New Delhi: In a dramatic move, Prime Minister Narendra Modi announced the government is scrapping with immediate effect the existing currency denominations of Rs 500 and Rs 1,000 to combat black money, corruption and terror-financing.
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“These notes will just be paper from tomorrow,” Prime Minister Modi said in a televised address to the nation.
Notes and coins of all other denominations continue to be legal tender. There will be no change in any other form of currency exchange, be it cheque, DD, payment via credit or debit cards etc.
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Currency notes of Rs 500 and Rs 1,000 can be exchanged in banks and head post offices till December 30, 2016, by producing a valid identity like PAN card, Aadhaar or a Voter ID card. Failing this these notes can be exchanged at a local Reserve Bank of India office till March 31, 2017.
ATMs will not function till November 9 and in some places till November 10. However, some exceptions have been made on humanitarian grounds. Government hospitals will continue to accept 500 and 1,000 rupee notes. Medicines can be purchased with these notes for the next 72 hours.
Prime Minister Modi said that the RBI will issue notes of Rs 500 and Rs 2,000, but will limit notes with higher value.
Similarly, keeping in mind the supply of new notes, in the first few days, there will be a limit of Rs 10,000 per day and Rs 20,000 per week. This limit will be increased in the coming days.
Banks will open additional counters and work for additional hours to deal with the rush of people wanting to deposit or change notes.
There may be some who, for some reason, are not able to deposit their old Rs 500 or Rs 1000 notes by December 30, 2016, he said, adding they can go to specified offices of the RBI up to March 31, 2017 and deposit the notes after submitting a declaration form.
Officials said there were 6.7 billion pieces of Rs 1,000 notes in circulation and 16.5 billion pieces of Rs 500.
In his address, first in Hindi and later in English, Modi, whose government had implemented two schemes for unearthing of black money both domestic and abroad, said Rs 1.25 lakh crore belonging to the “corrupt” people has already been brought out in the open.
“There comes a time in the history of a country’s development when a need is felt for a strong and decisive step,” he said, asking political parties, all governments, social organisations and media to participate in the war against black money “with enthusiasm to make it a success”.
He conceded that there could some inconvenience to people in implementing the measures and asked them to bear with it.