Demonetisation of Rs 500 and Rs 1000: Things you need to know

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Demonetisation in effect from November 9, 2016

The demonetisation of Rs 500 and Rs 1000 banknotes was a step taken by the Government of India on 8 November 2016, ceasing the usage of all Rs 500 and Rs 1000 banknotes as a form of legal tender in India from 9 November 2016.

The announcement was made by the Prime Minister of India Narendra Modi in an unscheduled live televised address to the nation. In the announcement, Modi declared circulation of all Rs 500 and Rs 1000 banknotes as invalid and announced the issuance of new Rs 500 and Rs 2000 banknotes in exchange for the old banknotes.

The demonetisation was done in an effort to stop counterfeiting of the current banknotes allegedly used for funding terrorism, as well as a crackdown on black money in the country. The move is also aimed at reducing corruption, drug menace and smuggling.

Exchanging old Rs 500 and Rs 1000 currency notes

Over the counter exchange (in cash) of Rs 500 and Rs 1000 is not permitted from November 25, 2016. Members of public who approach the banks for over the counter exchange of the specified bank notes are encouraged to deposit them into their bank accounts. Banks have been advised to facilitate opening of new accounts for unbanked people.

Specified Bank Notes can be deposited in Cash Deposits machines / Cash Recyclers or at bank branches more than once till December 30, 2016. At bank branches, customers should use separate pay-in-slips for depositing specified bank notes and other legal tender bank notes.(If a depositor has a mixed bunch of SBN and legal tender notes, he has to segregate them and submit two separate Pay-in slips).

ATM withdrawal

The government has raised the cash withdrawal limit from Rs 2,000 per card, per day to Rs 2,500 per card, per day. This higher cash withdrawal limit is available only at recalibrated ATMs which will dispense one high security Rs 2,000 note and rest in the lower denomination. ATMs which have not been upgraded will continue to dispense Rs 2,000 per card. 

It has been decided that banks shall waive levy of ATM charges for all transactions (inclusive of both financial and non-financial transactions) by savings bank customers done at their own banks’ ATMs as well as at other banks’ ATMs, irrespective of the number of transactions during the month. This waiver is applicable on transactions done at ATMs from November 10, 2016 till December 30, 2016, subject to review.

Cash deposits totalling Rs 2.5 lakh must carry PAN 
As per the latest government notification, till December 30, PAN card will be mandatory if combined cash deposits in an account exceed Rs 2.5 lakh. Previously, the limit for cash deposit without PAN was Rs 50,000 per transaction. A lot of people were depositing less than Rs 50,000 per day to escape the PAN provision. But later government issued a notification saying multiple deposits made between 9 Nov and 30 Dec 2016 will require a PAN if the combined sum exceeds Rs 2.5 lakh. This clarifies the misconception that one can deposit cash in multiple batches of less than Rs 50,000 each and escape mentioning the PAN. 

Till the December 15, 2016, specified banknotes of only 500 denomination can be used as under:—

(a) For making payments in Government hospitals for medical treatment and pharmacies in Government hospitals for buying medicines with doctor's prescription;

(b) At railway ticketing counters, ticket counters of Government or Public Sector Undertakings buses and airline ticketing counters at airports for purchase of tickets;

(c) For purchases at consumer cooperative stores operated under authorisation of Central or State Governments and the customers shall provide their identity proof; However, the purchase from Consumer Cooperative Stores will be limited to ₹ 5000 at a time;

(d) For purchase at milk booths operating under authorisation of the Central or State Governments;

(e) For purchase of petrol, diesel and gas at the stations operating under the authorisation of Public Sector Oil and Gas Marketing Companies;

(f) For payments at crematoria and burial grounds;

(g) For making payments in all pharmacies on production of doctor’s prescription and proof of identity;

(h) For payments on purchases LPG gas cylinders;

(i) For making payments to catering services on board, during travel by rail;

(j) For making payments for purchasing tickets for travel by suburban and metro rail services;

(k) For making payments for purchase of entry tickets for any monument maintained by the Archaeological Survey of India.

(l) For making payments towards any fees, charges, taxes or penalties, payable to the Central or State Governments including Municipal and local bodies;

(m) For making payments towards utility charges for water and electricity only. -which shall be restricted to individuals or households for payment of only arrears or current charges. No advance payments shall be allowed

(n) For payments towards court fees

(o) For making payments towards purchase of seeds from the centres, units or outlets belonging to the Central or State Governments, Public Sector Undertakings, National or State Seeds Corporations, Central or State Agricultural Universities and the Indian Council of Agricultural Research, on production of proof of identity: Provided that for the purposes of this clause, specified bank notes shall mean bank notes of the denominational value of five hundred rupees

(p) Payment of School fees up to Rs 2000 per student in Central Government, State Government, Municipality and local body schools;

(q) Payment of fees in Central or State Government colleges;

(r) Payments towards pre- paid mobile top-up to a limit of Rs 500 per top-up

(s) Toll payment at these toll plazas of the Ministry of Road Transport and Highways may be made through old Rs 500 notes from 3.12.2016 to 15.12.2016 (as they have continued the toll free arrangement up to 2.12.2016)

Can I withdraw cash against cheque?

Yes, you can withdraw cash against withdrawal slip or cheque subject to a weekly limit of Rs 24000/- (including withdrawals from ATMs and over the counter) from the bank accounts.

Business entities having Current Accounts which are operational for last three months or more will be allowed to draw Rs 50,000/-per week. This can be done in a single transaction or multiple transactions. This facility has been extended to Overdraft and Cash Credit accounts and traders registered with the Agricultural Produce Market Committee (APMC) markets or mandis. Accordingly, holders of current / overdraft / cash credit accounts, which are operational for the last three months or more, may withdraw upto Rs 50000 in cash, in a week. Such withdrawals may be disbursed predominantly in Rs 2000 denomination bank notes. This enhanced limit for weekly withdrawal is not applicable for personal overdraft accounts. Farmers are allowed to draw upto Rs 25000/- per week in cash from their loan (including Kisan Credit Card limit) or deposit accounts subject to their accounts being compliant with the extant KYC norms.

I am right now not in India, what should I do?

If you have Specified banknotes in India, you may authorise in writing enabling another person in India to deposit the notes into your bank account. The person so authorised has to come to the bank branch with the Specified banknotes, the authority letter given by you and a valid identity proof (Valid Identity proof is any of the following: Aadhaar Card, Driving License, Voter ID Card, Pass Port, NREGA Card, PAN Card, Identity Card Issued by Government Department, Public Sector Unit to its Staff).

I am a foreign tourist, I have these notes. What should I do?

Foreign citizens will be permitted to exchange foreign currency up to Rs 5000 per week. Necessary entry to this effect will be made in their passports.

Can I make use of electronic (NEFT/RTGS /IMPS/ Internet Banking / Mobile banking etc.) mode?

You can use NEFT/RTGS/IMPS/Internet Banking/Mobile Banking or any other electronic/ non-cash mode of payment. In order to meet the transactional needs of the public through digital means, additional measures have been introduce by way of special dispensation for small merchants and enhancement in limits for semi-closed Prepaid Payment Instruments (PPIs).

PPIs issuers can issue PPIs to such merchants. While balance in such PPIs cannot exceed Rs 20,000/- at any point of time, the merchants can transfer funds from such PPIs to their own linked bank accounts upto Rs 50,000/- per month, without any limit per transaction. Merchants only need to provide a self-declaration in respect of their status and details of their bank account.

The limit of semi-closed PPIs issued with minimum details has been enhanced to Rs 20,000/- from the existing Rs 10,000/-. The total value of reloads during any given month has also been enhanced to Rs 20,000/-.

Extant instructions for other categories of PPIs remain unchanged. Full KYC PPIs with balance upto Rs 1,00,000/- can continue to be made available by authorised PPI issuers.

The above measures will be effective from November 21, 2016 till December 30, 2016, subject to review.

Withdrawal limit of Rs 2,50,000 sanctioned for marriage purpose 
With a view to ease the hardships of those tying the nuptial knot, government has allowed up to Rs 2.5 lakh cash withdrawal from KYC compliant bank account of a bride or groom or their parents for a marriage during the ongoing wedding season. 

Farmers allowed withdrawing up to Rs 25,000 per week against crop loans 
Government has allowed farmers to withdraw up to 25,000 rupees per week against their crop loans. Besides, it has also extedned the time limit to pay crop insurance premiums by 15 days. 

Can I use the Specified banknotes to settle outstanding in my loan account?

Deposits of Specified bank Notes into all types of deposit/loan accounts is allowed subject to CTR/STR reporting. Anybody depositing more than Rs 50,000/- in cash in their bank account has to submit a copy of the PAN card in case the bank account is not seeded with PAN.

Can I deposit SBN to Small Savings Scheme?

Government of India has decided that subscribers of Small Savings Schemes may not be allowed to deposit SBNs in Small Savings Schemes. Banks have been advised not to accept SBNs for deposits in Small Saving Schemes with immediate effect. However deposits into Post Office Savings account are permitted

What is proof of identity?

Valid Identity proof is any of the following: Aadhaar Card, Driving License, Voter ID Card, Pass Port, NREGA Card, PAN Card, Identity Card Issued by Government Department, Public Sector Unit to its Staff.

Where can I get more information on this scheme?

Further information is available on our website ( and the website of the Government of India (

What steps have been taken for queue management?

Banks have been advised to make arrangements for separate queues for Senior citizens and Divyang (disabled) persons. Similarly, separate queues should also be arranged for those who come to exchange SBN for cash and those who come to deposit into bank accounts.

The last date for submission of the annual life certificate for the government pensioners which is to be submitted in November every year has been extended upto January 15, 2017 to facilitate.

The Reserve Bank assures members of the public that enough cash in small denominations is also available at the Reserve Bank and banks. The Reserve Bank urges that public need not be anxious; need not come over to banks repeatedly to draw and hoard; Cash is available when they need it.

28. If I have a problem, whom should I approach?

You may approach the control room of RBI by email or on Telephone Nos 022 22602201/022 22602944


Security Features of the new currency notes:

Common to both denomination notes:

Front side:

* See through register with denominational numeral can be seen when the note is held against it.

* Latent image with denominational numeral can be seen when the banknote is held at 45 degree angle at eye level.

* Denominational numeral in Devnagari.

* Colour shift windowed security thread with inscriptions ‘भारत’, RBI and denominational numeral. Colour of the thread changes from green to blue when the note is tilted.

* Guarantee clause, Governor’s signature with Promise Clause and RBI emblem towards right.

* Mahatma Gandhi portrait and electrotype watermarks.

* Number panel with numerals growing from small to big on the top ledt side and bottom right side.

* Denominational numeral with Rupee Symbol, in green to blue color changing ink.

* Ashoka Pillar emblem on the right.

For visually impaired:

Raised printing of Mahatma Gandhi portrait, Ashoka Pillar embelem.


* Year of printing of the note on the left

* Swachh Bharat logo with slogan

* Language panel towards the centre

Exclusive for the Rs 2,000 note:

* Is a part of the Mahatma Gandhi (New) series, with a motif of India's Mars orbiter, the Mangalyaan on the reverse

* Size: 66mm x 166mm

Front side:

* Portrait of Mahatma Gandhi in the center.

* Micro letter ‘RBI’ and ‘2000’

For visually impaired:

* Horizontal rectangle with Rs 2000 in raised print on the right

* Seven angular bleed lines on left and right side in raised print


 * Motif of Mangalyaan

Exclusive for the Rs 500 note:

*The size is 63mm x 150mm, colour is stone grey with Red Fort and Mahatma Gandhi's image on each sides

Front side:

* Orientation and relative position of Mahatma Gandhi portrait changed.

For visually impaired:

* Circle with denomination printed on it.

* Five bleed lines on left and right in raised print.


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