In a surprising move, the government has decided to put a full stop on the over the counter exchange of old notes after midnight on 24-11-2016. Previously it was announced by Prime Minister Narendra Modi, that the last date for exchanging old notes of the denominations Rs.500 and Rs.1000 will be until December 31. Also, a press release on November 11 said that there will be a hike in exchange limit. Now going back on his word Mr. Modi put a full stop to over the counter exchange.
The statement released by the government read, “It has been observed that over the counter exchange of the old currency notes of Rs. 500 and Rs. 1000 denomination has shown a declining trend.” It was also added that “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. This will encourage people who are still un-banked to open new bank accounts. Consequently, there will be no over the counter exchange of old Rs. 500 and Rs. 1000 notes after midnight of 24.11.2016.”
It was added that the places that were exempted from using 500 and 1000 notes may continue doing so till December 15. But there might be scrutiny on the transactions, and also they will be accepting only Rs.500 notes. So this will mean that the higher denomination note of Rs.1000 can only be used for bank deposits. Bill payments and arrears, like water and electricity will further be accepted, but that too limited to Individuals and residences. There also have been few exemptions for foreigners who can exchange up to 5000 Rupees a week and an official entry in passports. Mobile recharges of 500 Rupeess limited to Rs. 5000 per transaction and customer store purchases can be done in Rs. 500 notes too.
The toll suspension will be valid only until December 2nd and from December 3 – 15, old 500 denomination notes will be accepted at toll plazas. This has in a way reduced the places for exchange of old notes and that indirectly forces the usage of Digital economy. This has been the final goal of our government, to make India a digitalised economy. Arun Jaitley has previously stated that there are 80 crores of debit cards in India out of which 40 crores are active. Going forward, those with zero balance accounts will get debit cards making it easier for them to access their accounts.
