Financial News

The Modi-fied masterstroke: Rs 500 Rs 1000 notes abolishes to fight against black money

Modi’s ruling BJP came into power in 2014 with a promise to bring billions of dollars of black market money into the regular financial system.

With a surprise stroke and without any clue, the Prime Minister Narendra Modi on Tuesday night led a charge against black money, by banning currency notes of Rs 500 and Rs 1,000, saying that it was part of a clean-up on rampant corruption and fake currency. People can return their notes to banks and post offices within 50 days from November 10 upto December end and take new notes.

500 1000 Rupee Bank NoteIn a sudden Address to the nation, Modi said that ‘Black money and corruption are the major obstacle in eradicating poverty’. New 500 and 2,000 rupee notes will be issued at a later date, he said.

Modi’s ruling BJP came into power in 2014 with a promise to bring billions of dollars of black market money into the regular financial system.

He also said militants operating against India have been using counterfeit versions of the 500 rupee note, worth about USD 7.50 at current exchange rates. Enemies from across the border have run their operations using fake notes, which has been going since years. High denomination notes have been misused by terrorists and for hoarding black money.

However, the move taken by Modi is appreciable, in the light of frequency of fake Indian currency notes in higher denomination has increased. For ordinary persons, the fake notes seems similar to genuine notes, even though no security feature has been copied. In order to contain the growing prevalence of fake notes and black money, the scheme has been introduced.

The conclusions come after a cabinet meeting and the steps taken are as under:-

Banks have been ordered to remain shut on Wednesday. ATM withdrawals will be restricted to Rs 2,000 per day till November 11, and this limit may be increased subsequently.

Rs 500 and Rs 1,000 denomination notes can be deposited in banks and post offices, and also exchanged across the bank counter by showing valid ID proof. Withdrawals from bank accounts will be limited to Rs 10,000 for the first few days.

For medical patients, payment is accepted at hospitals with the old notes. Also for booking of flight tickets, railway bookings, government bus ticket counters, Rs 500 and Rs 1000 notes will be valid till the midnight of November 11 and 12.

The retail petrol pumps will accept such notes till November 11, after which the stations will have to keep a register of such notes for some time.