Thursday, January 23, 2014

RBI to withdraw all pre-2005 currency notes to curb black money



Reserve Bank of India Governor Raghuram Rajan said the withdrawal of pre-2005 notes is not intended to check black money but to prevent counterfeiting.

"It is not intended to get at black money, tax evasion etc. I am not saying those are good things. This is technical action, in order to withdraw notes which have fewer security features than new notes," Rajan said in a media briefing after announcement of third quarter monetary policy review.

It is an attempt to reduce the possibility of counterfeiting and give more reliable notes at the hands of the public, he said.

"Of course we want to minimise any inconvenience (to the) public...so this process (of withdrawal) would be much smooth.

This particular currency withdrawal is meant at something else," he added.

Last week, RBI had said that after March 31, 2014, it will completely withdraw from circulation all bank notes issued prior to 2005. From April 1, 2014, the public will be required to approach banks for exchanging these notes.

The RBI had also said the volume of such notes that were being withdrawn from circulation was not significant.

On whether the counterfeiter will now see new means, Rajan said, "the whole point about the security feature is that they are hard to counterfeit. We have no doubt we are in a constant race, we have to keep improving the security features and counterfeiters keeps trying to figure out how to do that."

Notes will continue to be withdrawn, he said, adding, it is a part of a technical process which will continue in the future also.

"I have no doubt today's note will be withdrawn at some point. Many of them are destroyed in the process of use itself. We

have clean note policy, if anything is written on note we take it out of circulation," he said. 

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Reserve Bank of India has said that all currency notes issued before 2005 will be withdrawn from circulation - a move that is expected to check fakes and at the same time cause consternation among those dealing in cash. Although the central bank has desisted from declassifying these notes as legal tender there is fear that a logical conclusion would be to take these notes completely out of circulation.

In terms of the timeline set out by the central bank, from April 2014 all banks will accept and exchange pre-2005 notes. These can easily be identified by the absence of year of printing at the reverse of the note. Sources said that the maximum number of fake currencies have been in the pre-2005 series. From July 2014, to exchange more than 10 pieces of Rs 500 and Rs 1000 notes, non-customers will have to furnish identity and address proof to the bank branch.

The Reserve Bank today decided to withdraw all currency notes issued prior to 2005, including Rs 500 and Rs 1,000 denominations, after March 31 in a move apparently aimed at curbing black money and fake currencies.

The Reserve Bank today decided to withdraw all currency notes issued prior to 2005, including Rs 500 and Rs 1,000 denominations, after March 31 in a move apparently aimed at curbing black money and fake currencies.

"After March 31, 2014, it (RBI) will completely withdraw from circulation all bank notes issued prior to 2005. From April 1, 2014, the public will be required to approach banks for exchanging these notes," the RBI said in a statement.

The public can easily distinguish the currency notes issued before 2005 as they do not have the year of printing on reverse side. The year of printing in a small font is visible at the middle of the bottom row in notes issued after 2005.

Asking people not to panic and cooperate in the withdrawal process, the Reserve Bank of India (RBI) said old notes will continue to be legal and can be exchanged in any bank after April 1."From April 1, 2014, the public will be required to approach banks for exchanging these notes. Banks will provide exchange facility for these notes until further communication," the RBI said.From July 1, 2014, persons seeking exchange of more than 10 pieces of Rs 500 and Rs 1,000 notes will have to furnish proof of identity and residence to the bank.

Although the RBI did not give any reason for withdrawal of pre-2005 currency notes, the move is expected to unearth black money held in cash.As the new currency notes have added security features, they would help in curbing the menace of fake currency. At present, currency notes in denominations of Rs 5, Rs 10, Rs 20, Rs 50, Rs 100, Rs 500 and Rs 1,000 are issued.

6 comments:

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  2. RBI asks public to start exchanging pre-2005 currency notes



    As the common man went on speculating frantically on what to do with banknotes printed before 2005, Reserve Bank of India on Friday tried to calm the nerves by saying that public may initiate the process of exchanging notes at bank branches at their convenience.

    RBI said its move to withdraw currency notes printed before 2005 is to check counterfeit notes and these notes will continue to be legal tender even after the July deadline. It said that after July 1, 2014, public can exchange any number of these old series notes from the bank branches where they have their accounts.

    Non-customers of a bank will have to furnish proof of identity and residence to the bank branch in which they want to exchange more than 10 pieces of Rs 500 and Rs 1000 notes.

    The RBI clarified that the rationale behind its move to withdraw banknotes printed prior to 2005 is to remove these banknotes from the market because they have fewer security features compared to banknotes printed after 2005. "It is standard international practice to withdraw old series notes," it said on Friday responding to queries raised by several quarters.

    The RBI has already been withdrawing these bank notes from the market in a routine manner through banks. "The volume of the banknotes printed prior to 2005 today, still in circulation, is not significant enough to impact the general public in a large way," it said.

    The RBI said it would monitor and review the process of withdrawal of old series notes so that the public is not inconvenienced in any manner.

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  3. sir this scheme of RBI shall presently work only on currency denominated in Rs 500 and 1000 not on all like Rs 5,10,50,100 whether it is right or wrong ?

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  4. all notes, i.e, INR.5,10,50,100...

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  5. Public News: RBI Extend the date for exchanging the pre-2005 banknotes to January 01, 2015. Pls Share it.
    Read full Info: http://goo.gl/e8bfAo

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  6. Soliciting cooperation from the public in withdrawing these notes from circulation, the Reserve Bank of India has urged them to deposit the old design notes in their bank accounts or exchange them at a bank branch convenient to them. The Reserve Bank of India has stated that the public can do so till June 30, 2015. Earlier, in March 2014, it had set the last date for public to exchange these notes was January 01, 2015.
    The Reserve Bank has stated that the notes can be exchanged for their full value. It has also clarified that all such notes continue to remain legal tender.
    Explaining the move, the Reserve Bank said that now the notes in Mahatma Gandhi series have been in circulation for a decade. A majority of the old notes have also been withdrawn through bank branches. It has, therefore, decided to withdraw the remaining old design notes from circulation. Not having currency notes in multiple series in circulation at the same time is a standard international practice, the Reserve Bank has pointed out.
    The Reserve Bank will continue to monitor and review the process so that the public is not inconvenienced in any manner.

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