New Delhi, November 8

Banks will open additional counters and work extra hours beginning Thursday to help people exchange Rs 500 and Rs 1,000 notes that have been declared invalid from midnight tonight.Anticipating panic and rush at bank counters, RBI as well as government has set up control rooms in Mumbai and the national capital to avoid any crisis, Department of Economic Affairs Secretary Shaktikanta Das said.Banks will remain shut tomorrow to allow stocking of smaller currency notes and public will be allowed to tender their now invalid Rs 500 and Rs 1000 from November 10. They can deposit any amount of the invalid currency in their bank account till December 30 and also exchange them for lower banknotes at special counters at banks and post offices till November 24 but with limit of Rs 4,000 in a day.Bank will, however, report any unusual transaction to Financial Intelligence Unit and tax authorities for scrutiny. RBI Governor Urjit Patel said the central bank had ramped up production of the new higher security currency notes of Rs 500 and Rs 2,000 that will replace the notes being taken out of circulation. The new notes will come into circulation from November 10, he said.      He linked the government decision to use high denomination currency notes for terrorism financing and also for holding black money.While overall currency circulation had increased by 40 per cent during 2011 to 2016, Rs 500 banknotes in circulation had gone up by 76 per cent and that of Rs 1000 by 109 per cent.As many as 16.5 billion notes of Rs 500 denomination are in circulation currently while 6.7 billion Rs 1,000 notes are in market. — PTI

THE BLACK BUCK STOPS HERE, SAYS MODI

NEW WHITE REVOLUTION Notes of `500, `1,000 not legal tender any more, 50-day window to deposit or exchange

NEW DELHI: Prime Minister Narendra Modi announced on Tuesday the abolition of 1000 and 500 rupees bank notes from midnight, a dramatic move aimed at stamping out corruption and draining illicit cash from the economy.

In a surprise late-evening televised address to the nation, Modi said the notes in circulation can be exchanged at banks till December 30. Some concessions will be allowed for use of these notes at hospitals and crematoriums, and to buy air, rail and bus tickets till November 11.

There will be some restriction on withdrawal of cash from banks and ATMs (See box).

The move could help bring billions of dollars-worth of unaccounted for cash back into the economy, and choke the flow of fake high-value banknotes militant groups use to fund their attacks against India.

The decision is also an attempt by Modi to fulfill his election promise of curbing tax evasion and recovering illegally stashed incomes overseas. It gives his Bharatiya Janata Party a talking point ahead of elections in five states next year.

But the move entails possible downside risks. Given that about 40% of India’s economy is driven by small- and medium-sized enterprises that largely run on cash transactions, the decision could have a knock-on effect on economic growth.

The short notice too sparked concern among people, and large queues were reported outside ATMs across India, as people rushed to withdraw smaller bank notes. The move could also inconvenience poorer people and families planning weddings, the season for which starts in days.

It wasn’t immediately clear how businesses and private banks with large stocks of highvalue notes will deal with the transition. The banned denominations account for more than 80% of all currency in circulation by value.

“Banks will be closed tomorrow. It will cause some hardship to you… Let us ignore these hardship… In a country’s history there come some moments when every person feels he too should be a part of it,” the prime minister said in a 4-minute speech.

“We have an opportunity when every citizen can join this mega mission,” he added, calling the move an “Imandari ka Utsav”, or celebration of honesty.

The Reserve Bank of India (RBI) will issue a new `2000 and `500 notes later.

Modi also dwelled on the scourge of fake bank notes, saying militants operating against India were using counterfeit of the 500 rupee note, worth about $7.50 at current exchange rates.

NOTEWORTHY DETAILS

“Banks will be closed tomorrow. It will cause some hardship to you …. Let us ignore these hardships… In country’s history, there comes a moment when people will want to participate in the nation building and reconstruction. Very few such moments come in life.” — Narendra Modi, PM

Deposit old notes of `500 and `1,000 in bank or post office accounts between November 10 and December 30, 2016, showing ID proof

After Dec 30, you can exchange notes at designated RBI offices till March 31 next year with a declaration form along with proof and reasons

WITHDRAWAL LIMIT

BANK `10,000 per day and `20,000 per week

ATM `2,000 per card per day which will increase to `4,000 per card

NO RESTRICTIONS ON

Payments by demand draft, cheque, non-cash payments, debit card, etc

FOR THE NEXT 72 HOURS, VALID AT:

Government hospitals

Railway ticket booking counters

Ticket counters of govt buses

Airline ticket counters

Petrol, diesel and gas stations authorised by public sector oil companies

Consumer coop stores authorised by state or central govt

Milk booths authorised by state govts

Crematorium, burial grounds