There are no more serpentine queues outside Indian banks to exchange old ₹500 and ₹1000 notes subsequent to demonetisation during November 2016! Up to 97% of the demonetised bank notes have been deposited into banks, which have received a total of ₹14.97 trillion as of December 30, 2016 out of the ₹15.4 trillion that was demonetised. This is against the government’s initial estimate that ₹3 trillion would not return to the banking system. Now, it is time for a brand new Indian law to penalise those people who still possess these old notes.
Indian Parliament passed the Specified Bank Notes (Cessation of Liabilities) Act, 2017 which provides for holding, transfer and receiving of old ₹ 500 and ₹ 1000 notes a criminal offence. President of India has given the approval to this law on 27th February 2017. As per the Act, the old ₹ 500 and ₹ 1,000 notes will cease to be liabilities of the Reserve Bank of India (RBI) from December 31, 2016 onwards. Further, these notes will no longer be guaranteed by the union government.
What is the penalty? Any person holding these notes is an offence punishable with a fine: (i) which may extend to ₹ 10,000, or (ii) five times the value of notes possessed, whichever is higher.
Is there any exemptions? Yes, this Act gives exemption if: (i) a person holds up to 10 old notes, (ii) a person holds up to 25 notes for the purposes of study, research or numismatics (collection or study of coins or notes), or (iii) a person holds notes on the direction of a court. In addition, the RBI or any person authorised by it, are also exempted from this prohibition.
Is this applicable for Companies? This penalty is also applicable for companies who commits an offence under this law. Court of a Magistrate of the First Class or the Court of a Metropolitan Magistrate will have the powers to impose these penalties both on individuals and companies.
What if, I was outside the country? If an Indian Citizen was outside the country during demonetization period of November 9 – December 30, 2016, he/she may deposit these notes within 31st March 2017 with a declaration that they were outside the country. Please be aware that if any person wilfully making a false declaration will be punishable with a fine upto ₹ 50,000, or five times the value of notes deposited, whichever is higher.
[1st March 2017]