Thursday, 23 January 2014

[] Reserve Bank of India puts 2005 as expiry date on currency notes to curb fake money


Reserve Bank of India puts 2005 as expiry date on currency notes to curb fake money

In what is seen as a two-pronged strategy to tackle fake currency notes in the system and black money, the RBI on Wednesday said it will withdraw all currency notes issued before 2005 from April 1, 2014.

People who have notes from 2005 or before identifiable by the absence of any year printed on the bottom, will have to take it to any bank and provide address proof, if you don't have a bank account.

This will mean that those who have not declared their accumulated cash will now become accountable. If they don't get it changed.

There is no likelihood of there being any huge cache of such notes because it would have been exchanged for fresh notes in the last ten years. If such notes without any year printed looks crisp and neat it is likely that they are fake. Also it is impossible to change these notes through hawala since such notes have lost value. All avenues of encashing these notes are blocked now.

Yet, the government is likely to mop up substantial amount of black money or make them vanish once and for all, since people who have huge stacks of such cash are likely to surrender them at a discount.

Most of those who have such stash will sell it at a 10% to 15 %discount to a large number of people in small amounts. These individuals will go and get new currency issued.

For example, a black money hoarder will take `3,000 and give `300 as commissions to various individuals for the services. These individuals will get it changed at no risk and make a killing in the process.



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