Prime Minister Narendra Modi has announced the demonetisation of Rs. 1000 and Rs. 500 notes with effect from midnight. This step makes these notes invalid from today. Apart from this, government has also reduced the cash withdrawal limits from banks and ATMs. The move is seen as a major assault on black money, fake currency and corruption.
1,000 and 500 rupee notes will cease to be legal tender from midnight tonight!
1,000 and 500 rupee notes will cease to be legal tender from midnight tonight and those who are in possession of these notes can deposit the notes in their accounts in banks and post offices from 10th of this month to 30th of December this year.
Making old notes of Rs. 500 and Rs. 1000 invalid: What does this mean?
- This would mean more than Rs 15 lakh crore worth of high-value legal tender being withdrawn from circulation.
- Those who are unable to deposit the notes within the deadline for some reasons, can change them till 31st of March next year by furnishing ID proof.
- New currency notes of 500 and 2000 rupees denomination notes to be introduced.
- RBI has decided to limit the notes with higher value.
- Though this move will bring a lot of hardships, mostly for the small traders and common man who don’t use plastic money, it is widely considered as a revolution in Indian economy.
Changes in cash withdrawal limits from Banks and ATM
- Banks will be closed tomorrow.
- ATMs will not work for next 48 hours.
- Thereafter, amounts upto Rs. 2000 can be withdrawn from ATMs.
Emergency services will not be affected for next 72 hours!
- Petrol Pumps, CNG Stations, Milk Booth, Consumer Cooperative stores and crematoriums will accept old notes in the next 72 hours.
- Railway booking counters, ticket counters of Government Buses and airline ticket counters will also accept the old notes for the next 72 hours.
- Old notes of 500 and 1000 denominations will be accepted in Government hospitals for the time being.
War against corruption!
- Mr Modi said, his government has waged a war against corruption.
- Corruption, fake currency and terrorism are festering wounds, holding back the economy.
- As per the sources the Government has unearthed 1.25 lakh crore rupees black money.
Are banks equipped to replace all old notes of Rs 500 and Rs 1,000?
- According to Reserve Bank of India data, the total outstanding currency in circulation in the Indian economy as on October 28 stood at Rs 17.77 lakh crore. This figure was Rs. 16.42 lakh crore as on March 31. 2016.
- Out of the total Rs 16.42 lakh crore value of bank notes in circulation as on March 31, 2016, as much as Rs 14.18 lakh crore, i.e. over 86 per cent, consisted of Rs 500 and Rs 1,000 notes.
- In terms of volumes, out of the total 9026.6 crore banknote pieces, 2,203 crore or 24 per cent-plus were of Rs 500 and Rs 1,000 denomination.
- Outright replacement of around 2,300 crore banknote pieces will be an obvious logistical nightmare.
- It is likely that the bulk of this would simply be deposited by people in banks rather than be exchanged for lower denomination notes.
What should you do with Rs.500 and Rs.1000 currency notes?
- Deposit old notes at your nearest authorised banks or post offices between November 10 and December 30 (50 days) without any limit. There will, however, be a limit on withdrawal — Rs 10,000 per day and Rs 20,000 per week. This particular limit will be increased in the coming days.
- Exchange of old notes for cash upto a limit of Rs 4000 possible at any bank or post office by producing valid ID proof.
- Tip: To know more about the arrangements by Government and RBI read: What should you do with Rs.500 and Rs.1000 currency notes?
ATM cash withdrawals: For a few days, only upto Rs. 2000 can be withdrawn from ATMs. This will be enhanced to Rs. 4000 later. The withdrawal limit for ATM will eventually be fixed at Rs. 10,000 per day and Rs. 20,000 per week.
What may be the future?
- Real Estate price, higher education, health care to come within the reach of common citizens, as money will be accounted in future.
- Funding for arms, smuggling, espionage, terrorists to be choked.
- Circulation of large volumes of counterfeit currencies to end.
- Open up new opportunities, neo-middle class and middle class.
- A lot of money will get into the banking system, as people will start depositing cash in the banks.