Specified Bank Notes (Cessation of Liabilities) Ordinance, 2016

Why in news?

The President recently approved the promulgation of the Specified Bank Notes (Cessation of Liabilities) Ordinance, 2016.

What the new ordinance says?

• The Cabinet headed by Prime Minister Narendra Modi had  approved promulgation of the Ordinance.
• The three-month window, January 1-March 31, 2017, for deposit of old currency notes in specified offices of the RBI after submitting a declaration form will remain open.
• The ordinance makes holding, transferring or receiving these old notes as illegal, with provisions for penalty for contravention.
• This ordinance ends the Reserve Bank of India’s liability on extinguished notes and permanently ends the legal tender status of the old Rs 1,000 and Rs 500 notes.
• After the period of exchange is over, the liabilities of the Reserve Bank and the guarantee of the Central Government towards the Specified Bank Notes will stand extinguished.
• Further, to prevent any continued parallel transactions with the SBNs by unscrupulous elements, after this period, holding, transferring and receiving SBNs will attract a fine of Rs.10,000 or five times the amount of the face value of the SBN involved in the contravention, whichever is higher.

What are the provisions for non residents?

• For those citizens of India who are not resident in India, the note exchange facility would be available till June 30, 2017, the finance ministry said in a statement.
• This exchange facility will be subject to Foreign Exchange Management (Export and Import of Currency) Regulations, 2015.
• These rules restrict bringing back Indian currency into the country to Rs 25,000 per person.

Category: Mains | GS - III | Economy

Source: Indian Express