HOW DEMONETIZATION WAS IMPLEMENTED IN INDIA (2016)
The demonetization was
announced on 8th November, 2016. When demonetization was announced,
there was not much information available to the public. It was sudden and
unexpected. The new currency notes are quite different in terms of its size,
colour, looks and design.
The plan of demonetization was
started in February, 2016. The RBI had presented to Government an analytical
notes about the merits and demerits of this idea, the impact, challenges,
consequences associated with it and alternatives ideas and necessary
preparation for its implementation. There were several rounds were conducted on
ideas, pros and cons etc, again and again regarding this move and regarding its
implementation.
In may 2016, the Reserve
Bank Of India has started the printing of new currency notes and confirmed the
design of Rs.2000 banknotes in August, 2016.
The new banknotes were
started printing in October, 2016. RBI has spent around Rs.3,500 crore to print
new banknotes in 2016-2017 ( July to June).
Also incurred various cost in collection, storage and movement of banknotes
across the country. RBI has new series notes of more than Rs.23 billion pieces
of new series notes,( i.e. 2 billion pieces of Rs.2000 notes to replace with
existing 4 billion notes of Rs.1000 and 21 billion pieces of new series notes
of Rs.500), have been printed and accumulate by the time the programme
commenced.
On 8th November,
2016 demonetization was effected through 3 notifications:
(i) The Ministry Of Finance
issued Gazette Notification by which Rs.500 and Rs.1000 banknotes ceased to be
legal tender from 9th November, 2016.
(ii) MOF issued Gazette
Notification regarding denomination of new currency notes.
(iii) The RBI in its
Notification no.2625 informed about the new currency notes and about the
process of exchanging banknotes.
The Union cabinet was
informed about the demonetization on 8th Novemeber, 2016 by the
Prime Minister, Narendra Modi. After the meeting, Narendra Modi announced the
demonetization in an unscheduled live national televised addressed at 8:15 P.M.
and declared the old Rs.500 and Rs.1000 banknotes to be invalid and also
announced the issuance of new currency notes of Rs.500 and Rs.2000 banknotes of
Mahatma Gandhi New Series Notes.
The RBI has stipulated that
the banknotes should be deposited with the banks within 50 days upto 30th
Decemebr, 2016. The Government also announced that those who have more than
Rs.2,50,000 cash in hand , then they have to pay @30% tax on such amount. Also,
informed that international airports, fuel pumps, government hospitals, railway
and airline booking counters, medical stores and ration stores are allowed to
to accept the old demonetized banknotes till 2nd December, 2016.
The bank also limit Rs.4000
per person from 8th to 13th November, 2016 & Rs.4.500
from 14th to 17th November, 2016 and Rs.2000 from 18th
to 25th November, 2016. Also, the cash withdrawal limit was
restricted to Rs.10.000 per day and Rs.20,000 per week from 10th to
13th November, 2016. Later on this was extended to Rs. 24,000 per
week from 14th November, 2016.
A limit on withdrawals from
ATMs was imposed from Rs.2000 per day till 14th November, 2016 and
Rs.2500 per day until 31st December, 2016.
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