The government has given banks, post offices and district central cooperative banks a month’s time to deposit any demonetised currency still in their possession subject to restrictions.
“Such specified bank notes may be deposited by such bank, post office or district central cooperative bank, as the case may be, in any office of the Reserve Bank, within a period of 30 days from the commencement of these rules,” said a government notification issued on Wednesday that’s in line with a pledge to the Supreme Court.
The 30-day period ends July 20. The move will bring relief to cooperative banks in particular that were stuck with old currency after the Reserve Bank of India asked them to retain the notes pending verification.
“Farmers… and people staying in remote locations” will benefit from this window, said a senior government official. “The notification for fresh window to exchange old currency is as per commitment given to the Supreme Court.”
The government announced the cancellation of old Rs 500 and Rs 1,000 notes on November 8 last year to eliminate black money, fake currency and terror funding.
Concerns over money laundering
The move was also part of the government’s efforts to move to a cashless economy. The deadline for depositing and swapping old notes for new ones was December 30, 2016.
However, RBI stopped district cooperative banks from accepting demonetised notes after November 14 fearing large-scale money laundering through accounts that possibly didn’t abide by stringent know-your-customer (KYC) norms.
While banks and post offices had to deposit all demonetised notes with the RBI by December 31, a day after the demonetisation window closed, district central cooperative banks were asked to retain the notes till further instructions.
The cooperative banks got stuck with demonetised currency of about Rs 5,000 crore. On the other hand, some banks and post offices had notes worth a few crore rupees deposited in remote branches that they could not surrender to the RBI in time.
The district cooperative banks had approached Supreme Court for relief. Many political parties including BJP ally Shiv Sena had been demanding that RBI accept these notes.
RBI will accept only those notes collected during the demonetisation window. For banks and post offices, this will be up to December 30, 2016. For district central cooperative banks, this will be between November 10 and November 14, 2016.
A valid reason for not depositing the specified bank notes within the demonetisation period has to be provided to RBI, according to the notification. As per the last official count released by RBI on December 13,banks had garnered Rs 12.44 lakh crore in demonetised notes till December 10.
A final count will be available only after RBI has verified all numbers. India’s GDP growth declined to 6.1 in the fourth quarter of 2016-17, the slowest in more than two years but the government including finance minister Arun Jaitley has dismissed suggestions that it was on account of demonetisation.