In a bid to check a parallel economy being run on junked currency, the government on Friday made holding, transfer and receiving of the demonetised note a criminal offence, punishable with a minimum fine of Rs 10,000.
This follows President Pranab Mukherjee approving promulgation of the Specified Bank Notes (Cessation of Liabilities) Ordinance, 2016, that provides for a fine of Rs 10,000 or five times the cash held, whichever is higher, on holding of more than 10 banned 1,000 and 500 rupee notes.
A top government official said the ordinance was required to prevent continuation of the old currency as a medium of trade and commerce. “We didn’t want a parallel economy to be run on the banned currency notes,” he said.
While NRIs have been given time till June 30 to deposit their old notes, any individual returning to India from abroad will have to make a declaration to customs authority at the airport about the number and denomination of the specified bank notes (SBNs) or junked currency he or she is carrying.
“The details of the declaration and statements that are required to be submitted along with the SBNs at the time of deposit in RBI Issue Offices will be separately announced by RBI. Any false declaration will invite a fine of Rs 50,000 or five times the amount of the face value of the SBN tendered, whichever is higher,” a finance ministry statement said.
The government had, while announcing demonetisation on November 8, given a 50-day window to exchange or deposit the old notes. That window ended on Friday.
But a special window will be available for NRIs and special cases like armed forces personnel to deposit their holding at specified RBI branches even beyond December 30.
The fines on holding and transfer of specified bank notes (SBNs) will kick in after March 31 when the window for exigencies ends.
The ordinance also provides for amending the Reserve Bank of India (RBI) Act, 1934 to provide legislative support for extinguishing the central bank and government’s liability on the demonetised banknotes that are not returned.
“The main objectives of the Ordinance are to provide clarity and finality to the liability of the RBI and the Government of India for the specified bank notes (of 1,000 and 500); to provide an opportunity to those persons who were unable to deposit the SBNs within the time provided; and to declare holding, transferring or receiving SBNs as illegal, with provisions for penalty for contravention of any of the provisions of the Ordinance,” it said.
Those keeping the junked notes for “study, research or numismatics” purposes would be exempt from penalty provided they hold not more than 25 number of such notes irrespective of the denomination.