Demonetisation: Demystifying the new Rs. 5,000 rule

Film crews are accepting the demonetised currency as they can deposit them in banks till December 31.   | Photo Credit: V. Sreenivasa Murthy

The RBI on Monday has issued fresh guidelines on depositing demonetised high value currency notes of Rs. 1000 and Rs. 500. Here is what you need to know:

What is the new rule from RBI?

The Reserve Bank of India on Monday announced that deposits of more than Rs. 5,000 of demonetised currency note will be allowed only once, till December 30. So if you have Rs.10,000 with you in Rs.1000 or Rs.500 notes, you will have to take it to the bank in one go. After that, you will not be able to make any more deposits of demonetised notes till December 30.

Does this mean I cannot deposit more than once?

If you have less than Rs. 5,000 in demonetised notes in your hand, you can spread it over any number of deposits.

Are there any new procedures for depositing more than Rs. 5,000 in demonetised notes?

You will have to present your case of why you didn't deposit them earlier, in the presence of at least two bank officials. If the officials find your response satisfactory, it will be accepted. But your bank account may be scrutinisied later at the time of audit.

What if I deposited Rs. 4,000 and later found two more Rs. 1000 notes?

If the combined values of your deposits exceeds Rs. 5000, you will be subjected to the same procedure as when depositing more than Rs.5,000 once. And you will not be able to make any more deposits of demonetised till Dec.30 after that.

But how will a bank know if I have deposited Rs. 4,000 earlier elsewhere?

Every time you deposit demonetised money, the bank alerts the CBS (core banking solution). If you deposit Rs. 4,000 as old notes today , you can deposit only Rs.1,000 more in old notes without being asked to give an explanation.

What is this KYC compliance clause?

The one-time deposits of over Rs. 5,000 can be made only to KYC-compliant accounts. KYC, or Know your customer, is a business process to verify the identity of bank customers. Banks collect a valid identification proof and address proof and PAN card details of its customers periodically. Those who haven't submitted these documents are KYC-non compliant. Such customers can deposit only up to Rs. 50,000 in demonetised notes.

I don't have time to visit a bank. Can I send someone on my behalf?

Yes, you can. You have to provide suitable authorisation to the bank and the person depositing the amount should show approved identification. You still have to send a written explanation as to why you didn't make the deposit earlier.

I have more than Rs. 5,000 in cash. But they are not demonetised currency notes...

There is no restriction on currency notes that are legal tender.

I have unaccounted money worth more than Rs. 5,000 and I am planning to disclose it under the new declaration scheme. What should I do now?

These restrictions do not apply to deposits made under the government’s new income declaration scheme, the Pradhan Mantri Garib Kalyan Yojana 2016. You have to deposit 25 per cent of total declared unaccounted money to the Pradhan Mantri Garib Kalyan Yojana, a scheme with a four-year lock in period with no interest.

I lost track of all rules related to demonetised money. A quick recap please.

Government has demonetised Rs. 1000 and Rs. 500 currency notes with effect from November 8 midnight. Though the government had earlier made some exemptions, these notes have ceased to be legal tender and are not being accepted anywhere from December 15. If you still have them, they can be deposited in your accounts in nationalised and private-sector banks till December 30. After that, the Reserve Bank will continue to accept these notes directly till March end after getting a declaration.

Our code of editorial values

Related Topics
This article is closed for comments.
Please Email the Editor

Printable version | Dec 1, 2021 10:22:30 PM |

Next Story