Another amendment in Currency ban, No more over-the-counter exchange of old notes

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Bank deposits would benefit due to demonetisation, S&P said on Thursday. File Photo
Bank deposits would benefit due to demonetisation, S&P said on Thursday. File Photo
Bank deposits would benefit due to demonetisation, S&P said on Thursday. File Photo

Scrapped high value currency notes can only be deposited in banks and post offices.

The government on Thursday evening extended all old currency note utilisation exemptions till December 15, but only with Rs 500 notes. Further, it also scrapped the facility to exchange notes over the counter at banks and post-offices altogether, doing away with originally announced window of up to December 30.

“The payments for the transactions under all the exempted categories will now be accepted only through old Rs 500 notes,” the statement said. This implies that Rs 1000 notes will now be only valid for deposits into account.

The government said the decisions were taken after “after due consideration of all relevant aspects”. It was also decided that payment of fees up to Rs. 2000 per student can be made using old Rs 500 notes in Central Government, State Government, Municipality and local body schools. Central or State Government colleges will also accept scrapped Rs.500 notes.

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Another addition to the list is mobile top ups. For pre-paid mobile top-up, old note payments with a cap of Rs. 500 per top-up will be accepted. The payment of current and arrears dues to utilities will be limited to only water and electricity.

Further, purchase from Consumer Cooperative Stores will be limited to Rs. 5000 at a time.

For foreign citizens, the government said exchange of foreign currency up to Rs. 5000 per week will be permitted.  “Necessary entry to this effect will be made in their passports,” the statement said, adding that instructions in this regard will be issued by the RBI.

The government reasoned that over the counter exchange of the old currency notes of Rs. 500 and Rs. 1000 denomination has shown a declining trend.

“It has further been felt that people may be encouraged and facilitated to deposit their old Rs. 500 and Rs. 1000 notes in their bank accounts,” it said, adding that this will encourage people who are still unbanked, to open new bank accounts.

As per the statement issued by the government on November 8, following the demonetisation announcement by Prime Minister Narendra Modi, exchange of old bank notes was allowed till December 30.

Source : The Hindu

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