Ordinance planned to do away with liability of govt, RBI on banned notes

Govt is also mulling imposing penalty on people for possessing certain quantity of old notes

An ordinance to extinguish the liability of the government and the RBI on the demonetised high denomination notes is likely to come up before the Union Cabinet today.

Sources in the government said the ordinance is being brought as it was found to be necessary to prevent future litigations against the government for junking Rs 500 and Rs 1,000 notes.

Seeking to prevent harassment and any ambiguity, a proviso would be added to ensure that certain category of people can still deposit the old notes in RBI branches between December 31 and March 31 next, they said.

The category may include people in armed forces, people who were abroad and ordinary citizens who can explain that the money is part of their legitimate income and they could not deposit it in banks due to some reasons.

The government is also mulling imposing penalty on people for possessing certain quantity of old notes after December 30 but there is no confirmation.

In 1978, a similar ordinance was issued to end the government's liability after Rs 1,000, Rs 5,000 and Rs 10,000 notes were demonetised by the Janata Party government under Morarji Desai.

The government had, while announcing the demonetisation of the old currency on November 8, allowed holders to either exchange them or deposit in bank and post office accounts. While the facility to exchange the old notes has since been withdrawn, depositors have time till Friday to deposit the holding in their accounts.