Home Articles Articles Things You Need To Know About Scrapping Of 500 and 1000 Rupee NotesThings You Need To Know About Scrapping Of 500 and 1000 Rupee Notes

Things You Need To Know About Scrapping Of 500 and 1000 Rupee Notes

IndianMoney.com Research Team | Updated On Friday, May 04,2018, 12:23 PM
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Things You Need To Know About Scrapping Of 500 and 1000 Rupee Notes

 

The Prime Minister of India, Narendra Modi, made a sudden announcement….from midnight November 8th 2016, rupee notes of 500 and 1,000 denomination, will no longer be legal tender in India.

Yes….the citizens of India, are tired of black money and the great Indian Prime Minister has obliged with a move, that has sent shock waves across the Nation. This move will help break the back of terrorism in India, which is funded by black money. The corrupt will have no place to hide…black money.

Now to the important part….

How does the scrapping of 500 and 1,000 rupee notes affect you?

 

Banks and ATM’s shut

 

Banks will remain closed to public transactions, on November 9th 2016. ATM’s will remain shut on November 9th and November 10th.

Why are banks shut? The Government will introduce new 500 and 2000 rupee notes, to replace old 500 and 1000 rupee notes. To facilitate this process, banks will be shut for a day and ATM’s for 2 days.

 

Are your 500 and 1000 rupee notes worthless?

 

Rumors have spread that your 500 and 1000 rupee notes are worthless….this is not true. The Government has given you 50 days from November 10th 2016 till December 30th 2016, to exchange 500 and 1000 rupee notes, at banks and post offices. You have to submit a valid identity proof such as PAN, Election card, Passport or Aadhaar, at the bank branch. You will be able to exchange up to INR 4,000 in cash at the bank, for your 500 and 1000 rupee notes. If you exchange 500 and 1000 rupee notes more than this, any amount above INR 4000, will be transferred through electronic fund transfer, to your bank account.

You exchange INR 10,000, in five hundred and thousand rupee notes at a bank branch. You get INR 4,000 in cash. The rest of the money will be transferred to your bank account, through electronic fund transfer.

 

What happens if you cannot exchange your 500 and 1000 notes, before December 30th 2016?

 

Just submit these 500 and 1000 rupee notes, with the RBI, within March 31st 2017. You have to give a declaration, stating where you got that money.

The problem: You would have to stand in a long queue, to exchange your money. A bigger problem….If you come with bundles of 500 and 1000 rupee notes at the bank, you have to give the source of the money. If you have not paid tax, there is no immunity for you. The law will take its course. All banks will be equipped with video cameras, to capture depositor details.

I have a big problem….My son is studying medicine and has to pay his fees in lakhs….what should I do?

There is a limit on the money, you can withdraw from banks and post offices. You can withdraw only INR 10,000 a day and INR 20,000 a week. Once ATM’s start working, you can withdraw a maximum of INR 2,000 a day, on a single card. This is till 18th November 2016. From 19th November, you can withdraw INR 4,000 per day per card. You can withdraw INR 10,000 through cheque, in a day. You can withdraw INR 20,000 through cheque, in a week. This also includes the money you withdraw from ATM’s.

The reason for this move….The Government wants to promote cashless transactions in India, making it a cashless economy. IndianMoney.com has published articles on cashless transactions. Just click on united payment interface, mobile wallet and financial inclusion.

Here’s the good news…You can transfer money using  NEFT/RTGS/IMPS/Mobile Banking.

Can you still use 500 and 1000 rupee notes?

You can use these currency notes at:

  • Government Hospitals
  • Petrol, Diesel and gas stations of PSU Oil Companies.
  • Crematoriums and burial grounds.
  • Railway, Airline and bus ticket booking counters.
  • Consumer co-operative stores.
  • Milk booths

This is only for a period of 72 hours.

What if you don’t have a bank account?

You can easily open a bank account, after fulfilling KYC norms. (Know Your Customer). The Prime Minister on August 28th 2014, had launched the Pradhan Mantri Jan Dhan Yojana Scheme.  More than 25 crore PMJDY bank accounts, have been opened so far. You can open a PMJDY account, submitting the KYC documents.The common man will not suffer with this move. Of course, there could be slight inconvenience in the short run.

Why has the Government scrapped 500 and 1000 rupee notes?

  • The Government wants to break the back of terrorism in India. Illegal black money is used to fund terrorism.
  • There are plenty of fake notes circulating in the economy. There are fake notes worth INR 400 crores circulating in the economy. Out of every 10 lakh notes in circulation in India, 250 are fake.
  • Black money fuels corruption in the country. This spoils the image of the Nation.

 

Yes…there’s no doubt, this is a great move. It will have to be implemented in the days to come. The Government gave citizens holding black money, virtually no time (just a few hours) to change black money to white. Most of them failed. This entire operation was kept secret, since the last 6 months, so that no sensitive information was leaked. The Cabinet too had no clue. Bank officials too had no clue. A true surgical strike on black money.

 

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IndianMoney.com Research Team

The research team at IndianMoney.com comprises of certified and experienced professionals who share the company's vision to make every Indian financially literate by equipping every Indian with right and unbiased advice. IndianMoney.com research team provides newsletters, articles, videos and FAQs on various financial products and concepts only to help you make wise financial decisions.

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