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Rs 500 and Rs 1000 Notes No Legal Tender Now
Nov 09, 2016

In a historical move that will add record strength in the fight against corruption, black money, money laundering, terrorism and financing of terrorists as well as counterfeit notes, the Government of India has decided that the 500 and 1000 rupee notes will no longer be legal tender from midnight, 8 November. 

Prime Minister Narendra Modi made these important announcements during a televised address to the nation on the evening of 8 November 2016. He said that these decisions will fully protect the interests of honest and hard-working citizens of India and that those five hundred and one thousand rupee notes hoarded by anti-national and anti-social elements will become worthless pieces of paper. 

Key Highlights

  • The steps taken by the Government would strengthen the hands of the common citizens in the fight against corruption, black money and counterfeit notes. Fully sensitive to some of the difficulties the common citizens may face in the coming days, the Prime Minister has announced a series of steps that will help overcome the potential problems. 
  • The Government has accepted the recommendations of the RBI to issue 2000 rupee notes and new notes of 500 rupees will also be placed in circulation. 
  • Notes of 100, 50, 20, 10, 5, 2 and 1 rupee will remain legal tender and will remain unaffected. 
  • Persons holding old notes of 500 or 1000 rupees can deposit these notes in bank or post offices from 10 November onwards till 30 December. 
  • The old notes can be exchanged for value at any of the 19 offices of the Reserve Bank, any of the bank branches or at any head post offices or sub-post offices.
  • There are also some limits placed on the withdrawals from ATMs and bank for the very short run. 
  • Once the ATMs start functioning, there will be a withdrawal limit of Rs. 2,000 per debit card, which will be increased to Rs. 4,000 later.
  • There will, however, be an overall limit on withdrawal from banks of Rs. 10,000 per day and Rs. 20,000 per week, which will be increased in the coming days.
  • For all the exchanges, the person has to carry valid identity proofs. This can be done at any branches of the bank that one is banking with and can also be done at other bank branches provided one furnishes valid identity proof and bank account details.
  • A person with no personal account of own can avail of this exchange facility via a relative/friend’s account with written permission. But while exchanging, one should provide the evidence of permission given by the account holder and own valid identity proof.
  • Cash withdrawal through cheque/withdrawal slips is subject to a 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-up to November 24.
  • Those who are outside the country can get their exchanges done by authorising in writing another person in the country to deposit the notes into your bank account with the authority letter and identity proof such as Aadhaar card, driving license, voter ID card, passport, NREGA card, PAN card etc.
  • On humanitarian grounds notes of 500 and 1000 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. 
  • There is no restriction on any kind of non-cash payments by cheques, demand drafts, debit or credit cards and electronic fund transfer. 
  • As per the official data of the Reserve Bank, till March 2016, Rs. 14 lakh crore out of Rs. 16 lakh crore worth currency issued by RBI were in denominations of Rs. 500 and Rs. 1,000.

Narendra Modi is the second Indian Prime Minister to demonetise high-value rupee notes in independent India. But he will be the first to introduce the Rs 2,000 note. In 1978, the then Prime Minister Morarji Desai had banned all currency above Rs 100. In both instances, it was the menace of black money that had compelled the government to scrap the existing high-value currency notes.

The Prime Minister has time and again said that the Government is committed to ensure that the menace of black money is overcome. 

  • The very first decision taken by the NDA 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. 
  • Over the past two and a half years, more than Rs. 1.25 lakh crore of black money has been brought into the open.

Important Information

  • The highest currency note ever printed by the RBI was a Rs 10,000 note during the British Raj. It was printed first in 1938 and a new version came in 1954. These notes were demonetised in January 1946 and again in January 1978.
  • When Morarji Desai came to power, banknotes of Rs 1,000, Rs 5,000 and Rs 10,000 were in circulation. But Morarji Desai, who also held the finance portfolio, demonetized all these notes in January 1978.
  • During the Atal Behari Vajpayee era, the Rs 1,000 note made a comeback. In November 2000, these notes were re-introduced on the ground that it would be easier for business transactions. The Rs 500 notes had already returned into circulation in October 1987. The move was then justified as an attempt to contain the volume of banknotes in circulation due to inflation.
  • Bank notes in the Ashoka Pillar watermark series in Rs 10 denomination were issued between 1967 and 1992, Rs 20 in 1972 and 1975, Rs 50 in 1975 and 1981 and Rs 100 between 1967-1979.
  • The banknotes issued during this period contained the symbols representing science and technology, progress and orientation to Indian art forms.
  • In the year 1980, the legend Satyameva Jayate was incorporated under the national emblem for the first time.
  • In October 1987, the Rs 500 banknote was introduced with the portrait of Mahatma Gandhi and Ashoka Pillar watermark.
  • The Mahatma Gandhi banknote series-1996 were issued in the denominations of Rs 10, Rs 100 (June 1996), Rs 50 (March 1997), Rs 500 (October 1997), Rs 1,000 (November 2000), Rs 20 (August 2001), and Rs 5 (introduced in November 2001).
  • The Mahatma Gandhi Series-2005 bank notes were issued in the denomination of Rs 10, Rs 20, Rs 50, Rs 100, Rs 500 and Rs 1,000 and contained some additional/new security features as compared to the 1996 series.
  • The Rs 50 and Rs 100 banknotes were issued in August 2005, followed by Rs 500 and Rs 1,000 denominations in October 2005 and Rs 10 and Rs 20 in April 2006 and August 2006, respectively. 


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