WHat to Do with Indian Currency Issued prior to 2005?!

Dear All,

You might also be wondering about the news that is circulating in the past few days about the RBI's decision to withdraw currency notes issued prior to 2005 as I was.  I came across this informative missive published by livemint.com  and thought this is useful for one and all.  SO I am just posting this info by copying and pasting from their site.

Here is the info:

The Reserve Bank of India (RBI) has decided to completely withdraw all currency notes issued prior to 2005. The central bank announced this on 22 January through a notification in which it stated that after 31 March, it will completely withdraw from circulation all banknotes issued prior to 2005. The notification didn’t elaborate the reason behind such a move, but it did mention that RBI has appealed to the public not to panic and requested the general public to actively co-operate in the withdrawal process.

So, what do you do about the notes that you have which were issued prior to 2005? Mint Money answers this and other questions.

Which notes will be withdrawn from circulation?

RBI aims to withdraw banknotes that were issued prior to 2005, but there is no time limit. So, if you have an old note that was issued before 2005, RBI advises you to exchange it at banks for a more recently designed one.

How to identify such notes?

It is very simple to identify these notes. All you have to do is check for the year of printing at the bottom on the reverse side of your note. If there is no year of issue printed there, it means the note was issued prior to 2005 and you need to exchange it for a newer note.

Will these notes become useless after 31 March?

The answer is, no. The central bank has clearly said that these currencies will continue to be legal tender. This means that the currencies issued prior to 2005 will have monetary value. So, these will still be acceptable, but only at banks. Till 31 March, you can use these notes as you have been using them till now—paying the newspaper vendor, the taxi driver, donation at a place of worship, in an envelope as a wedding gift, and the many other things that currency notes are used for.

However, from 1 April, you can’t do all this using pre-2005 notes. This doesn’t mean these notes will become useless after that—you will have to approach banks to exchange the older notes for new ones.

Banks will provide exchange facility. If you have a currency note that doesn’t have the year of printing on it, from 1 April, banks will be the only place that will accept it.

Banks are required to exchange the notes for everybody—customers and non-customers.

Why are pre-2005 notes being eliminated?

Currently there are currency notes of many designs in circulation. According to international best practices, it is advisable to reduce the clutter. Since prior to 2005, notes had fewer security features, RBI has been decided to weed out the notes printed before that year.

What happens if an automated teller machine (ATM) dispenses such notes?

The central bank has been working silently with banks toward mopping up the old design notes issued prior to 2005. Therefore, ideally you should not be getting any notes issued before 2005 from ATMs. However, if you do get one (or more) such note, you will have to go to a bank to exchange it.

What happens if you go to the bank after 1 July to exchange these notes?

You can exchange the old notes with any bank from 1 April till 30 June. If you go after 30 June to exchange more than 10 notes of denominations Rs.500 and Rs.1,000, you will have to furnish proof of identity and residence.

Now, if you are a customer of that bank, these proofs are not needed; if you are not a customer, the proofs are needed. If you go with fewer than 10 notes (of Rs.500 and Rs.1,000), you don’t have to give any proof.

If you decide to not exchange the older notes and keep them with you, the currency will still hold monetary value. Those notes will still be acceptable.

Can you transact at multiple branches on the same day?

You can exchange the notes in as many branches as you want on the same day. There is no limit on this.

Will RBI’s move help in flushing out black money?

The move has been widely interpreted as a step against black money. RBI says the number of notes in circulation that were issued prior to 2005 is not very large. RBI has not used the word “demonetize”, which would mean that after the prescribed timeline, the notes will lose their value.

Why is RBI involving people this time?

Removing the old-design banknotes is a continuous process. RBI has over time weeded out most of the old notes through banks. Now, it is approaching the public for the remaining stock. The central bank believes that the volume of notes bearing the old designs may not be large enough to cause inconvenience to the public.

Why this rush to withdraw the currency notes?

RBI says there is no rush. It has prescribed no dates for banks to stop accepting the older notes. These will be accepted freely at bank branches. The central bank has asked people not to panic.

What about those people who are not aware of this new notification—those staying in remote areas, or those who do not have ready access to news?

The central bank says it is considering a proposal to communicate the message through various channels.

 

Kanchi