The Always-Updated Guide to #Demonetization

On 8th November, The Prime Minister announced the demonetization of 500 and 1,000 rupee notes. It means that the status of the banknotes as legal tender issued by the Reserve Bank of India has been withdrawn. Simply, you can no longer use them for transacting any kind of business or store them for use in the future. There are some exceptions, discussed below.

This policy decision and its subsequent effects impact everyone and it is important to have accurate and comprehensive information regarding the demonetization of currency. It is with this spirit that Nyaaya has created this always-updated guide which will track changes in the policy and inform you about them. You can also check all the original notifications, which we are compiling here.

What should you do with your demonetized currency notes?

If you have any banknotes that have been demonetized, you can do three things with them:

  1. They can be deposited into your account with any:
  • Public Sector Bank
  • Private Sector Bank
  • Foreign Bank
  • Regional Rural Bank
  • Urban Co-operative Bank, or
  • State Co-operative Bank.

There is no limit on the amount of money to be deposited (please see below — this has changed if your account is not KYC complaint). You can deposit money till 30th December 2016. After this date, you can continue to deposit money at the offices of the RBI.

19th and 21st December UPDATES:

From December 21, 2016, the following restrictions apply to any bank deposits for accounts that are not KYC complaint.

A. If you want to deposit more than Rs. 5000 (before the deadline of December 30, 2016), you can do this only once.

  • Please note that the bank officials will question you — they will ask you why you did not deposit the money earlier. You will need to have a satisfactory answer. They will keep your answer on record for audit purposes.
  • The bank can restrict the deposit to Rs. 50,000.

B. If you want to deposit amounts less than Rs. 5000, you can keep doing this until December 30, 2016.

  • However, if the total amount you have deposited over this period is more than Rs. 5000 (for example, Rs. 1000 over 6 days), the bank officials can question you. They can ask you why you did not deposit the money earlier. You will need to have a satisfactory answer. They will keep your answer on record for audit purposes.
  • The bank can restrict the deposit to Rs. 50,000.

C. This does not apply if you are making deposits under the Pradhan Mantri Garib Kalyan Yojana, 2016.

2. They can be exchanged for value only at any of the offices of the Reserve Bank of India. This can be done till 31st December 2016. The limit for such exchange is Rs. 2000 and this can be done once by each person. You have to fill a form for the exchange of notes.

3. Old banknotes of Rs. 500 can still be used for certain purposes till December 15th. This has been detailed later on in this guide.

What are the current limits for withdrawal/exchange from Banks and ATMs?

If you are using an ATM card: you can withdraw Rs. 2500/- per card daily. Note: From 1st January 2017, the ATM withdrawal limit has been raised to 4500/- per card daily. The weekly withdrawal limit stays same. From 16th January 2017, the ATM withdrawal limit has been raised to 10,000/- per card daily. The weekly withdrawal limit remains the same. From 1st February 2017, there are no more limits on withdrawal of money from ATMs.

If you are withdrawing from a bank: there is no daily limit to how much you can withdraw. However there is a weekly limit of Rs. 24,000 for withdrawal from Bank accounts. (Update) The withdrawal limit can be eased if you are depositing valid currency (new legal notes as well as notes that were always valid like Rs. 50 and Rs. 20) into your account. The increase in withdrawal will be in effect from Nov. 29th 2016 and will be in proportion to the amount of legal notes you are depositing. For instance, if you deposit 5,000 rs. in your account, out of which 2,000 is in legal notes, your withdrawal limit for the week will increase by 2,000 Rs. For that week, your withdrawal limit will be Rs. 26,000.

If you have a current, overdraft or cash credit account: (operational in the last 3 months) then you can withdraw up to Rs. 50,000 in a week.From 16th Jan 2017, this has been increased to Rs. 1,00.000. From 1st February 2017, there are no more limits for withdrawal from such bank accounts

Note: As of 29/11/2016, different withdrawal limits apply to Jan Dhan accounts

What is the upper limit to deposit money?

There is no upper limit to the amount of money you can deposit if you have a valid bank account.

Are there any provisions for specific persons or situations (farmers, weddings) ?

If you are a farmer: Farmers can withdraw up to Rs. 25,000 in cash from their loan or deposit accounts. They can also use the demonetized 500 Rs. notes to buy seeds from the government centres.

If you have a wedding in the house: You can withdraw a maximum of Rs. 2,50,000 from your bank account till December 30th 2016 for wedding related expenses. There are certain conditions which must be fulfilled in order to benefit from this:

  • The amounts can be withdrawn only if the date of marriage is on or before December 30, 2016.
  • Withdrawal can be made by only one person, either by the parents of the person getting married or the person themselves.
  • Application form should be fully filled.
  • Evidence of the wedding, including the invitation card, copies of receipts for advance payments already made, such as Marriage hall booking, advance payments to caterers, etc.
  • A detailed list of persons to whom the cash withdrawn is proposed to be paid, together with a declaration from such persons that they do not have a bank account, where the amount proposed to be paid is 10,000/- or more. The list should indicate the purpose for which the proposed payments are being made.

Do I need to go to the bank personally?

No, if you are unable to go to the bank to deposit money, you can send someone on your behalf to deposit the money. You will have to provide a written declaration, signed by you authorising that person to deposit money on your behalf. The representative must have a valid ID proof.

Can I withdraw cash against cheque?

Yes, subject to the withdrawal limit of Rs. 24,000 per week.

What can you do if you are a foreign tourist in India?

You can exchange foreign currency for Indian currency notes, limited to Rs. 5000 in a week. This facility is available till 31st January 2017

What can you do if you were out of the country between 9th November to 30th December 2017?

For Resident Indians, as well as NRI’s a grace period has been given by the government. For resident Indians, it is till 31st March 2017 and for NRI;s it is till June 30, 2017. Please read this RBI notification to know more.

Are there any provisions for using these notes for any emergency needs?

Till 15th Dec. 2016, you can use the demonetized Rs. 500 notes for the following:

  • for making payments in Government hospitals for medical treatment and pharmacies in Government hospitals for buying medicines with doctor’s prescription;
  • at railway ticketing counters, ticket counters of Government or Public Sector Undertakings buses and airline ticketing counters at airports for purchase of tickets;
  • Note: (1) As per the RBI notification on 30th November 2016, the facility for buying airline tickets is only till 2nd December 2016 (2) As per notification on 7th December 2016, the facility for railways and buses is only till 10th December.
  • for purchases at consumer cooperative stores operated under authorisation of Central or State Governments and the customers shall provide their identity proof; However, the purchase from Consumer Cooperative Stores will be limited to Rs. 5000 at a time;
  • 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 and Gas Marketing Companies; (Note: As per notification on 30th November 2016, this facility is only till 2nd December 2016.)
  • for payments at crematoria and burial grounds;
  • for making payments in all pharmacies on production of doctor’s prescription and proof of identity;
  • for payments on purchases LPG gas cylinders;
  • for making payments to catering services on board, during travel by rail;
  • for making payments for purchasing tickets for travel by suburban and metro rail services;(Note: As per notification on 7th December 2016, this facility is only available till 10th December.)
  • for making payments for purchase of entry tickets for any monument maintained by the Archaeological Survey of India.
  • for making payments towards any fees, charges, taxes or penalties, payable to the Central or State Governments including Municipal and local bodies;
  • for making payments towards utility charges for water and electricity only. -which shall be restricted to individuals or households for payment of only arrears or current charges. No advance payments shall be allowed
  • for payments towards court fees
  • for making payments towards purchase of seeds from the centres, units or outlets belonging to the Central or State Governments, Public Sector Undertakings, National or State Seeds Corporations, Central or State Agricultural Universities and the Indian Council of Agricultural Research, on production of proof of identity:
  • Payment of school fees up to Rs. 2,000 per student in Central Government, State Government, Municipality and local body schools;
  • Payment of fees in Central or State Government colleges;
  • Payments towards pre-paid mobile top-up to a limit of Rs. 500 per top-up
  • For toll payments at Plazas operating under the National Highways Authority of India. This will be applicable from 2nd December 2016 to 15th December 2016 as tolls have been made free till 2nd December 2016.

What law has this been done under?

This has been done under the Reserve Bank of India Act, 1934. Section 24(2) of the RBI Act 1934 empowers the central govt. to direct the discontinuation of bank notes of any value. Section 26(2) of the same act says that the central govt. can declare that any bank notes shall cease to be legal tender.

Disclaimer: We have tried to keep the information accurate and up to date. In case you spot a mistake, let us know and if possible point us to the correct information. This guide has been created based on the information given on the RBI website and the notifications issued by the Ministry of Finance. You can also check all the original notifications, which we are compiling here.

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