Last week, RBI has indicated that it would withdraw bank currency notes prior to 2005. Public need to go to banks for exchange of such pre-2005 currency notes. In this article, I would detail about how to identify such pre-2005 currency notes, how to exchange and some of the FAQ’s on pre-2005 bank currency notes exchange.
Why RBI wants to withdraw pre-2005 bank currency notes?
There are a few reasons to it.
- The main reason is to counter black money in circulation. We need to really need to see how much black money would come out with this RBI decision.
- To help weed out fake currency notes in circulation in the system. This would be tricky part as we do not know how much fake currency is in circulation in India and across the world.
- To remove currency notes which would have got spoiled due to exchange from one hand to another.
How to identify pre-2005 bank currency notes?
It is very easy to identify pre-2005 bank notes as the year is printed on the reverse side of the currency note.
Sample no. 1: Currency note shows prior to 2005 which needs to be exchanged with the bank. Some have printed year as prior to 2005 and some are blank.
Sample no. 2: Currency note shows 2005 which is not required for exchange.
FAQ’s on how to identify and exchange Pre-2005 bank currency notes?
1) By when we should exchange such pre-2005 currency notes?
RBI has given a deadline that these notes to be withdrawn after 31-Mar-2014. You can exchange at any time from now or even after 31-Mar-2014.
2) To whom we need to approach for pre-2005 banknotes exchange?
You can approach your bank where you are operating your savings or current account or any other bank to exchange these currency notes.
3) Do I need to produce any documents for exchange of such pre-2005 currency notes?
We all know that to deposit a cash of Rs 50,000 or more we need to specify a PAN number. However, if you want to exchange and deposit amount in your bank account, the same rule would continue. However, to exchange such currency notes, you may need to identify yourself. You may need to produce Aadhar Card as identification. We cannot rule out banks demanding PAN number going forward.
4) What would happen if I do not exchange and keep paying for regular purchases?
Public is already aware of this fact and the awareness would increase in the next couple of months. When you are making any payment for your purchases, they would check the year and they can always reject prior-2005 currency notes. Though these are legally still valid, but there are higher chances that general public would not be accepting them.
5) I have black money, how do I make it white?
This is a good opportunity to make your black money as white. Simply pay income tax on that and make it white. Exchange this at the bank and deposit in your bank account.
6) Does RBI have sufficient new currency notes now to exchange?
This is another question which came to my mind whether RBI has sufficient new currency notes for the exchange to be done. RBI would have already thought about this before taking this decision. However, in case, banks would not honour and exchange for any reason, there could be some panic among public.
Conclusion: RBI move to withdraw Pre-2005 bank currency notes is a good move. While it would help in countering black money and weed out fake currency notes, it would also help in removing spoiled notes from circulation. While you need not rush now, I feel the earlier you exchange your pre-2005 currency notes, it is better for you to avoid any last minute surprises.
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How to identify and exchange Pre-2005 bank currency notes
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