

Yesterday, RBI refused to exchange/deposit old ₹500 and ₹1000 notes at RBI branches all over the country. According to RBI, only those who were abroad between November 10-December 30 can deposit their old notes at RBI (and they need to submit proof of being in another country*). Those who were in India but could not exchange the old notes, whatever may be the reason, can not exchange them anymore.

*: Pakistan, Bhutan, Nepal and Bangladesh excluded.

Since this is a totally new rule (earlier, it was confirmed by RBI that anyone can deposit old notes at RBI till March 31, 2017), at many RBI offices, there were protests by angry depositors. RBI had to shut counters at many places.

Deposits as on December 29 had reached 14.94 lakh crores according to some unconfirmed reports. Remaining 50,000 crores will also be deposited by March 31, considering cash NRIs have + currency in circulation in Nepal and Bhutan. (Pranab Sen, in an interview to Scroll even said that total deposits have crossed 15.44 Lakh crore and that's the reason why RBI is not publishing the demonetization related data anymore). In short, there was no black money in India.

Aditya

[Bimat]

A new day...and one more broken promise by RBI!

RBI now says that you can exchange your old notes at RBI only if you were out of India for the whole period between November 10-December 30, 2016. That means, if you arrived in India on say December 20th (or left India on say November 15) but couldn't get your old notes exchanged/deposited, you won't be able to deposit/exchange them anymore now. And the ordinance by government also says that you will be fined if you have more than 10 old notes in possession. What exactly is wrong with RBI? Losing credibility by such foolish decisions!

Aditya

[Bimat]

PIOs, NRIs Feel Heat of Demonetisation; Wait in RBI Queues

Press Trust Of India
First published: January 12, 2017, 5:01 PM IST

New Delhi: After residents, NRIs and People of India Origin (PIO) are now braving long queues to exchange the old Rs 500/1000 notes at 5 designated RBI branches across the country but because of stringent conditions several of them have had to return disappointed.

Tempers ran high outside the central bank branches as people coming from long distances were denied entry by guards on the grounds that they were not carrying the requisite documents.

Many NRIs complained that they are not allowed to speak to officials who could at least listen to their grievances.

"Though I have foreign passport, I still have roots in India. Our family comes to India every year. We have few Indian currency notes and we want to exchange them but we are not allowed to enter RBI. Mr Prime Minister are we supposed to burn Indian currency that we have?," said Ritu Diwan, an agitated US national.

This unnecessary harassment simply indicates that PIOs are no more welcome to the country of their birth, she added.

Dharamveer, another US national, said PIOs generally keep some amount of Indian currency as they frequently visit India because there is no point in paying commission on exchange of currency on each visit.

"Any PIO who regularly visits India would easily have Rs 50,000 to Rs 1 lakh worth of Indian currency and I challenge the government to prove this as black money and forfeit this from us", he said, adding that "this money, we don't spent in the country where we live but country of our origin".

"It is by chance that we are here at this time and wanted to exchange few currency but we are not allowed to do so. It is very frustrating," he added.

Many PIOs who were turned away protested that they don't have crores of rupees but only few thousands which the administration should exchange.

Frustrated at the "high-handedness of RBI" and the "government policy", there are reports of NRIs throwing defunct Indian currency at the gate of RBI as a mark of protest.

Besides PIOs, many Indian who failed to deposit junked currency notes during the 50-day demonetisation period are also being turned away after standing in the queue for hours.

Disappointed at the flip-flop of the government on the issue, Ram Kumar said Prime Minister in his November 8 address had said that people would have time till March 31 to exchange their old notes at the RBI.

Hoping against hope some are coming repeatedly thinking that if they were lucky they would be allowed by the security guards to enter RBI office for exchange of scrapped currency notes.

Many people said the government should take taxes, if any, but allow them to exchange the old notes as not everyone standing at the RBI gate has black money.

As only 5 RBI offices-in Mumbai, New Delhi, Chennai, Kolkata, and Nagpur-are authorised to exchange the currency, people are having to travel long distances.

One person, who first went to RBI's Jaipur regional office, was directed to go to RBI Delhi for exchange.

With few a thousand rupees in his hand, he nearly broke down when he was turned away by the guards at Delhi RBI.

Unable to get a few junked currency notes exchanged, a frustrated poor woman, as mark of protest, had become topless in front of RBI regional office in Delhi last week.

As per the conditions imposed by RBI, the Indians who were abroad during the 50-day window provided from November 9 to December 30 to deposit the old currency have been given a 3-month grace period till March 31 and NRIs 6 months till June 30 to deposit the junked notes at RBI's offices.

The Customs officer will strictly count the number of notes and tally the total amount mentioned before stamping the form submitted by the passenger.

While there is no limit on deposit of SBNs by an Indian national who was abroad when the 50-day window was in operation, NRIs can deposit only up to Rs 25,000.

Indians abroad will have to produce a "copy of passport with immigration stamp as proof of the individual's absence from the country during the period November 9, 2016, to December 30, 2016" as also copies of all bank account statements evidencing that no SBNs of 500 and 1,000 rupees were deposited during the 50-day window.

Source: News18

[Bimat]

More twists in the story...and this could be interesting! A very long but nicely illustrated report, do read carefully!

Silently, India's supreme court has set off a chain of events that could torpedo Modi's demonetisation move

WRITTEN BY
Shubhankar Dam

On Dec. 30, 2016, Indian prime minister Narendra Modi cajoled president Pranab Mukherjee into promulgating the Specified Bank Notes (Cessation of Liabilities) Ordinance, 2016. Two days later, on Jan. 02, 2017, the supreme court, in a separate matter, delivered a verdict that changed the law of ordinances in powerful ways. It scrubbed out old meanings, unearthed new ones, and further garrisoned judges' hold on the constitution. A prohibitive change has swept in. Ordinances now face constitutional fire in ways they never have.

In the immediate crosshairs, perhaps, is Modi's demonetisation decree. A lawfully-safe ordinance has overnight become constitutionally suspect.

Why? How? What now?

Technocratic legalese

As ordinances go, the demonetisation one was tedious, almost technocratic. Twelve short provisions introduced two key changes.

First, currency notes demonetised on Nov. 08, it was declared, shall no longer be liabilities of the Reserve Bank of India (RBI).

What?

Take a note at random, look closely: "I promise to pay the bearer the sum of X rupees," the fineprint reads, signed, governor, RBI. All currency notes are promises—they are liabilities. Bring a Rs500 note to any branch of the bank and officials must exchange it for a new one or smaller denominations, say, of five Rs100 notes.

The ordinance has garroted this. Now bring a Rs500 or Rs1,000 note after Dec. 31 to the RBI and it need do nothing. The promissory words, the fineprint, no longer mean what they say. They mean nothing at all. (A limited window of exception applies till Mar. 31, 2017.)

The broken promises help beef up the bank's books, too. Why?

Imagine a person borrows money. He must repay in, say, two years. The period has elapsed. The loan is still unpaid. But the creditor hasn't come calling; he doesn't care. In fact, he has given up on the loan. What, then, of the borrower? He gains; it's a windfall for him. The borrowed sum isn't a liability anymore.

The RBI, oddly, is like a borrower. It must recompense its creditors—those in possession of the demonetised currency. But some creditors didn't care; they didn't deposit their demonetised hoard. They can no longer do so, the ordinance says. And these are "loans" the RBI needn't repay—it's a windfall.

How much windfall? As of March 2016, some 15,707 million pieces of Rs500 notes and 6,326 million pieces of old Rs1,000 notes were in circulation, the RBI revealed. This totalled to nearly Rs14.5 lakh crore, which is the amount of currency by value that Modi demonetised on Nov. 08. Initial estimates of a windfall had a euphoric air. The State Bank of India speculated about Rs6 lakh crore—nearly 40% of the demonetised sum. Government sources were staider: about Rs3 lakh crore, they estimated.

The real numbers are miserly. A Jan. 10, 2017, report in The Indian Express newspaper, citing top officials, said Rs75,000 crore remain unclaimed, which is a measly 5% of the demonetised sum. This, too, is an estimate. The RBI is silent and unusually slow. Official bulletins have dried up. The final amount isn't known yet.

But two things are known. The RBI will enjoy a windfall, big or small—one created entirely by an ordinance.

That ordinance also ushered in a second change: a new crime.

Knowingly or voluntarily holding, transferring or receiving demonetised notes, the decree instructs, is a felony. This is the three wise monkeys' law, Modi edition: Do not keep notes. Do not deal in notes. Do not accept notes.

There are exceptions. Up to 10 notes is fine. Up to 25 is fine, too, for those engaged in "study, research, and numismatics." The moral? It is fine to hold a few notes. Hold too many, and one must pay a fine.

These changes, their collective kismet, now hang in balance. Why?

A constitutional cesspool

Ordinarily, parliament makes laws in India. But the constitution also dignifies the president with lawmaking powers: Article 123.

He may make laws—ordinances—if one or both houses of parliament aren't in session, and he feels that such laws are immediately needed.

The underlying idea is simple. The legislative chambers are only intermittently in session. Urgencies may happen when they are away. Ordinances will help tide over those moments. When the houses reassemble, ordinances must be presented to them. The chambers must approve them within a specific period. If not, the ordinances fail; they cease to operate. So says the constitution.

Simple? No. Far from it. Often, the constitution doesn't mean what it says. Often, it isn't followed either.

Article 123 says: Governments may promulgate ordinances if they are "immediately necessary." In practice, reasons other than necessity have dominated ordinances. Governments, especially minority ones, invoked them to bypass parliament. They lacked necessary votes, but still wanted laws. The ordinance mechanism was a sly way out.

This abasement of language never attracted judicial vigil. Judges never confronted governments on immediacy or necessity. The words meant what ministers wanted. Predictably, they contorted them to their profit.

Article 123 says: Ordinances must be presented to the houses when they reassemble. But governments often don't. Why not?

Presenting ordinances to the chambers invites glare: The houses get to vote on them. Governments, especially minority ones, fear the outcomes. They fear parliamentary losses and the loss of face they engender.

Article 123 says: Ordinances cease to operate if the houses do not approve them. That is, without the houses' nod, they cannot remain law beyond the six-month period.

But what of the official actions already taken? For decades, courts read the words "ceases to operate" faintly. All actions completed, or even initiated, remain forever valid, they intoned.

Governments, their lawless instincts, felt further emboldened. They could issue ordinances, let them fail, and still profit from the official business already transacted.

As the debased meanings and debauched practices swirled around it, Article 123 descended into a cesspool. Ordinances piled up. Almost 70 constitutional years, almost 700 ordinances.

This is how things stood as the sun went down on Dec. 31, 2016. The demonetisation ordinance was law, legal, and legally safe. It was Modi all the way; he decided to bring in the ordinance. He could decide not to present it to parliament. He could let the ordinance fail. Yet, he could secure the windfall for the RBI, and, ultimately, for his government.

Not anymore.

New year magic: old law, new view

Jan. 02, 2017: a tremor. The constitutional ground shook, then shifted. The supreme court, seven judges, guillotined the lax meanings and their libertine possibilities. Instead, they grafted a new, weaponised law of ordinances into place.

The decision has three highlights.

One, governments are no longer the sole purveyors of "immediate necessity." Ministers may insist an ordinance is necessary.

But like other constitutional claims, this, too, is now vulnerable to legal audit. If assailed, judges will assess if the ordinance was necessary.

Two, at least in parts, Article 123 really means what it says, the unusually strident court clarified. Article 123(2) reads: "An ordinance promulgated under this article... shall be laid before both houses of parliament." The provision says shall, it means shall. There's no wriggle room. Governments shall present ordinances to the houses. They must. If they don't, ordinances will immediately lapse; they shall cease to operate.

Three, if ordinances cease to operate, the can of official acts already taken will be reopened. Past are the days of automatic validity. Instead, judges will quiz: Does public interest demand the official acts be left undisturbed? Is it necessary to let them stand? Or should the actions be reversed?

These precepts, taken together, are a watershed. They have radically reset the rules on ordinances in India, and they portend distress for Modi's demonetisation decree.

Modi's moment of reckoning

What happens now?

Parliament will assemble for the budget session, reports indicate, on Jan. 31. When it does, the ordinance must be placed before the houses. The verdict obligates this. The opposition, finally, will get to have its say on demonetisation in parliament. It will get to vote, too. How cogently they make their case, what they say, and how they behave will matter. It will set a new precedent.

The Modi government is in a minority in the upper house. Short of a miracle, it will lose the vote. The ordinance will fail and cease to operate. (They must be approved by both houses to become law.)

A simultaneous plot will unfold a short distance away, in the supreme court. All aspects of demonetisation, the decision, its execution and its aftermath, are already under judicial scanner. Doubts will be tagged with them. Two issues will demand judges' attention: Was the demonetisation ordinance necessary? In what way has it ceased to exist?

Parliament was in session until Dec. 16, 2016. The need for such a law, one that vaporises the RBI's liabilities, was already known. There couldn't be a windfall without it, governor Urjit Patel had already indicated. The necessity of the ordinance, then, is a laboured claim. It stands on weak legs.

And the second question? Recall what the demonetisation ordinance does. It delivers the RBI from liabilities, generates a windfall in its accounts, and makes hoarding of demonetised notes a crime.

Will a catastrophe descend if the liabilities are reinstated? Hardly. Is it ruinous to erase the windfall? Not at all. Indeed, neither public interest nor the constitution demands these changes become permanent. Doing so will undermine the new verdict and the principle of parliamentary supremacy it affirms.

Undoing the demonetisation ordinance will reinstate the promises. The fineprint will again mean what they say. Those in possession of demonetised notes may again demand that their "borrower," the RBI, pay up.

More importantly, the government may abandon its ordinance binge. With the opposition firmly set against it, and the upper house still beyond reach, it may return to a quaint idea: parliamentary negotiation. Claim some, give up some others, get along. Parley, in other words.

A vapid ordinance, in an ironic twist, will test Modi, the opposition, the supreme court, and much else. It will decide, for now, the vitality of the new verdict. But it may accomplish forever parliament's role in the play that is Indian democracy.

Source: Quartz

[Figleaf]

I am not a lawyer, let alone an Indian lawyer. However, the above arguments seem to me to be based on shaky, but important grounds. The author bristles at the idea that old banknotes can become worthless in spite of the promise to pay. Methinks he bristles too much.

There was a transition period, in which the notes could be exchanged. That, in my eyes, constitutes the fulfilment of the promise. There were restrictions on exchanging, but they were aimed at offenders and criminals.

Take the case of 18th century UK halfpenny tokens. They were issued mostly by private persons and enterprises. Some were issued in good faith, others were imitations. At one point, they were banned. Look at advertisements of those days: they invite holders of tokens to present themselves at the offices of the issuer before a certain date, to be paid in official coin and warn that imitations shall be refused. The promise to pay is kept, but with reasonable restrictions and the issuer takes no responsibility for fraudulent tokens.

Rather than content, challengers may look at form. If the ordinance does not have the required form (e.g. I think it would not be difficult to argue that the necessary secrecy demanded an emergency action, but not getting parliamentary approval afterwards is another matter), it is vulnerable. While I don't know enough about Indian politics to make such easy predictions as the author, I wonder why even opposition parliamentarians would want to aid and abet tax evaders and corruption...

Peter

[Bimat]

While I don't know enough about Indian politics to make such easy predictions as the author, I wonder why even opposition parliamentarians would want to aid and abet tax evaders and corruption...

Forget the opposition, at-least 100 MPs of BJP (the ruling party) are said to be upset with the decision of demonetization and they had assured the opposition (in the last parliament session) that they will vote against Demonetization (as it's a secret voting). Some of them have criticized the decision openly before. Their major worry is that only poor have suffered because of the decision and rich are still roaming free. Millions of jobs have already been lost, farmers are dumping their crop as they are unable to recover the basic investment they have made for the crops (to give you an example: traders were buying tomatoes from farmers for ₹1 per kg last week) and most importantly, almost all the money is back in the system. Of course, just depositing the money in bank does not make it white, but the IT department neither has the mechanism nor the manpower to scrutinize each and every account and filter out white and black deposits.

You will be surprised to know that RBI now says that it will take 600(!) days for RBI to count all the old notes as it has only 60 machines which are capable of doing so (it checks fake currency as well and doesn't count it) and these machines are working 12 hours a day. 600 Days means close to 2 years. So by June 2018, people will actually know how much money was deposited due to demonetization. This is obviously foolish, RBI very much knows how much has been deposited, it's no rocket science. The real problem is that more than what was in circulation has been deposited, hence they have ordered recounting of notes. But since a large portion of the old notes was destroyed in first few days after demonetization by RBI itself, I don't know how far they can cook such stories.

Aditya

[Bimat]

According to some unconfirmed reports, government is considering introduction of redesigned (and resized) ₹1000 banknote as people are finding it almost impossible to find change of the ₹2000 note. ₹2000 note will NOT be discontinued but will be printed in smaller quantities.

Also, RBI may give another chance to exchange old ₹500 and ₹1000 banknotes at selected locations in every city to those who couldn't do so until December 30th. The exchange limit is likely to be very small (up to ₹2000 per person) and he/she will be required to give a valid reason for not depositing old notes earlier. This decision is likely to be taken very soon.

Aditya

[Bimat]

Rs 1,000 note to be back in new avatar, not clear when

Written by Sunny Verma | New Delhi | Updated: February 21, 2017 8:00 am

The RBI and the government have firmed up plans to launch a new series of Rs 1,000 notes shortly to replace the earlier note of similar denomination that was withdrawn from circulation following the November 8 demonetisation announcement, a senior government official has told The Indian Express.

The RBI, the official said, has already started production of the new Rs 1,000 note. According to the official, the initial plan was to introduce the new Rs 1,000 note in January but "it has been delayed due to the pressing need to supply Rs 500 notes".

It is not clear when the new note of Rs 1,000 will be officially introduced into the market. To replace old notes of Rs 500 and Rs 1,000 during demonetisation, the RBI had issued new notes of Rs 500 and Rs 2,000 which carried new designs, better security features and the picture of Mangalyaan on the back of the notes. The new notes are being issued to replace Rs 15.44 lakh crore worth of demonetised currency notes.

As on January 27, notes in circulation, comprising all denominations including Rs 2,000 and Rs 500, were Rs 9.92 lakh crore, RBI Deputy Governor R Gandhi said on February 8. The central bank has not shared information of the total value of Rs 500 and Rs 2,000 notes that have been issued.

February 20 onward, the limit on cash withdrawals from savings bank accounts are being raised to Rs 50,000 per week from the earlier limit of Rs 24,000 per week. Effective March 13, all limits on cash withdrawal from savings bank accounts will be removed.

Transactions in Rs 2,000 notes are expected to become easier with the introduction of Rs 1,000 denomination notes. While a bulk of the currency that was demonetised has been deposited into banks, the RBI is yet to provide the exact data. The RBI has given Indians who were abroad between November 9 and December 30, a three-month grace period until March 31 to deposit the old notes. For NRIs, this deposit window is open until June 30.

On February 11, when he was asked when would the RBI release data on the old notes of Rs 500 and Rs 1,000 deposited in banks, RBI Governor Urjit Patel said that the central bank will provide a number which is verifiable and not merely an estimate.

"Given that the window is open until March 31 and then at a lower level until June 30, we need to be careful and try as hard as possible that this is a number that is not a mere estimate but a verifiable number, both physically and in accounting stance," Patel said.

An email sent to the RBI and finance ministry for comments on the re-introduction of Rs 1,000 notes did not elicit any response.

Source: Indian Express

[velind]

Is this true ---

No new Rs 1000 notes, govt rubbishes reports

So the reports were unfounded.

The government says it has no plans to reintroduce Rs 1000 notes.

Shaktikanta Das, Secretary Economic Affairs, Government of India, tweeted, "No plans to introduce Rs 1000 notes. Focus is on production and supply of ₹500 and lower denomination notes. Complaints of cash out in  ATMs being addressed. Request  everyone to draw the cash they actually require. Overdrawal by some deprives others."


Yesterday, reports said that the RBI and the government had firmed up plans to launch a new series of Rs 1,000 notes  to replace the earlier note of similar denomination that was withdrawn from circulation following the November 8 demonetisation announcement, a senior government official told the Indian Express reported.

The RBI, the official said, has already started production of the new Rs 1,000 note. According to the official, the initial plan was to introduce the new Rs 1,000 note in January but "it has been delayed due to the pressing need to supply Rs 500 notes".

Source: http://news.rediff.com/commentary/2017/feb/22/no-new-rs-1000-notes-govt-rubbishes-reports/741db5e47ce2af3f4d4ffe5b55c58f4f

[Bimat]

Yes, I read Das' tweet too. But Indian Express says that printing of ₹1000 has already started. Interesting to note that just after November 8, Das had said in a press conference that a new ₹1000 note will be issued, which Jaitley later denied. I guess nobody is really having a clue what's happening.

Ideally, they should issue a ₹1000 note if they are also printing ₹2000 notes (government has already said that they won't discontinue ₹2000 note as being speculated), as majority of the 10 trillion rupees remonetised after demonetization are in the form of ₹2000 notes. The gap between 500 and 2000 is huge and given the unpopularity of the ₹2000 note, even if they issue notes worth 15 trillion, majority of which are in ₹2000 notes, the shortage of cash will continue (my friends from Delhi tell me that many of the ATMs in Delhi have started running dry again, same is the case in Punjab and Haryana. Mumbai seems to be lucky).

If they don't want ₹1000 notes, then don't issue ₹2000 note either, but in that case they will have to issue so many ₹500 notes that it will take more than a year to fill the gap.

Aditya