India’s Prime Minister Mr. Narendra Modi has announced demonetization of ₹500 and ₹1000 currency notes, at midnight on 8th of November 2016.
While it is a bold political move to combat corruption and black money evils, it does come with a set of immediate inconveniences for the common man. Remember what our Honorable President has stated, do not panic and follow the guidelines. Here is a list of questions that you might have, answered to the best of our knowledge at this point:
Q:What will happen to my ₹500 and ₹1000 currency notes? I have some cash in denominations of ₹500 and ₹1000 at home.
A: You need not worry. You need to visit a bank or a post office with those notes, between 10 November – 30 December, with your PAN card/Adhaar Card, to get them exchanged. After 30th December, the notes can only be exchanged at RBI, with a declaration.
This provision has been kept keeping in mind that NRIs might have liquid cash with them and would not be able to return the same immediately. The exchange limit has been capped at ₹4000 only. So, a hoarder might have a hard time.
Q:I have an emergency situation at home and I do not have a credit\debit card. What do I do?
A:The following emergency services are exempted from this ban till Nov 11 (that is, for the next 72 hours after midnight):
- Government Hospitals
- Crematoriums and cemeteries
- Petrol pumps
- Milk booths operated by the Government
- Airport and Train ticket counters
- Consumer co-operative stores
Q:I am traveling right now and carrying only cash. The hotel refuses to accept cash. What do I do?
A:This can be a tricky scenario. If you pass through an airport, ask assistance for exchange of currency there. Otherwise, you might have to visit a bank or post office nearby, which will be accessible after tomorrow. Else, you can approach someone back home to transfer the payment to the hotel using net banking or credit card. Please remember that all cashless transactions remain unaffected by this move. Also, barring the two denominations in question, all other denominations remain in circulation.
Q:I was planning to travel tomorrow/day after. Now the travel plan seems jeopardized because of this ban. What should I do now?
A: Remember, Banks and ATMs shall remain closed tomorrow and the day after. Try to carry as many ₹100s as you can, in case you are traveling. Carry a debit/credit card or a chequebook. In case you or your travel mates have access to none of the above, it is best to delay/alter your plans.
Q:Why do we have to go through so much trouble? Why did Modi decide to declare this ban so suddenly? That too after banking hours was over.
A: The move is bold, intelligent and sensible. It will surely help fighting black money and corruption. If there was notice, the black money dealers would have had enough time to act upon it. We understand the inconvenience, but also acknowledge that a move as drastic and surgical as this, was probably necessary to tackle the evil.
Q:Will the Govt issue Rs 2000 currency notes now? How will it help reduce black money?
A: As per sources, Govt is issuing new currency notes of ₹2000 and ₹500 by November 10th. Since people need to submit ₹500 and ₹1000 notes to banks with valid documents, people having loads of undeclared/black cash, will be either caught or will lose their money. The Government will get to account for the money returned. RBI is also planning to monitor and moderate the distribution of the ₹2000 notes to curb further corruption.
But Rs 2000 notes will further reduce the black money storage problem. Will it not?
A: This ban will help in immediate and surgical reduction of black money circulation. It will also help control the issue of fake currency being used to sponsor terrorism. Eventually ₹ 2000 notes will also be at risk. To counter this, Government is allowing cash withdrawal limit of ₹2000 per day for now, this will get extended to ₹4000 per day shortly. The eventual limits would be set at ₹10000 daily and ₹20000 weekly. This would encourage plastic money usage and online transactions, reducing illegal cash flows, for better transparency in the future.
Q:Will the fake currency problem be solved forever?
A: No, it will solve the problem for some time, for sure. As of now, most fake currencies that exist are of denominations 500 and 1000. It amounts to a whopping ₹1,69,000 to ₹200,000 Crore. In future ₹2000 notes will probably have their fake versions too. Govt has to introduce strict measures to identify and remove them.
Q:Will there be no repercussions? Will it only affect the black money dealers and not the law-abiding citizens?
A: No, not really. Say a hotel owner has black money worth Rs 100 crores. He employs 1000 employees in his hotel chains in 10 different places. If he turns bankrupt (since his black money is of no use now), he will not be able to pay his employees. Those 1000 people will lose their jobs. Also, there is a large segment of Indians, who do not hold a bank account yet, and may find it difficult to convert their hard-earned money. Some brokers might pop up and cheat them in the meanwhile.
Do you have any more questions? Let us know!
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