Govt notifies demonetisation of Rs 500/Rs 1,000 notes

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SME Times News Bureau | 09 Nov, 2016
To give effect to Prime Minister Narendra Modi's decision to denotify Rs 500 and Rs 1,000 notes to curb black money, the central government on late Tuesday notified the changes.

The notification by the Department of Economic Affairs, Ministry of Finance published in the Gazette of India read: "The Central Government declared that the bank notes of existing series of denomination of the value of five hundred rupees and one thousand rupees, shall cease to be legal tender on and from the 9th November, 2016."

The government also declared that the Rs 500 and Rs 1,000 notes shall "not be ceased to be legal tender between November 9 and 11" for providing public convenience in carrying out certain emergent and urgent transactions.

The notification detailed that old Rs 500 and Rs 1,000 notes can be used for making payments in government hospitals, pharmacies in government hospitals, at railway ticketing counters, ticket counters of government or public sector undertakings buses and airline ticketing counters at airports for purchase of tickets.

"For purchases at consumer cooperative stores operated under authorisation of central or state governments; for purchase at milk booths operating under authorisation of the central or state governments; for purchase of petrol, diesel and gas at the stations operating under the authorisation of public sector oil marketing companies; for payments at crematoria and burial grounds."

The notification specified that all establishments allowed to carry transaction between November 9 and 11 have to maintain a complete account of record of stock and sale of transactions made with old Rs 500 and Rs 1,000 bank notes.

In another notification, the government gave its assent for the new Rs 2,000 notes.

"On the recommendations of the Central Board of Directors of the Reserve Bank of India, the Central Government hereby specifies the denomination of bank notes of the value of two thousand rupees," the notification read.

Prime Minister Narendra Modi on Tuesday termed the decision to ban Rs 500 and Rs 1,000 notes as a "historic step" to fight corruption and black money, that would also choke funds for arms smuggling, espionage and terrorists.

In a sudden, televised address to the nation in the evening, the Prime Minister said: "India has taken a historic step to fight corruption, black money, terrorism and counterfeit currency."

"This historic step will open up new opportunities for the poor, neo middle class, and middle class," he said.

He said the decisions, taken after a cabinet meeting and on the recommendations of the Reserve Bank of India, will "fully protect the interests of honest and hard-working citizens of India and that the notes hoarded by anti-national and anti-social elements will become worthless pieces of paper".

Modi also said that with this step, real estate prices, higher education and healthcare would come within the reach of the common citizens.

He said the decision would help end the circulation of large volumes of counterfeit currency.

The Prime Minister said his government is committed to ensure that the menace of black money is overcome. He said that over the past two and a half years of the NDA Government, he has walked the talk and led by example.

Modi said that the huge amount of black money in circulation increased inflation, which in turn affected the common man. He said the situation was even worse in the real estate sector.

Modi said that the very first decision of his government was the formation of a SIT on black money.

A law was passed in 2015 on disclosure of foreign bank accounts. In August 2016 strict rules were put in place to curtail benami transactions. During the same period a scheme to declare black money was introduced, he said.

The Prime Minister said that the efforts have borne fruit. Over the past two and a half years of his government, more than Rs 1.25 lakh crore of black money has been brought into the open.