This post was originally published on 28 December 2016.
India government on Wednesday approved an ordinance to penalise persons holding demonetised Rs 500 and Rs 1,000 notes after 31 March 2017, when the deadline to deposit these notes at the RBI window ends.
- Under the ordinance, hoarding, receiving or transferring banned Rs 500, 1000 notes after March 31, 2017, will invite punishment.
- One can only have a maximum of 10 old notes without penalty.
The penalty for holding old currency in excess of 10 notes may include financial fines and a jail term of up to 4 years in certain cases, media reports said.
The ordinance, approved by the cabinet meeting chaired by Prime Minister Narendra Modi, will be submitted to President Pranab Mukherjee, currently in Hyderabad, for approval before notification.
Ordinance to extinguish liability
The ordinance, named as ‘The Specified Bank Notes Cessation of Liabilities Ordinance’, is to extinguish liability of government and RBI on the demonetised high-denomination notes.
A PTI report citing sources in the government said the ordinance is being brought as it was found to be necessary to prevent future litigations against the government for junking Rs 500 and Rs 1,000 notes.
In 1978, a similar ordinance was issued to end the government’s liability after Rs 1,000, Rs 5,000 and Rs 10,000 notes were demonetised by the Janata Party government under Morarji Desai.
The government had, while announcing the demonetisation of the old currency on November 8, allowed holders to either exchange them or deposit in bank and post office accounts.
While the facility to exchange the old notes has since been withdrawn, depositors have time till Friday (30 December) to deposit the holding in their accounts.
It was announced earlier that people living out of India would be given time till 31 March 2017 to exchange old notes at RBI offices, after submitting a declaration and valid reason.
NRIs worldwide were demanding a more flexible option as millions of NRIs will not be able to travel before this deadline and the number of RBI offices in India is limited.
The hashtag #WhatAboutNRIs was trending on Twitter with questions and requests addressed to Narendra Modi and Sushama Swaraj. Many were optimistic that this deadline would be extended due to popular demand.
However, with the new ordinance, such an extension does not seem to be possible.
Beyond 31 March 2017, not only these notes will be tendered illegal but also it would be a punishable offence to hoard them.