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Govt stops exchange of banned bank notes, extends exemptions

24 November, 2016

Prime Minister Narendra Modi’s government on Thursday decided to stop exchange of old Rs 500 and Rs 1,000 notes in bank branches from midnight and made it mandatory for everyone to deposit the currency. 

The government also extended the period of exemptions for some transactions where payment could be made through old notes until 15 December, it said in a statement. However, such payments will be allowed only through Rs 500 notes.

The fresh set of measures came as the government struggles to ease the cash crunch in the economy after the 8 November decision to ban Rs 500 and Rs 1,000 notes in a bid to combat corruption, tax evasion and counterfeit currency. The decision to overnight withdraw 86% of the currency in circulation by value triggered widespread chaos, led to serpentine queues in front of banks and cash-dispensing machines, and caused several deaths. 

The government and Reserve Bank of India have been unveiling new steps almost every day to tackle the situation. On Thursday, it added new activities where the scrapped notes can be used. These included payment of fees in government schools and colleges, payments toward pre-paid mobile top-up up to a limit of Rs 500 per transaction and purchase from consumer cooperative stores.

The government also allowed individuals and households to pay current and outstanding water and electricity bills. In addition, it said that highway toll fee can be paid through old Rs 500 notes until 15 December. Foreign citizens will be permitted to exchange foreign currency up to Rs 5,000 a week, it added.

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Govt stops exchange of banned bank notes, extends exemptions

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