The Union Government on 28 December 2016 approved an ordinance to term the possession of old Rs 500 and Rs 1000 notes beyond March 2017 a penal offence. The ordinance also seeks to removes the liability of the government towards bearers of such notes.
This 'Specified Bank Notes Cessation of Liabilities Ordinance' will now be sent to President Pranab Mukherjee for the approval. It will be then converted into a proper legislation by passing of a law by Parliament within months.
Highlights of Specified Bank Notes Cessation of Liabilities Ordinance
• The Specified Bank Notes Cessation of Liabilities Ordinance makes holding of the cancelled notes beyond a limit after 31 March 2017 a criminal offence.
• This criminal offence will attract a monetary fine of Rs 10000 or five times the cash held, whichever is higher.
• Moreover, providing wrong information while depositing the old currency between 1 January and 31 March will attract a fine of Rs 5000 or five times the amount.
• People can deposit the old notes of Rs 500 and Rs 1000 in banks up till 30 December 2016. They can deposit these demonetised notes in the Reserve Bank of India up to 31 March 2017.
Prime Minister Narendra Modi on 8 November 2016 banned the Rs 500 and Rs 1000 notes and since then, these demonetised notes ceased to be legal tender.
However, experts at that time felt anguished over the liability that every note issued by the central bank RBI carries a promise that the bearer is entitled to the value printed on it. They pressed on the need of extinguishing this liability.
This ordinance will end the central bank's liability with regard to the notes that are not returned or deposited.
When: 28 December 2016