Jagoinvestor

November 9, 2016

Rs 500/1000 notes banned – Here are 5 critical facts to know

Last night, it was a historic moment when our Prime Minister informed the whole nation that Rs 500 and Rs 1000 notes will not be eligible currency notes from midnight at the end of 8th Nov, 2016. Here is the RBI notification

old currency notes ban

PM Modi had also explained all the points very well in his speech and shared how people should not worry about this if they have money with them and it can be exchanged with new notes in next 50 days, however seems like a lot of confusion is there around this topic and many myths are floating around.

5 important facts about the old notes bank

Below are some of the most important facts which you should know after this Rs 500 and Rs 1000 notes bank. There are lots of myths around and I wanted to clear them. These points which I have mentioned below are taken out of the RBI notification itself.

Fact #1 – You can deposit any amount of old notes in your bank/Post Office account

You can “deposit” your old currency in your bank account till 30st Dec, 2016. There is no limit on this amount and if you have Rs 50 lacs with you in Cash, you can just walk into your bank branch (expect a lot of rush) and just deposit the amount in your bank account. The limit which is there is on the “exchange” which is the next point. Please find below the exact wording from the RBI notification.

rbi notification note ban

Also note that there is no limit of deposit for account whose KYC is complete. If KYC is not yet complete, the limit is Rs 50,000.

#2 – You can exchange up to Rs 4,000 notes in ANY bank branch in first 15 days

You can walk to ANY bank branch and exchange up to Rs 4,000 of old notes along with your identity proof (PAN, Aadhaar card, Passport etc). You don’t need a bank account in the same bank. After 15 days, this limit of Rs 4,000 will be reviewed and raised. I am sure this small limit is kept so that most of the middle class and poor people are handled before other privileged class πŸ™‚ . Apart from the bank branches, you can also visit RBI centers for this exchange.

#3 – You can deposit the money in 3rd party account also

It is also possible to deposit the money to 3rd party account also if you follow the full procedure and produce a valid ID proof (your own)

#4 – Cash withdrawal Limit from ATM and Bank Branch

There is following withdrawal limit set by the govt.

  • ATM – Withdrawal from ATMs would be restricted to Rs.2,000 per day per card up
    to November 18, 2016. The limit will be raised to Rs.4,000 per day per card
    from November 19, 2016 onwards.
  • Bank Branch – Till 24th Nov, 2016, you can walk to your bank branch and withdraw up to Rs 10,000 in a go, but the overall limit is Rs 20,000 per week.

You can walk to ANY bank branch and exchange up to Rs 4,000 of old notes along with your identity proof (PAN, Aadhaar card, Passport etc). You don’t need a bank account in the same bank. After 15 days, this limit of Rs 4,000 will be reviewed and raised. I am sure this small limit is kept so that most of the middle class and poor people are handled before other privileged class πŸ™‚ . Apart from the bank branches, you can also visit RBI centers for this exchange.

#5 – You can deposit the old notes till 31st Mar, 2017 in worst case

In worst case, if you are not able to deposit the cash in your bank account or exchange those till 30st Dec, 2016, Still you will get another change to deposit the amount at RBI designated branched till 31st Mar, 2017 with proper documentation. One of my close friend parents are coming back to India from US after Jan, and they were worried after this news. I told them about this 31st Mar, 2017 deadline which calmed them!

Below is the speech by our Prime minister in case you want to hear it.

The big confusion and the Panic

This whole news which came out last night has created a big confusion among people and I can see many of them in panic situation. A lot of people who know clearly that their money is still safe and can be deposited back in bank account are also acting like the world has come to the end.

On the lighter note, social media went crazy and there were some really hilarious tweets which started circulating across various platforms.

tweet on note ban

There was news of people rushing to buying gold, doing shopping last night (till midnight) and what not. Understand that if your money is legally earned and you are paying the taxes, you need not panic and just keep calm, you can deposit it with bank and your money is 100% safe.

Only those who have black money will be facing problem as now all the money they have is worthless.

Discomfort because of the BAN

While there is surely some level of discomfort, but that’s very obvious and it’s bound to happen when things change at this level. This bank of old bank notes is for good and our countries future. This will really help curb black money and corruption in a big way.

notes ban image

Will update more on this topic in coming days. New notes of Rs 500, and Rs 2,000 will get started from Nov 11th .

Let us know your views around this topic in comments section below

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IFSCCODEDIR
IFSCCODEDIR
3 years ago

Of the Rs 15.41 lakh crore worth Rs 500 and Rs 1,000 notes in circulation on November 8, 2016, when the note ban was announced, currency worth Rs 15.31 lakh crore have been returned.

Nagarajan
Nagarajan
7 years ago

if my friend give me the open cheque for Rs 20,000/-, shall I get cash at bank counter for full amount?

Nagarajan
Nagarajan
7 years ago

Can I withdram Rs 20,000/- on self cheque ?

Jerry
Jerry
7 years ago

I am NRI, Came to India Sep2016 and left with family end of Sep16 house is locked and keys with me , have some notes with me overseas and some notes in my House in india.
I will visit India Next year Oct 2017.

no way I can get leave to come back to exchange the money and spend flight ticket of Rs 40K to exchange the notes .

Guess I lost my hard earned money for the sake of others sins in black money

Abhinav Adithya
Abhinav Adithya
7 years ago

But now we can exchange only 2000 and most parts of Tamilnadu didn’t get new 500 rupee note yet…

Kiran
Kiran
Reply to  Abhinav Adithya
7 years ago

Even in Gujarat I have not seen Rs500 new notes

Suhas Patil
Suhas Patil
7 years ago

Hi Manish,

Thank you for your wonderful tips.

As you know lot of news are going around whether this move of demonetization is right or wrong and there are still confusions in mind of people. Politicians are raising this as an issue or problem whereas public is not sure whether they or country will benefit out of this move.

We would like to know your views about this change and what & how will affect the things around us viz. it seems housing rates will come down, black money will be removed at high % (not fully), politicians are crying as to what they will do of their black money and how will it be used in elections, this has also impacted the money supply to terrorists etc. etc.

I believe you must have thought about it. Awaiting you views or separate article on this.

Thanking you in advance,

Suhas Patil
Suhas Patil
Reply to  Jagoinvestor
7 years ago

Oh, noted. But you are not less than those economists. What special characteristics they have than you? You are the financial expert and always advise on such unforeseen happenings. I am little surprise to see that neither you or your team do not have anything to comment on such major change in economy.

Suhas
Suhas
Reply to  Jagoinvestor
7 years ago

Thank you Manish for your comments. We are ready to bear pain, to gain at the end. Hope this turns out to be a good move. Such bold step was required and no one should have taken this other than Shri Modiji. You are right, the poor are suffering due to this.
Lets hope for ‘Acche Din Aayenge’. πŸ™‚

Anjan
Anjan
Reply to  Jagoinvestor
7 years ago

I think the “planning better” part was made difficult by the fact that Mr. Modi decided to keep the Demonetization plan a closely guarded secret which only 3 people in his cabinet knew about. One person can only plan so much in advance without guidance from other experts around. There is no way one person could have envisioned or foreseen every possible scenario that could arise due to this massive undertaking to shake the core of the nation.

Not even the finance minister knew about the Demonetization. In hindsight it’s a great strategy since if more people knew about it beforehand, chances of information leaking to press would have been greater and the plan would have failed. 24 hours would have been enough to convert most of the black money to white.

Modi is truly focused on eradicating Black Money from India. This is not the only move he has in his arsenal. He has quite a few trump cards and he will unleash them one by one. We just need to ride the wave with him and make his grand plans a success. India has been waiting for such a Prime Minister since Independence. He has the power to change the landscape forever and I’m glad he is exercising his executive powers for the greater good of the nation, something which politicians rarely do. Let’s all support him wholeheartedly.

prem
prem
7 years ago

How does the demonitisation and cash in flow to the banks effect the interest rates for home loans in particular?
Is it better to clear principal outstanding home loan amount now or better later ?

nitesh
nitesh
7 years ago

I have account payee cheque of rupees 30000 of a cooperative bank and I have submitted this cheque in dena bank so is there any cheque clearance issues in my case because of restrictions on cooperative banks to change the old notes please clear my doubt

jitendra mahajan
jitendra mahajan
7 years ago

how much i can deposit in third party a/c at a time and how many times

Praveen Kumar
Praveen Kumar
7 years ago

Still Now we can get 2,000 rs currency in all banks. Now you can get 24,000 per week in all banks.

Prashant N Patil
Prashant N Patil
7 years ago

can I transfer the amount of Rs 50000/- to my son PPF account by cheque during this period.My son”s PPF account and my saving account is in same branch. pls comment

PatientWealth
PatientWealth
7 years ago

This is amazing. I read an article on BBC about this and it said that its all about getting people to pay taxes. I don’t understand that? In the United States when you earn income you get a form with the amount and the government gets a copy of the same form. So if you don’t pay your tax they know and then they fine you.

How does keeping money stashed away avoid tax? Or maybe the better question is, “how would you ever prove that you had paid the tax on your black money?” Interesting post. http://www.patientwealth.com

SANTONU
SANTONU
7 years ago

it is also heard that PAN no is required for purchasing jewellery only above 2L So someone can purchase jewellery costing around 1.99 L more than one occasion from different vendors without furnishing PAN. Is it a drawback?

Umesh P
Umesh P
7 years ago

India has got first PM who has dare to fight against BLACK MONEY in very planned manner. I support his decision. We all facing inconvenience regarding currency exchange through bank, but that too only for some days.
Thanks Manish for giving nice information in such a easy language.

Money
Money
7 years ago

it is good decision of Indian govt and now they can save a lot of money from corruption.

Bharat
Bharat
7 years ago

Dear Manish,

Thanks for making few things clear.

Do you know of any limit to deposit into PPF account during this period. Can one still make all their existing 500s, 1000s to 2.5L deposit to their own bank account + deposit 1.5L deposit into PPF account + 1.5L into Sukanya Samriddhi Account?

Please clarify incase you know

Bharat

Srinivas
Srinivas
Reply to  Bharat
7 years ago

One can use all cash(500/1000) for depositing in his accounts, be they PPF, SB etc.

However, they all are tracked by PAN. One needs to be ready to answer any IT queries subsequently.

Sameer Mittal
Sameer Mittal
7 years ago

Can I withdraw INR 20000/ week from my 2 different accounts in different bank.

Manish Gupta
Manish Gupta
7 years ago

what about small businessman, bcu small businessman collect payment on daily basis from market and deposit in credit account or in OD account if the payment is more than 2.5 lakh what would be the implication for TAX . as such there is no black money bcu we have details of all earning and paying tax as per rule,…

Nitin
Nitin
7 years ago

I am in united states and holding Rs. 500 and Rs. 1000 notes . I won’t be travelling any time soon. I might be traveling end of next year. Any idea, if there is any option to exchange them when i visit India or can i exchange them in united states?

Rashmi
Rashmi
7 years ago

I am wonder will this step really help to remove Black Money , as i can see people who have Black money can easily find way where to store their extra income by using other’s account even they are using their house maid a/c and their family member . Any one tell me how it is really working?
Bcoz people like them have found their way through ,and unfortunately our educated CA’s are the one how makes them let go so easily by taking their own share .
I find the only sufferers are the common poor people , they are dying with shocks .