On November 8, the Prime Minister announced the demonetisation of notes of ₹500 and ₹1,000. It means that the status of the bank notes as legal tender issued by the Reserve Bank of India has been withdrawn. Simply put, you can no longer use them for a transaction in any business or store them for use in the future. The exceptions are discussed below.
This policy decision and its subsequent effects impact everyone, and it is important to have accurate and comprehensive information regarding the demonetisation of currency. It is with this spirit that Nyaaya has created this guide that we constantly update where we track changes in policy and inform you about them. You can also check all the original notifications which we are compiling here.
If you have any bank notes that have been demonetised, you can do three things with them:
1. They can be deposited into your account with any:
There is no limit on the amount of money to be deposited. You can deposit money till December 31, 2016. After this date, you can continue to deposit money at offices of the RBI.
2. They can be exchanged for value only at any of the offices of the Reserve Bank of India. This can be done until March 31, 2017. The limit for such exchange is ₹2000, and this can be done once by one person. You have to fill a form for exchanging notes.
3. Old banknotes of ₹500 can still be used for certain purposes until December 15. This has been talked about in detail later on in this guide.
If you are using an ATM card: you can withdraw ₹2500 per card daily. However, some ATM machines are yet to be calibrated and will dispense ₹2000 per card.
If you are withdrawing from a bank, there is no daily limit to how much you can withdraw. However, there is a weekly limit of ₹24,000 for withdrawal from bank accounts.
The withdrawal limit can be eased if you are depositing valid currency (new legal notes as well as notes that were always valid like ₹50 and ₹20) into your account.
The increase in withdrawal will be in effect from November 29, 2016, and will be in proportion to the total amount of legal notes you are depositing. For instance, if you deposit ₹5,000 in your account, out of which ₹2,000 is in legal notes, your withdrawal limit for the week will increase by ₹2,000. For that week, your withdrawal limit will be ₹26,000.
If you have a current, overdraft or cash credit account: (operational in the last three months) then you can withdraw up to ₹50,000 in a week.
Note: As of November 29, 2016, different withdrawal limits apply to Jan Dhan accounts.
There is no upper limit to the amount of money you can deposit if you have a functioning bank account.
Farmers can withdraw up to ₹25,000 in cash from their loan or deposit accounts. They can also use the demonetised ₹500 notes to buy seeds from government centres.
If you have a wedding in the house, you can withdraw a maximum of ₹2,50,000 from your bank account till December 30, 2016, for wedding related expenses.
There are certain conditions which must be fulfilled in order to benefit from this:
No, if you are unable to go to the bank to deposit money, you can send someone on your behalf to deposit the money. You will have to provide a written declaration, signed by you authorising that person to deposit money on your behalf. The representative must have a valid ID proof.
Yes, subject to the withdrawal limit of ₹24,000 per week.
You can exchange foreign currency for Indian currency notes, limited to ₹5000 in a week.
Until December 15, 2016, you can use the demonetised ₹500 notes for the following:
This has been done under the Reserve Bank of India Act, 1934. Section 24(2) of the RBI Act 1934 empowers the central government to direct the discontinuation of bank notes of any value. Section 26(2) of the same Act says that the central government can declare that any bank notes shall cease to be legal tender.
Disclaimer: We have tried to keep the information accurate and up to date. In case you spot a mistake, let us know and if possible point us to the correct information. This guide has been created based on the information given on the RBI website and the notifications issued by the Ministry of Finance. You can also check all the original notifications, which we are compiling here.
This post was originally published here and you can check it for regular updates.
About the author: Nyaaya is a free, non-profit resource explaining and documenting all Indian laws. They have just launched the public beta version of the website.