Old notes penalty, new notes pain....Jail if you hold on to banned `500, `1,000 beyond March 31

HTC, 28 Dec 2016, NEW DELHI: The cabinet cleared on Wednesday an ordinance that makes holding a large number of scrapped banknotes after March 31 an offence punishable with a jail term and a hefty fine.

The move comes two days before the deadline for depositing the junked `500 and `1,000 bills in banks runs out, after that money can only be deposited at the Reserve Bank of India offices and that too till March 31.

December 30 is also the day when the government is expected to revise the restrictions on bank and ATM withdrawals.

The specified bank notes cessation of liabilities ordinance makes holding of scrapped currency beyond a threshold amount after March 31 a criminal offence that will attract a fine of `10,000 or five times the cash held, whichever is higher, sources said.

A maximum of 10 banned notes may be allowed to be held by any person.

In a surprise move, the government on November 8 scrapped the high-value notes that accounted for 86% of the currency in circulation, and restricted cash withdrawals, triggering a cash crunch and howls of protest from the Opposition.

The government and the Reserve Bank of India have since revised the guidelines numerous times, 60 at the last count.

The ordinance, needed to complete the legal process of demonetisation, allows exchange of a limited number of banknotes at offices of the RBI until March 31.

Furnishing wrong information while depositing the old currency between January 1 and March 31 will attract a fine of `5,000 or five times the amount.

The ordinance, approved during the cabinet meeting chaired by Narendra Modi, seeks to amend the RBI act, aimed at extinguishing the liability of the government towards bearers of such notes.

“The ordinance primarily seeks to shield the government against future litigations that may follow for not honouring the promise to pay,” an official said. Cases were filed in courts across the country questioning the government’s power to cull currency by an executive decision. The ordinance will come into force once the President gives his assent but it will have to be passed by Parliament within six months.

An ordinance is a constitutional provision that allows a law to be enacted when Parliament is not in session. Hitting out at the government, CPI (M) general secretary Sitaram Yechury said the government was using the “backdoor” as it was afraid of facing Parliament.

“The government has no option but to take the ordinance route because unless the law is changed, demonetisation is not legal. Ideally this law should have been brought in Parliament in the winter session,” Yechury told the media.

Opposition parties have called demonetisation a mega scam and have accused the Modi government of unleashing economic emergency, as people queued up for hours at banks and ATM kiosks to get cash. The demonetisation row wiped out the winter session that ended on December 16 without getting much business done.

The ordinance, approved during the cabinet meeting chaired by Prime Minister Narendra Modi, seeks to amend the Reserve Bank of India act, aimed at extinguishing the liability of the government towards bearers of such notes.

“The ordinance primarily seeks to shield the government against future litigations that may follow for not honouring the promise to pay,” an official said.

The demonetisation row wiped out the winter session that ended on December 16 without getting much business done.