Banks to open more counters,work extra hours to exchange notes

Banks will open additional counters and work extra hours beginning Thursday to help people exchange Rs 500 and Rs 1000 notes that have been declared invalid from midnight tonight.
Anticipating panic and rush at bank counters, RBI as well as government has set up control rooms in Mumbai and the national capital to avoid any crisis, Department of Economic Affairs Secretary Shaktikanta Das said.
Banks will remain shut tomorrow to allow stocking of smaller currency notes and public will be allowed to tender their now invalid Rs 500 and Rs 1000 from November 10.
They can deposit any amount of the invalid currency in their bank account till December 30 and also exchange them for lower banknotes at special counters at banks and post offices till November 24 but with limit of Rs 4,000 in a day.

Bank will however report any unusual transaction to Financial Intelligence Unit and tax authorities for scrutiny.
RBI Governor Urjit Patel said the central bank had ramped up production of the new higher security currency notes of Rs 500 and Rs 2,000 that will replace the notes being taken out of circulation.

The new notes will come into circulation from November 10, he said.
He linked the government decision to use high denomination currency notes for terrorism financing and also for holding black money.
While overall currency circulation had increased by 40 per cent during 2011 to 2016, Rs 500 banknotes in circulation had

gone up by 76 per cent and that of Rs 1000 by 109 per cent.
As many as 16.5 billion notes of Rs 500 denomination are in circulation currently while 6.7 billion Rs 1,000 notes are in market.
While the government imposed strict cash withdrawal limits - Rs 2000 from ATM and Rs 10,000 from bank account in a day and Rs 20,000 in a week, Patel said there will be no impact on liquidity in the markets including financial markets.
The cash withdrawal limits will be relaxed gradually as small currency denomination notes are adequately stocked with banks and ATMs and new currency notes come into wide circulation.

A high-security Rs 1000 currency note will be re-introduced at a later date, Das said.
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The government and the RBI's move to take out Rs 500 and Rs 1,000 banknotes from circulation will help India towards cash-less economy where most transactions are done electronically and that can be tracked.
Terming the move as "surprise move", Das said it will help in checking inflation as well as boosting growth in medium to long term.
"The fake Indian currency notes and use of blackmoney fuel inflation and corrode the very basis of our economy," the Secretary said.
He further said that the "long shadow of ghost economy" has been a problem and for the real economy to grow the parallel economy must go.

The Secretary also said Chief Secretaries of states have been sensitised about the steps which "they now required" to take.
To a question, Das said the matter was in under consultation and internal discussions in the government for "very long time".
"All the banks (and) post offices will open additional counters and we have requested the banks to have extended hours for transactions...Ample time will be available for the public (to exchange notes)," he said.
The new Rs 2,000 notes will feature 'Mangalyan' showing India's scientific progress and research.
When asked that the Rs 2,000 note picture was in circulation on social media, Das said the RBI Board had taken a decision about the note a few months back and also the notes were under print for sometime now.

According to him, someone would have taken a picture of the note and circulated on social media. Das said he would look into the issue.
He also said that while there were fake notes in circulation, but so far security features of Indian currency notes have not been breached.
For exchange of currency notes, a person would have to establish identity.
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Explaining the rationale behind introducing Rs 2,000 notes, the Secretary said Rs 1,000 notes were introduced in early 2000s and since then the real value of rupee has come down due to inflation.
He also said Rs 2,000 notes will also help in faster replacement of old currencies.

Further, there will be no restriction on the use of any non-cash method of operating the account which will include cheques, demand drafts, credit/debit cards, mobile wallets and electronic fund transfer mechanisms.
To avoid inconvenience to the public for the first 72 hours, old high denomination bank notes will continue to be accepted at government hospitals and pharmacies in the hospitals, railway ticketing counters, ticket counters of government and PSU buses and airline ticketing counters at airports.
The facility will also be available for purchases at consumer co-operative societies, at milk booths, at crematoria, burial grounds, at petrol/diesel/gas stations of PSU oil marketing companies and for arriving and departing passengers at international airports and for foreign tourists to exchange foreign currency at airports up to a specified amount.

The RBI has issued notification to effect withdrawal of Rs 500 and Rs 1,000 notes from midnight today.