Author Topic: ₹500 and ₹1000 Banknotes are No More Legal Tender  (Read 13842 times)

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Offline Bimat

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₹500 and ₹1000 Banknotes are No More Legal Tender
« Reply #75 on: December 19, 2016, 06:57:51 AM »
I think RBI is legally bound to refund the full amount paid in old ₹500 or ₹1000 banknotes, irrespective of when they are returned, as each and every note mentions so ("I promise to pay the bearer the sum of [...] Rupees"). As long as a valid proof is being presented, this should be no problem.

Having said that, this is a complex legal issue and we may see intervention by court at some point of time. Interesting times ahead. ;)

Aditya

Sorry for quoting my own post ;), but I have been told that I'm indeed right regarding exchange of old notes at RBI for an indefinite period. In his own words: RBI can't escape legally from honor "promise to the bearer".

We shall see what RBI notifies as March 31, 2017 comes closer...

Aditya
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Offline Bimat

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₹500 and ₹1000 Banknotes are No More Legal Tender
« Reply #76 on: December 19, 2016, 10:28:09 AM »
Latest rule by RBI: You can now deposit an amount over ₹5000 in old notes only once per account till December 30. Credit in such cases will be allowed only after questioning of the tenderer as to why couldn't he/she deposit the amount earlier. A proper record of all these questions shall be kept for audit purpose and an appropriate flag also should be raised in CBS...

https://rbi.org.in/Scripts/NotificationUser.aspx?ID=10784

Minimum government, maximum governance, anyone? On November 12, finance minister had said that there's no need to rush to the bank to deposit your old notes, you have enough time till December 30 to do so. And now this... ::)

Aditya
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Offline dheer

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Re: ₹500 and ₹1000 Banknotes are No More Legal Tender
« Reply #77 on: December 19, 2016, 11:50:10 AM »
No wonder when I went to deposit OHD today; the lady at the teller sent me to KYC. Surprisingly they didn't ask me any questions. Humm ... and lazy people like me who didn't queue up the Bank will have some answering to do  ;D
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Offline dheer

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Re: ₹500 and ₹1000 Banknotes are No More Legal Tender
« Reply #78 on: December 19, 2016, 11:52:36 AM »

Minimum government, maximum governance, anyone? On November 12, finance minister had said that there's no need to rush to the bank to deposit your old notes, you have enough time till December 30 to do so. And now this... ::)

Aditya
I guess the time is same till December 30. Earlier the RBI/finance minister has said that one can deposit the OHD multiple times [as many times as one wants]. Now the ruling is only one time. This is bound to create few flutters. However given that almost all the the OHD is back; does it really matter  ;)
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Offline Bimat

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₹500 and ₹1000 Banknotes are No More Legal Tender
« Reply #79 on: December 19, 2016, 12:07:59 PM »
I guess the time is same till December 30. Earlier the RBI/finance minister has said that one can deposit the OHD multiple times [as many times as one wants]. Now the ruling is only one time. This is bound to create few flutters. However given that almost all the the OHD is back; does it really matter  ;)

It DOES matter. What PM/FM had said on/after November 8:

You can deposit upto 2.5 Lacs in your account. No questions asked. No tax charged. They didn't say you can deposit entire amount only once or multiple times. It was up to you to decide. I myself visited bank twice to deposit old notes.

The latest notification means that you will be QUESTIONED if your amount exceeds 5k. Yes, 5k! This is Banana Republic!

The restriction has been imposed because RBI now fears that more money than what they had 'put' into circulation will be deposited in the accounts by December 30th. If that happens, then it will give nightmares to RBI for many years to come. They somehow want people not to deposit the money in account.

By the way, according to some reports, government is also planning to impose restrictions on how much cash you can keep at home (Not confirmed yet). The recommendation was made by the SIT on black money, so very much possible in near future. Apart from how to implement it, this is the last mistake this government can do. People don't like unreasonable restrictions. This is dictatorial attitude. Get out of it!

Aditya
It is our choices...that show what we truly are, far more than our abilities. -J. K. Rowling.

Offline dheer

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Re: ₹500 and ₹1000 Banknotes are No More Legal Tender
« Reply #80 on: December 19, 2016, 01:21:41 PM »

The restriction has been imposed because RBI now fears that more money than what they had 'put' into circulation will be deposited in the accounts by December 30th. If that happens, then it will give nightmares to RBI for many years to come. They somehow want people not to deposit the money in account.

I guess quite likely. If the amount is more or even near to 14; it is bound to open Pandora's box.>:D
I think anything less than 12.5 / 13 and the Govt would be happy saying it met the objective.

By the way, according to some reports, government is also planning to impose restrictions on how much cash you can keep at home (Not confirmed yet). The recommendation was made by the SIT on black money, so very much possible in near future. Apart from how to implement it, this is the last mistake this government can do. People don't like unreasonable restrictions. This is dictatorial attitude. Get out of it!
I guess Govt needs to look at alternatives. The approach in my view is make it expensive. i.e. print very less of High Denomination notes ... very very less ... take a hit on cost and print more of Rs 100 as much as required ... even the 14 lacs crores. This way for normal people its not an issue ... but then very soon it may become cumbersome to carry this kind of cash ... yes it may give rise to hawala safe deposits, where you keep money and take a slip ... but then it grows in storage and safe keeping costs ... On the other hand stop lower denomination and move to coins ... So end the Rs 10 and Rs 20 notes and replace by as many coins as needed ... ofcourse fake Rs 10 coin can become more serious issue ...

This would make it expensive to carry tons of coins or notes in pockets for ordinary people and they would slowly move to digital ... if I don't have cash in pocket, petty corruption would reduce [I cant bribe the traffic police, etc] ... on the other hand it would become cumbersome for large scale corruption as carrying the quantity of notes becomes an issue.
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Offline Bimat

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₹500 and ₹1000 Banknotes are No More Legal Tender
« Reply #81 on: December 19, 2016, 04:45:38 PM »
I guess quite likely. If the amount is more or even near to 14; it is bound to open Pandora's box.>:D
I think anything less than 12.5 / 13 and the Govt would be happy saying it met the objective.

As on today, over 14 Lakh crore have been deposited (According CNBC report, Attorney General informed SC that over 13 Lakh crore are back in banking system which is much higher than what government had expected. This was a week ago, and on an average, 20,000 crores are being deposited). 10 more days to go. No wonder RBI asked banks to recount the banknotes they have collected. RBI Governor must be having sleepless nights. Wohaa! :D

Aditya
« Last Edit: December 19, 2016, 05:00:54 PM by Bimat »
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Offline Bimat

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₹500 and ₹1000 Banknotes are No More Legal Tender
« Reply #82 on: December 20, 2016, 11:08:14 AM »
Latest rule by RBI: You can now deposit an amount over ₹5000 in old notes only once per account till December 30. Credit in such cases will be allowed only after questioning of the tenderer as to why couldn't he/she deposit the amount earlier. A proper record of all these questions shall be kept for audit purpose and an appropriate flag also should be raised in CBS...

https://rbi.org.in/Scripts/NotificationUser.aspx?ID=10784

Minimum government, maximum governance, anyone? On November 12, finance minister had said that there's no need to rush to the bank to deposit your old notes, you have enough time till December 30 to do so. And now this... ::)

Aditya

A new day, a new rule. ;D Government has withdrawn yesterday's decision to give written explanation for deposits over 5000 after much of criticism. A new notification likely in next couple of hours...

Amendment number 59 on day 42.

Aditya
It is our choices...that show what we truly are, far more than our abilities. -J. K. Rowling.

Offline dheer

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Re: ₹500 and ₹1000 Banknotes are No More Legal Tender
« Reply #83 on: December 20, 2016, 12:53:46 PM »
If you had black money and if you paid a commission of 30-40% to an agent to make it white just after the decision of demonetization, then you have been fooled. Economic Times now reports that situation has completely reversed now and these agents are offering 6-8% interest on black money, with a lock-in period of 1 year or so. :o

While all this is very hard to digest for me atleast (I'm still trying to find out how can they provide interest on huge sums of black money), it does sound possible. An industrialist last week posted on Twitter that some people are buying old ₹1000 banknotes for a 5% premium. Didn't believe in him then, but since this report has appeared, I'm convinced that he wasn't kidding.

Irrespective of my (or anyone's) views regarding demonetization, this is a VERY bad news for RBI/other banks/government. Interest on black money means direct loss to the banks. Terrible.

Aditya

India is strange land indeed ... amazed and disappointed at the same time. ???
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Offline Bimat

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₹500 and ₹1000 Banknotes are No More Legal Tender
« Reply #84 on: December 20, 2016, 03:49:28 PM »
India is strange land indeed ... amazed and disappointed at the same time. ???

The story is not over yet, my dear friend! Conversations (SMSs, e-mails and may be more) of a person, who was a key part of demonetization team since beginning, have been leaked and making rounds among journalists etc. for quite some time now. Buzz in Lutyens is that this will be out in public domain soon and will cause major embarrassment for the government. It's said that whatever has been leaked is very explosive. We shall see! 8)

Subramanian Swamy, a senior leader of ruling party, couple of days ago tweeted that he too suspects that the decision of demonetization was leaked to some selected people well in advance and he'll go to court if government doesn't. Fun times ahead! :D

Aditya
It is our choices...that show what we truly are, far more than our abilities. -J. K. Rowling.

Offline Bimat

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₹500 and ₹1000 Banknotes are No More Legal Tender
« Reply #85 on: December 21, 2016, 04:11:06 AM »
This is brilliant. Just brilliant.

Aditya
It is our choices...that show what we truly are, far more than our abilities. -J. K. Rowling.

Offline Bimat

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₹500 and ₹1000 Banknotes are No More Legal Tender
« Reply #86 on: December 21, 2016, 04:20:12 AM »
RBI Adds to Demonetisation Confusion With its Answer to an RTI Query

Tushar Dhara | CNN-News18
First published: December 20, 2016, 4:17 PM IST | Updated: 15 hours ago

New Delhi: The Reserve Bank of India has added to the confusion swirling around the demonetisation numbers with its reply to Mumbai-based RTI activist Anil Galgali.

Anil Galgali asked the RBI a series of questions under the Right to Information Act. Among them was a query about the inventory of new 2000 and 500 rupee notes with the RBI on 8 November, 2016, the day Demonetisation was announced.

The RBI’s answer is that it had Rs 4.94 lakh crore worth of 2000 rupee notes as on that date and none of 500 rupee notes. This is where it gets interesting.

RBI deputy governor R. Gandhi on December 13 said that “The banks have since the start of the programme on November 10, 2016 till December 10, 2016 issued notes valued at Rs 4.61 lakh crore to the public over their counters and through their ATMs.”

The value of notes issued to the public in the month since demonetisation is lower than the stock of 2000 rupee notes that the RBI says it had on the day the move was announced by the Prime Minister.

Does this mean that the new currency notes that have been printed since then haven’t been introduced into the banking system?

Mohan Guruswamy, the head of the Centre for Policy Alternatives said that the remonetisation is not going according to plan because the government and the RBI initially tried to introduce 2000 rupee notes without printing 500 rupee notes. But when they discovered that people couldn’t break the 2000 rupee notes in the market, they changed course and gave priority to distributing 500 rupee notes.

But the matter gets more curious.

The RBI reply contains another number that doesn’t seem to fit in. In reply to a question about the value of “old denomination” 500 and 1000 rupee notes on November 8, the RBI’s reply is thus: The value of 500 rupee notes was Rs 11.38 lakh crore while 1000 rupee notes was Rs 9.13 lakh crore, giving a total value of Rs. 20.5 lakh crore.

But the government has said that the total value of demonetised currency is Rs. 15 lakh crore. An affidavit filed in the Supreme Court by the Central Government states that:

“As per the Weekly Statistical Supplement, the notes in circulation as on November 4, 2016 stood at Rs. 17,74,187 crores. Roughly 86% of this value i.e. Rs 15,25,800 crore comprise of notes of denominations Rs 500 and Rs 1000.”

There is a discrepancy of Rs 5.25 lakh crore in the figures given by the RBI and furnished by the government.

Efforts by News18 to speak to officials in the RBI proved futile. The Public Information Officer of the RBI, P. Vijay Kumar, refused to speak to News18 despite repeated telephone calls and requests. Reserve Bank Spokesperson Alpana Killawala was also unreachable.

Sources with knowledge of the matter said that the discrepancy makes sense if the Rs 5.25 lakh crore was money lying in the RBI’s currency chests. When they are in the chest they are just pieces of paper with no intrinsic value till they are issued to the public, at which point they become liabilities. The RBI also doesn’t need to mention this amount in its annual reports or bulletins.

Source: News18
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Offline dheer

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Re: ₹500 and ₹1000 Banknotes are No More Legal Tender
« Reply #87 on: December 21, 2016, 09:14:33 AM »
I am sure there is a logical explanation. Big numbers are hard to reconcile and our record keeping is definitely not very great. In past there was similar discrepancy between the notes that were printed by printing press and the notes that RBI currency chest had.
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Offline Bimat

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₹500 and ₹1000 Banknotes are No More Legal Tender
« Reply #88 on: December 21, 2016, 09:59:49 AM »
Quote
Sources with knowledge of the matter said that the discrepancy makes sense if the Rs 5.25 lakh crore was money lying in the RBI’s currency chests. When they are in the chest they are just pieces of paper with no intrinsic value till they are issued to the public, at which point they become liabilities. The RBI also doesn’t need to mention this amount in its annual reports or bulletins.

What disturbs me that they will now be destroying currency worth ~ ₹5 Lakh crores even without touching it! It's a waste of tax payers' money, logistical/security efforts...They should have planned in a better way I think.

Aditya
« Last Edit: December 21, 2016, 12:07:04 PM by Bimat »
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Offline dheer

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Re: ₹500 and ₹1000 Banknotes are No More Legal Tender
« Reply #89 on: December 21, 2016, 12:04:49 PM »
What disturbs me that they will not be destroying currency worth ~ ₹5 Lakh crores even without touching it! It's a waste of tax payers' money, logistical/security efforts...They should have planned in a better way I think.

Aditya

Don't give the impression of 5 lakh crores being wasted  :). It is worthless paper ... yes the printing cost would be around 1000 crores ... still quite a bit of money ... :(
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