DEMONITISATION – RBI -FREQUENTLY ASKED QUESTIONS


1. Why is this scheme introduced?

The incidence of fake Indian currency notes in higher denomination has increased. For ordinary persons, the fake notes look similar to genuine notes, even though no security feature has been copied. The fake notes are used for antinational and illegal activities. High denomination notes have been misused by terrorists and for hoarding black money. India remains a cash based economy hence the circulation of Fake Indian Currency Notes continues to be a menace. In order to contain the rising incidence of fake notes and black money, the scheme to withdraw has been introduced.

2. What is this scheme?

The legal tender character of the existing bank notes in denominations of ₹500 and ₹1000 issued by the Reserve bank of India till November 8, 2016 (hereinafter referred to as Specified Bank Notes) stands withdrawn. In consequence thereof these Bank Notes cannot be used for transacting business and/or store of value for future usage. The Specified Bank Notes can be exchanged for value at any of the 19 offices of the Reserve Bank of India or at any of the bank branches of commercial banks/ Regional Rural Banks/ Co-operative banks or at any Head Post Office or Sub-Post Office.

District Central Cooperative Banks (DCCBs) can allow their existing customers to withdraw money from their accounts upto ₹ 24,000 per week upto November 24, 2016. No exchange facility against the specified bank notes (₹ 500 and ₹ 1000) or deposit of such notes should be entertained by DCCB’s. The Reserve Bank has accordingly advised all banks to permit withdrawal of cash by DCCBs from their accounts based on need.

3. Does the scheme apply to pre 2005 banknotes of ₹500 and ₹1000?

Yes, specified banknotes (SBN) include pre 2005 banknotes in the denominations of ₹500 and ₹1000.

4. How much value will I get?

You will get value for the entire volume of notes tendered at the bank branches / RBI offices.

5. Can I get all in cash?

No. You will get upto ₹4500 per person in cash exchange over the counter irrespective of the size of tender and anything over and above that will be receivable by way of credit to bank account.

6. Why I cannot get the entire amount in cash when I have surrendered everything in cash?

The Scheme does not provide for it, given its objectives.

7. ₹4500 cash is insufficient for my need. What to do?

You can use balances in bank accounts to pay for other requirements by cheque or through electronic means of payments such as Internet banking, mobile wallets, IMPS, credit/debit cards etc.

8. What if I don’t have any bank account?

You can always open a bank account by approaching a bank branch with necessary documents required for fulfilling the KYC requirements.

9. What if, if I have only JDY account?

A JDY account holder can avail the exchange facility subject to the caps and other laid down limits in accord with norms and procedures.

10. Where can I go to exchange the notes?

The exchange facility is available at all Issue Offices of RBI and branches of commercial banks/RRBS/ Co-operative banks or at any Head Post Office or Sub-Post Office.

11. Need I go to my bank branch only?

For exchange upto ₹4500 in cash you may go to any bank branch with valid identity proof.

For exchange over ₹4500, which will be accorded through credit to Bank account only, you may go to the branch where you have an account or to any other branch of the same bank.

In case you want to go to a branch of any other bank where you are not maintaining an account, you will have to furnish valid identity proof and bank account details required for electronic fund transfer to your account.

12. Can I go to any branch of my bank?

Yes you can go to any branch of your bank.

13. Can I go to any branch of any other bank?

Yes, you can go to any branch of any other bank. In that case you have to furnish valid identity proof for exchange in cash; both valid identity proof and bank account details will be required for electronic fund transfer in case the amount to be exchanged exceeds ₹4500.

14. Can I exchange ₹4500 more than once?

No. You can exchange upto ₹4500 only once. As per the Standard Operating Procedure advised to banks, while exchanging the specified banknotes, the bank branch concerned, issue office of RBI or post offices would put indelible ink mark on the right index finger of the customer so as to identify that he/she has exchanged the old currency notes. The indelible ink will be applied before the old notes are taken or new notes are given. Indelible ink on the index finger of the left hand or any other finger of the left hand may not be used as a pretext to deny exchange of old notes.

This procedure would be introduced to begin with in the metro cities and later extended to the other areas.

15. I have no account but my relative / friend has an account, can I get my notes exchanged into that account?

Yes, you can do that if the account holder relative/friend etc. gives you permission in writing. While exchanging, you should provide to the bank, evidence of permission given by the account holder and your valid identity proof.

16. Should I go to bank personally or can I send the notes through my representative?

Personal visit to the branch is preferable. In case it is not possible for you to visit the branch you may send your representative with an express mandate i.e. a written authorisation. The representative should produce authority letter and his / her valid identity proof while tendering the notes.

17. Can I withdraw from ATM?

The ATMs are progressively getting recalibrated. As and when they are recalibrated, the cash limit of such ATMs will stand enhanced to ₹ 2500/- per withdrawal. This will enable dispensing of lower denomination currency notes for about ₹ 500/- per withdrawal. Other ATMs which are yet to be recalibrated, will continue to dispense ₹ 2000/- till they are recalibrated.

Banks have also been advised to increase the Business Correspondents’ limit of dispensing cash to ₹ 2500/- for withdrawal from bank accounts.

18. What will be the levied ATM charges?

It has been decided that banks shall waive levy of ATM charges for all transactions (inclusive of both financial and non-financial transactions) by savings bank customers done at their own banks’ ATMs as well as at other banks’ ATMs, irrespective of the number of transactions during the month. This waiver is applicable on transactions done at ATMs from November 10, 2016 till December 30, 2016, subject to review.

19. Does the limit of ₹ 10,000 withdrawal apply to withdrawals from bank account of one bank from another bank?

The daily limit of ₹ 10000/- per day stands withdrawn. These limits are not applicable to cash withdrawal from a bank account by one bank from another bank, Post Office, Money changers operating at International airports and operators of White Label ATMs. The branches maintaining Currency Chests have been advised to accommodate the requests from other branches in their vicinity – linked or otherwise – for supply of cash.

20. Can I withdraw cash against cheque?

Yes, you can withdraw cash against withdrawal slip or cheque subject to a weekly limit of ₹ 24000/- (including withdrawals from ATMs and over the counter) from the bank accounts. The ceiling of ₹10,000/- in a day stands withdrawn. The limits apply upto November 24, 2016, after which these may be reviewed.

Business entities having Current Accounts which are operational for last three months or more will be allowed to draw ₹ 50,000/- per week. This can be done in a single transaction or multiple transactions.

21. Can I deposit Specified Bank Notes through ATMs, Cash Deposit Machine, cash Recycler and bank branches multiple times?

Yes, Specified Bank Notes can be deposited in Cash Deposits machines / Cash Recyclers or at bank branches more than once till December 30, 2016. At bank branches, customers should use separate pay-in-slips for depositing specified bank notes and other legal tender bank notes. (If a depositor has a mixed bunch of SBN and legal tender notes, he has to segregate them and submit two separate Pay-in slips).

22. Can I make use of electronic (NEFT/RTGS /IMPS/ Internet Banking / Mobile banking etc.) mode?

You can use NEFT/RTGS/IMPS/Internet Banking/Mobile Banking or any other electronic/ non-cash mode of payment.

23. How much time do I have to exchange the notes?

The scheme closes on December 30, 2016. The Specified banknotes can be exchanged at branches of commercial banks, Regional Rural Banks, Urban Cooperative banks, State Cooperative Banks and RBI till December 30, 2016 and even beyond, at specified RBI offices. As there is ample time, people need not rush to exchange putting avoidable strain on the banking branch network.

24. I am right now not in India, what should I do?

If you have Specified banknotes in India, you may authorise in writing enabling another person in India to deposit the notes into your bank account. The person so authorised has to come to the bank branch with the Specified banknotes, the authority letter given by you and a valid identity proof (Valid Identity proof is any of the following: Aadhaar Card, Driving License, Voter ID Card, Pass Port, NREGA Card, PAN Card, Identity Card Issued by Government Department, Public Sector Unit to its Staff)

25. I am an NRI and hold NRO account, can the exchange value be deposited in my account?

Yes, you can deposit the Specified banknotes to your NRO account.

26. I am a foreign tourist, I have these notes. What should I do?

You can purchase foreign exchange equivalent to ₹5000 using these Specified Bank Notes at airport exchange counters till November 24, 2016, provided you present proof of purchasing the Specified Bank Notes.

27. I have emergency needs of cash (hospitalisation, travel, life saving medicines) then what I should do?

Till the November 24, 2016 midnight, specified banknotes can be used as under:—

(a) for making payments in Government hospitals for medical treatment and pharmacies in Government hospitals for buying medicines with doctor’s prescription;

(b) at railway ticketing counters, ticket counters of Government or Public Sector Undertakings buses and airline ticketing counters at airports for purchase of tickets;

(c) for purchases at consumer cooperative stores operated under authorisation of Central or State Governments and the customers shall provide their identity proof;

(d) for purchase at milk booths operating under authorisation of the Central or State Governments;

(e) for purchase of petrol, diesel and gas at the stations operating under the authorisation of Public Sector Oil and Gas Marketing Companies;

(f) for payments at crematoria and burial grounds;

(g) at international airports, for arriving and departing passengers, who possess specified bank notes, the value of which does not exceed five thousand rupees to exchange them for notes having legal tender character;

(h) for foreign tourists to exchange foreign currency or specified bank notes, the value of which does not exceed five thousand rupees to exchange them for notes having legal tender character.

(i) for making payments in all pharmacies on production of doctor’s prescription and proof of identity;

(j) for payments on purchases LPG gas cylinders;

(k) for making payments to catering services on board, during travel by rail;

(l) for making payments for purchasing tickets for travel by suburban and metro rail services;

(m) for making payments for purchase of entry tickets for any monument maintained by the Archaeological Survey of India.

(n) for making payments towards any fees, charges, taxes or penalties, payable to the Central or State Governments including Municipal and local bodies;

(o) for making payments towards utility charges including water and electricity -which shall be restricted to individuals or households for payment of only arrears or current charges and no advance payments shall be allowed

28. Can I use the Specified banknotes to settle outstanding in my loan account?

Deposits of Specified bank Notes into all types of deposit/loan accounts is allowed subject to CTR/STR reporting.

29. What is proof of identity?

Valid Identity proof is any of the following: Aadhaar Card, Driving License, Voter ID Card, Pass Port, NREGA Card, PAN Card, Identity Card Issued by Government Department, Public Sector Unit to its Staff.

30. Where can I get more information on this scheme?

Further information is available on our website (www.rbi.org.in) and the website of the Government of India (www.finmin.nic.in)

31. What steps have been taken for queue management?

Banks have been advised to make arrangements for separate queues for Senior citizens and Divyang (disabled) persons. Similarly, separate queues should also be arranged for those who come to exchange SBN for cash and those who come to deposit into bank accounts.

The last date for submission of the annual life certificate for the government pensioners which is to be submitted in November every year has been extended upto January 15, 2017 to facilitate.

The Reserve Bank assures members of the public that enough cash in small denominations is also available at the Reserve Bank and banks. The Reserve Bank urges that public need not be anxious; need not come over to banks repeatedly to draw and hoard; Cash is available when they need it.

32. If I have a problem, whom should I approach?

You may approach the control room of RBI by email or on Telephone Nos 022 22602201/022 22602944

Withdrawal of Legal Tender Character of Specified Bank Notes – Compliance with provisions of 114B of the Income Tax Rules, 1962
RBI/2016-17/135
DCM (Plg) No.1287/10.27.00/2016-17November 16, 2016The Chairman / Managing Director/Chief Executive Officer
Public Sector Banks / Private Sector Banks/ Foreign Banks
Regional Rural Banks / Urban Co-operative Banks / State Co-operative BanksDear Sir,Withdrawal of Legal Tender Character of Specified Bank Notes –
Compliance with provisions of 114B of the Income Tax Rules, 1962Please refer to our Circular DCM (Plg) No.1226/10.27.00/2016-17 dated November 08, 2016 on the captioned subject. With a view to ensure compliance with provisions of 114B of the Income Tax Rules, 1962, the banks are advised as under:

  1. Anybody depositing more than ₹ 50,000/- in cash in their bank account has to submit a copy of the PAN card in case the bank account is not seeded with PAN
  2. In addition to the above provision, in the same IT Rules, PAN reporting requirements are there for other transactions, which banks need to insist upon.

2. The banks are, therefore, advised to take note of the above and ensure strict compliance with the provisions of 114B of the Income Tax Rules, 1962. Relevant provision 114B of the Income Tax Rules, 1962, is enclosed.Yours faithfully,(P Vijaya Kumar)
Chief General Manager
Encl: As above

Date : Nov 15, 2016
Withdrawal of Legal Tender Character of Specified Bank Notes: RBI asks Cooperative Banks to ensure Strict Compliance to its Instructions
There were reports that some cooperative banks were not strictly adhering to the instructions issued in connection with the withdrawal of legal tender status of the existing ₹ 500 and ₹ 1000 bank notes (specified bank notes). The Reserve Bank of India today informed that it has advised the Urban Cooperative Banks through its Regional Offices and the State Cooperative Banks through National Bank for Agricultural and Rural Development (NABARD) of the need to ensure strict compliance with the instructions issued with regard to exchange of specified bank notes as also deposit of such notes into the accounts of their customers.Alpana Killawala
Principal AdviserPress Release : 2016-2017/1215

RBI/2016-17/132
DPSS.CO.PD.No.1240/02.10.004/2016-2017

November 14, 2016

The Chairman and Managing Director / Chief Executive Officers
All Scheduled Commercial Banks including RRBs / Urban Co-operative Banks /
State Co-operative Banks / District Central Co-operative Banks
White Label ATM Operators

Dear Madam/ Sir,

Usage of ATMs – Waiver of customer charges

A reference is invited to the circular DPSS.CO.PD.No.316/02.10.002/2014-2015 dated August 14, 2014 on rationalisation of number of mandatory free ATM transactions for savings bank account customers for transactions done at their own bank ATMs as well as at ATMs of other banks. A reference is also drawn to Circular No.DCM (Plg) No.1226/10.27.00/2016-17 dated November 08, 2016 on the withdrawal of legal tender characteristics of existing ₹ 500/- and ₹ 1000/- Bank Notes (Specified Bank Notes – SBN) and Circular RBI/2016-17/111 DPSS.CO.PD.No./02.10.002/2016-2017 dated November 8, 2016 on, inter alia, closure of ATMs and waiver of charges on withdrawals from ATMs till December 30, 2016.

2. In this regard, it has been decided that banks shall waive levy of ATM charges for all transactions (inclusive of both financial and non-financial transactions) by savings bank customers done at their own banks’ ATMs as well as at other banks’ ATMs, irrespective of the number of transactions during the month.

3. This waiver is applicable on transactions done at ATMs from November 10, 2016 till December 30, 2016, subject to review.

4. The directive is issued under Section 10(2) read with Section 18 of Payment and Settlement Systems Act 2007, (Act 51 of 2007).

Yours faithfully

(Nanda S Dave)
Chief General Manager

RBI extends the Date for Withdrawal of Pre-2005 Series Banknotes- up to 31-12-2015


Date : Jun 25, 2015
The Reserve Bank of India has extended the date for the public to exchange their pre-2005 banknotes till December 31, 2015. It had, in December 2014, set the last date for public to exchange these notes as June 30, 2015.

Soliciting cooperation from members of public in withdrawing these banknotes from circulation, the Reserve Bank of India has urged them to deposit the old design notes in their bank accounts or exchange them at a bank branch convenient to them. The Reserve Bank has stated that the notes can be exchanged for their full value. It has also clarified that all such notes continue to remain legal tender.

Explaining the move, the Reserve Bank said that the banknotes in Mahatma Gandhi series have now been in circulation for a decade. A majority of the old banknotes have been withdrawn through bank branches. It has, therefore, decided to withdraw the remaining old design notes from circulation. Not having currency notes in multiple series in circulation at the same time is a standard international practice, the Reserve Bank has pointed out.

The Reserve Bank will continue to monitor and review the process so that the public is not inconvenienced in any manner.

Alpana Killawala
Principal Chief General Manager

Press Release : 2014-2015/2751

Team Modi has constituted a  Special Investigation Team in compliance with the judgement of Hon’ble Supreme Court


The Union Cabinet today approved constitution of Special Investigating Team (SIT) to implement the decision of the Hon’ble Supreme Court on large amounts of money stashed abroad by evading taxes or generated through unlawful activities.

The SIT will be headed by Hon’ble Mr. Justice M.B. Shah, former Judge of the Supreme Court as Chairman and Hon’ble Mr. Justice Arijit Pasayat, former Judge as Vice Chairman.

The Members of the High Level Committee will comprise:

i. Secretary, Department of Revenue

ii. Deputy Governor, Reserve Bank of India,

iii. Director (IB),

iv. Director, Enforcement

v. Director, CBI

vi. Chairman, CBDT,

vii. Director General, Narcotics Control Bureau

viii. Director General, Revenue Intelligence

ix. Director, Financial Intelligence Unit

x. Director, Research and Analysis Wing and

xi. Joint Secretary (FT&IR-1), CBDT

The SIT has been charged with the responsibility and duties of investigation, initiation of proceedings and prosecution in cases of Hasan Ali and other matters involving unaccounted money. SIT shall have jurisdiction in the cases where investigations have already commenced or are pending or awaiting to be initiated or have been completed. SIT will prepare a comprehensive action plan including creation of necessary institutional structure that could enable the country to fight the battle against unaccounted money. The SIT should report to the court the status of work from time to time.

 

CHECKS TO BE OBSERVED BEFORE INVESTING IN NBFC AND MC FROM RBI


PLEASE READ THE ARTICLE ON THE CHECKS TO BE CONDUCTED BEFORE INVESTING IN NON BANKING FINANCIAL COMPANIES AND THE MASTER CIRCULAR ISSUED BY THE RESERVE BANK OF INDIA IN THIS REGARD.

USEFUL ARTICLE FOR INVESTORS

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RBI DIRECTION ON CHEQUE RETURN CHARGES – Levy Cheque return charges only if customer is at fault


RBI/2012-13/493
DPSS.CO.CHD.No. 2030/03.06.01/2012-2013

May 7, 2013

The Chairman and Managing Director / Chief Executive Officer
All Scheduled Commercial Banks including RRBs /Local Area Banks
Urban Co-operative Banks / State Co-operative Banks /
District Central Co-operative Banks

Madam / Dear Sir,

Delay in re-presentation of technical return cheques and levy of charges for such returns

As you are aware, banks are expected to indicate the timeline for realisation of local/outstation cheques in their Cheque Collection policy(CCP) and charges for cheque returns to be levied in an upfront manner with due prior notice to the customers as enumerated in RBI circulars no. DPSS.CO. (CHD) No. 873 / 03.09.01 / 2008-09 dated November 24, 2008 and DBOD.No.Dir.BC. 56 /13.03.00/2006-2007 dated February 2, 2007 respectively.

2. However,recently, instances have been brought to our notice where banks are (i) levying cheque return charges even in cases where customers have not been at fault in the return and (ii) delaying the re-presentation of the cheques which had been returned by the paying banksunder technical reasons. Both of these issues result in unsatisfactory customer service.

3. It is, therefore, considered necessary to streamline the procedure followed by all banks in this regard. Accordingly, banks are advised to adhere to the following instructions with immediate effect:

1.    Cheque return charges shall be levied only in cases where the customer is at fault and is responsible for such returns. The illustrative,but not exhaustive, list of returns, where the customers are not at fault are indicated in the annex.

2.    Cheques that need to be re-presented without any recourse to the payee, shall be made in the immediate next presentation clearing not later than 24 hours(excluding holidays) with due notification to the customers of such re-presentation through SMS alert, email etc.

4. Banks are accordingly advised to reframe their CCPs to include the procedures indicated in paragraph 3(i) and 3(ii) above, and may note to give publicity to their revised CCPs for better customer service and dissemination of information.

5. The above instructions are issued under Section 18 of the Payment and Settlement Systems Act, 2007 (Act 51 of 2007).

6. Please acknowledge receipt and confirm compliance.

Yours faithfully,

(Vijay Chugh)
Chief General Manager


Money laundering by Multinational Banks – Allegations


A sting operation conducted by an online magazine Cobrapost across various branches of private banks has revealed how bank employees are accepting black money from customers to convert them into white money. Cobrapost Editor has insisted that leading private banks like HDFC Bank, ICICI Bank and Axis Bank are involved in this money laundering.

The Cobrapost report said its undercover correspondent approached executives of the three banks across the country over five months – in many cases as a walk-in customer – pretending to work for a fictitious politician who wanted to launder money.

Through its website alleged that HDFC Bank, ICICI Bank and Axis Bank Ltd were involved in a “nationwide money laundering racket”. Cobrapost.com said it had unraveled the fraud through undercover investigations at several branches of these banks and their insurance affiliates.

Further it claims to have caught on camera an expose that allegedly proves that some of the largest private sector banks in the country help in money laundering. According to them, HDFC Bank, ICICI Bank and Axis Bank were part of a vast money-laundering racket.

“The brazen criminal activity by these banks is channelizing vast amounts of black money into the regular banking system as laundered white money,” said CobraPost, which conducted the sting spanning several months in various bank branches throughout the country.

The sting alleges that banks and their managements systematically and deliberately violate several provisions of the Income Tax Act, FEMA, RBI regulations, KYC norms, the Banking Act and Prevention of Money laundering Act (PMLA) with utter disregard to consequences, driven by their desire to boost cheap deposits and thereby increasing their profits.

Earlier in the day, investigative website Cobrapost, which made this sensational charge, said such illegal conversions, called money laundering, are being done with the full knowledge of the senior managements of the three banks.

This is what the Cobrapost release said on the likely response from the banks to the expose,“When confronted with irrefutable evidence, the PR spin machines of the banks are likely to go into over drive and claim that ‘these cases are aberrations and isolated’, or that ‘the tapes are doctored’, or that ‘we will look into the matter and take action’.

The media report said money laundering services were being offered practically as a standard product across the country. These money laundering services were being openly offered to even walk-in customers who wish to launder their illicit money.

The Reserve Bank of India on Thursday asked ICICI Bank, HDFC Bank and Axis Bank for information on allegations that they were helping customers convert black money into white as a standard service.

RBI deputy governor said: “We have been in touch with the banks and have asked for information on the matter.” The apex bank is expected to follow this up with a formal notice soon.

Reacting to the allegations, the three banks announced their own investigations into the matter.

“ICICI Group conducts its business with the highest level of compliance to legal and regulatory requirements. All employees of the group are trained and required to adhere strictly to the group code of conduct, including anti-money laundering and know your customer norms.” the ICICI Bank spokesperson said.

“Segregation of frontline sales activities and back-office operations and post-transaction monitoring processes are in place to ensure independent checks and balances and adherence to all the laid down policies and procedures of the bank,” HDFC Bank said. “Any deviation is viewed very seriously and stringent action is taken both at an organizational and employee level.” Any deviation is viewed very seriously and stringent action is taken both at an organisational and employee level. We would like to assure our customers and other stakeholders that the bank has always adhered to the highest standards of compliance and corporate governance and will continue to do so,” it added.

Some Banks which are said to have been involved in this scam, also issued similar statements.

The Reserve Bank of India (RBI) is expected to take a closer look at the guidelines on transfer of funds and know your customers (KYC) following an exposure by cobrapost.com allegation that private banks are helping individuals convert black money into white money. The likely exercise would aim at covering any loophole that results in money laundering.

RBI may seek detail report from private banks involved on the big-ticket cash transactions. Alternatively, they could also conduct on-site inspection at a short notice to verify books of private banks.  This apart, RBI may also take a closer look at KYC guidelines for co-operative banks since the exposure by cobrapost.com alleges that it is easier to route money through co-operative banks to convert it into white money. Co-operative banks come under dual jurisdiction of state government and RBI making it difficult for RBI to effectively regulate it.

So far, the RBI has officially not issued any statement regarding the allegation made by cobrapost.com however in the past RBI has fined several banks for their failure to meet the KYC norms.