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Demonetization of RS. 500 and RS. 1000 Notes

Ekta by Ekta
November 9, 2016
Reading Time: 2min read
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Source: RBI

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If you thought Arnab quitting his home channel was the news of the month, you could not be more wrong. In these tense times, it is not just U.S. that gets all the drama and action. Indian government has come up with its own bag of surprise (or, maybe, shocks). The country got a bolt from the blue when the Prime Minister announced last night that Rs. 1000 and Rs. 500 notes will not be considered a legal tender after midnight. This step was said to be taken to combat corruption, fake currency and black money.

Mr. Modi announced in his speech that people holding these notes have a 50 days time period, from November 10 to December 30, to deposit these notes in their bank or the post office accounts. Any legal amount will be exchanged. Banks and post offices will have additional counters and extra working hours for the purpose of this exchange. If not this, after 31st December, you can approach authorized exchange centers and exchange these notes, ID proof being a prerequisite.

RBI also released a specimen of the new Rs. 500 and Rs. 2000 notes, to be released by February.

Government hospitals and pharmacies at these hospitals, International Airports and petrol pumps will continue accepting these notes.

People who possess Rs.500 or Rs. 1000 currency notes after December 30 can exchange it at Reserve Bank of India by providing a declaration. This is till March 31, 2017.

It has been argued that this is a very bold step by the government to combat financial terrorism that has engulfed the nation.

The question stands, will not the market for black money receive a boost after introducing currency worth Rs. 2000? But sources allege that the new notes will have NGC (Nano GPS Chip) embedded with them. This feature needs no power source and acts as a signal reflector. When a satellite sends a signal to detect the location, NGC reflects it, even if the money is stashed 120 meters below the ground. This chip cannot be removed from the note without damaging it. This way, location and amount of money kept can be traced and the information of such kind can be passed on to the Income Tax Department.

Justice MB Shah from the Special Investigation Team that probed the issue of black money says that the banking system will remain unaffected and that the RBI seems to be ready for it.

But the catch lies in the fact that this policy does not affect money already stashed in foreign bank accounts. This will not bring that money back. The government will deal with those cases separately.

For now, it is seen that this drastic measure is bound to bring temporary unpopularity to the ruling party, but might prove useful in the long run. But the inconvenience to the public and the fact that currency as high as worth Rs. 2000 is bound to bring home more problems cannot be turned a blind eye to.

Tags: Black MoneyindiaIndia Fight Against Black MoneyNew Notes
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