From April, RBI will withdraw all pre-2005 notes TIMES NEWS NETWORK Mumbai: The Reserve Bank of India on Wednesday said all currency notes issued before 2005 will be withdrawn from circulation — a move expected to check fakes and at the same time cause consternation among those dealing in cash. Although the RBI has desisted from declassifying these notes as legal tender there is fear that a logical conclusion would be to take these notes completely out of circulation. In terms of the timeline set out by the central bank, from April 2014 all banks will accept and exchange pre-2005 notes. These can easily be identified by the absence of year of printing on the reverse of the note (it started in 2005). Sources said that the maximum number of fake currencies have been in the pre-2005 series. ‘DON’T PANIC’ Banks will accept all pre-2005 notes for exchange from April 2014 After July ’14, banks will demand ID and residence proof to exchange more than 10 Rs 500 and Rs 1,000 notes Notes will be accepted until further instructions from the Reserve Bank Move aimed at checking fake notes in circulation Most fake currency is based on pre-2005 design Post-2005 notes have additional security features Banks will get only 25% of the value from RBI for turning in fakes Banks will have to report transactions of over Rs 10 lakh to authorities Total value of currency in circulation Rs 11,648 crore Value of pre-2005 notes could be in tens of thousands of crores Withdrawal of pre-’05 notes because of security reasons From July 2014, to exchange more than 10 pieces of Rs 500 and Rs 1000 notes, noncustomers will have to furnish identity and address proof to the bank branch. RBI has been withdrawing older currencies with fewer security features gradually from circulation by destroying these notes which are sent by banks. However, the fact that it has chosen to issue a press release with a timeline and a statement that the exchange facility will continue ‘until further communication’ is seen to signal n imminent deadline. At the same time the central bank has made an appeal to the public not to panic but to actively cooperate in the withdrawal process. The total value of currency in circulation in end-March 2013 was around Rs 11,648 crore, which is more than three times the Rs 3,61,227 crore figure for currency in circulation in March 2005. RBI sources said that while the central bank keeps track of the value of the currency in circulation it was not possible to identify how many of these were printed prior to 2005. Every year RBI destroys and reissues millions of notes with the lower denominations having the shortest life due to their high velocity. But even today there continue to be in circulation notes bearing signature of former governors who stepped down in the 1990s like S Venkitaraman (up to December ’92), C Rangarajan (January ’97), and Bimal Jalan (September 2003). Bankers say that the process could have implication on unaccounted currency in circulation. Athough all banks have been asked to freely exchange currencies, bankers say that RBI norms require that all transactions over Rs 10 lakh have to be reported to the authorities as a part of global anti-money laundering norms. In the past some political leaders such as Baba Ramdev had called for withdrawal of currency note of Rs 500 and Rs 1000 denomination to curb black money. Bankers, however, said that the move is impractical and would require ATMs to be refilled thrice a day were it to be implemented. RBI sources said that maximum counterfeiting has taken place in the pre-2005 category of currency notes. Some bankers feel that such high-quality fakes indicate that counterfeiters are gaining access to security paper from enemy nations. DON’T PANIC, SAYS GOVT
Posted on: Thu, 23 Jan 2014 02:28:01 +0000
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