Why Demonetization Of Rs 500 and Rs 1000 Notes And Its Impact

keep calm demonetization meme
Keep Calm Country Under ‘Modi’fication…
Very well summarized article

In presentation by Anand Rathi Securities group on the challenges and effects of demonetization, and am summarizing the points below for your benefit:1. Immediate impact: is expected to be negative all round:

a. In the short term it will be a logistical nightmare to manage the cash replacement in banks and smooth functioning of the banking system

b. slowdown in consumer spending due to limited cash availability

c. severe liquidity issues in cash based sectors like Real Estate and Jewelry

d. GDP will decline in the next 2 quarters due to reduction in overall spending

2. Over the next 4-5 months:Those having legitimate income will deposit it in banks and apart from the initial hassles associated with the banking system, they will have nothing to worry about.

However those having unaccounted money will face several problems as follows:

a. Those who choose to do nothing with the money, their notes will expire worthless. Every note is a liability of the Government (RBI), and thus notes becoming worthless will benefit the Government by extinguishing its liability.

b. Those who declare their unaccounted money, approx 60- 70% of the money will go to the Govt in the form of taxes and penalties.

c. There will be a third category who will try to launder their money, but which will entail severe risks including penalties and prosecution. However, the money sought to be laundered will anyway enter into circulation and remain therein.

It is expected that even if 50% of the around 14 lakh crores of old notes are legitimate, the remaining 50% or around Rs 7 lakh crores of unaccounted money will see around 60% to 80% thereof or approx Rs 5 lakh crores coming to the government in the form of extinguished RBI liability (point a above) and taxes and penalties. This Rs 5 lakh crores is enough to take care of India’s entire fiscal deficit for one year or more.

3. Overall Economic Impact:

a. GDP growth is expected to be negative for around 6 months. However subsequent 2 years will see sharp “hockey stick” revival in growth.

b. Inflation is expected to fall sharply with fall in Real Estate prices and transaction costs thereof.

c. Government Deficit will see a huge windfall in the next 2 years.

d. Currency is expected to strengthen as inflation drops and economy gets a boost.

e. Banking System will get a boost, as around Rs 7-8 lakh crores base money (new legal money) will enter the system, which will further create around 3-4 times more money due to re-circulation.

f. Real Estate and Jewelry sectors, though battered initially will stabilize in the next 6 months.

4. Effect on various Asset classes:

a. Bond prices will rise as interest rates drop.

b. Real Estate is expected to fall by around 20 -25 % and stabilize thereafter.

c. Effect on Gold is a bit uncertain, and may be neutral/ negative. Lower black money will depress demand, but at the same time Gold is a hedge against uncertainty and those still wanting to park black money may prefer to put it into Gold instead of cash.

d. Equity is expected to benefit the most due to three reasons. One, there will be a gradual shift from physical assets (real estate/ Gold) to financial assets. Two, the organised sector (corporate, especially listed ones) will benefit due to less cash transactions. Lastly, lower inflation and interest rates will benefit listed corporate through lower borrowing costs, thereby increasing their profitability and valuations.

Thus Asset Allocation and re balancing thereof will now play an even more important role, making proper financial planning imperative.

Lastly, the question may arise as to whether the new Rs 2000 Rupee notes will create more black money or not. While that is always a possibility, it should be noted that this demonetization would have created a psychological impact especially on large scale evaders who will definitely think twice before taking such action

black money penalty amounts
Tax Calculation for Black Money/Undeclared Money Deposited – 200% Penalty
New 2000 rs currency is not made with old currency material. Its similar to paper thickness. Within a week itself fake notes have entered the market.
The fake notes entered in market are color photocopy of 2000 currency. Since 2000 is new, many of them don’t know the features of it. Here are 3 steps to easily identify.
1. Security thread -The line which pass vertically through the currency. It appears green. On tilting the note it turns blue.
2. Front side of note, left bottom you can see a rectangle. On tilting the note and concentrating you can see 2000 in it.
3. The white portion of the currency will have watermark of Gandhi which is visible on showing to light.
On color photocopy these 3 features will not be seen.
Kindly share this information and spread awareness.
RBI in it’s latest circular RBI/2016-2017/123 DCM (Plg) No.1251/10.27.00/2016-17 has advised general public not to accept new currency note which has any text or sketch drawn on it.

This notification is as part of master circular published on 10th-Nov on withdrawal of Legal Tender of  ₹500/- and ₹1000/- Bank Notes.

In a separate press release RBI governor Mr Urjit Patel has clarified that as part of Government’s initiate to curb the use of black money, new notes of ₹ 500/- and ₹ 2000/- are printed with latest cutting edge technology which cannot be counterfeited and from Jan-2017 will be deposited and dispensed using new electronic machines across all banks in India.

These German machines are imported as part of Modi’s digital India programme and will not be able to accept notes which have any text or sketch drawn on it. Reason for the same is in foreign countries, *p*eople do not write anything on the notes and hence their software are not designed to read anything apart from what’s printed on the note.

Pls forward this information to all your friends and *r*elatives (especially aged ones) to be extra careful while *a*ccepting these new notes to ensure that they do not accept currency notes which *h*ave anything written over it. *A*s such currency notes will no longer be accepted by banks or *RBI

indian new currency
New Re 1 Note…Rs 150 Coin…Rs 100 Coin…Rs 20 Coin…
Please it’s a request in public interest.
Do not give or offer new currency notes at gurudwaras, Mandir, churches, mosque or ANY  religious places,   till March 31, 2017.
So that, any committees or trust members or political personalities could not exchange their black money with the golak money or donation money.It’s a request just to stop these personalities from converting their black money into white money.Kindly note till March 31, 2017 stop your offerings.

Please forward to all concerns.


Unique opportunity for Film and Sports Celebrities, NGOs, Social Activists,  and young citizens – They can consider helping in expressing their solidarity, mitigating inconvenience / hardship / angst of fellow citizens who will be standing in long queues outside Banks and Post Offices to exchange their OHD notes in coming weeks, by: 1) Helping distribute blank forms prescribed by RBI; 2) Helping common / uneducated people fill up these forms correctly and fully; 3) Guide people in attesting and attaching photocopies of their IDs; 4) Providing water / tea / coffee / snacks to the needy standing in queues; 5) Maintaining discipline in queues etc. – This will be their contribution to this second “freedom struggle” from corruption, terrorism and people who have not been paying direct and indirect taxes by transacting with black money, for ushering into “Surajya” for us and our future generations. 🙏🙏


minimize inconvenience for old notes

People Friendly Measures To Minimize Inconvenience

RBI Release –

1. Why is this scheme?

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 notes in denominations of ₹ 500 and ₹ 1000 stands withdrawn. In consequence thereof withdrawn old high denomination (OHD) notes cannot be used for transacting business and/or store of value for future usage. The OHD 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 or at any Head Post Office or Sub-Post Office.

3. How much value will I get?

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

4. Can I get all in cash?

No. You will get upto ₹4000 per person in cash irrespective of the size of tender and anything over and above that will be receivable by way of credit to bank account.

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

The Scheme of withdrawal of old high denomination(OHD) notes does not provide for it, given its objectives.

6. ₹4000 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.

7. 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.

8. 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.

9. 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/UCBs/State Co-op banks or at any Head Post Office or Sub-Post Office.

10. Need I go to my bank branch only?

For exchange upto 4000 in cash you may go to any bank branch with valid identity proof.

For exchange over 4000, 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.

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

Yes you can go to any branch of your bank.

12. 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 ₹4000.

13. 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.

14. 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.

15. Can I withdraw from ATM?

It may take a while for the banks to recalibrate their ATMs. Once the ATMs are functional, you can withdraw from ATMs upto a maximum of ₹2,000/- per card per day upto 18th November, 2016. The limit will be raised to ₹4000/- per day per card from 19th November 2016 onwards.

16. Can I withdraw cash against cheque?

Yes, you can withdraw cash against withdrawal slip or cheque subject to ceiling of ₹10,000/- in a day within an overall limit of ₹20,000/- in a week (including withdrawals from ATMs) for the first fortnight i.e. upto 24th November 2016.

17. Can I deposit withdrawn notes through ATMs, Cash Deposit Machine or cash Recycler?

Yes, OHD notes can be deposited in Cash Deposits machines / Cash Recyclers.

18. 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.

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

The scheme closes on 30th December 2016. The OHD banknotes can be exchanged at branches of commercial banks, Regional Rural Banks, Urban Cooperative banks, State Cooperative Banks and RBI till 30th December 2016.

For those who are unable to exchange their Old High Denomination Banknotes on or before December 30, 2016, an opportunity will be given to them to do so at specified offices of the RBI, along with necessary documentation as may be specified by the Reserve Bank of India.

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

If you have OHD 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 OHD 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)

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

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

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

You can purchase foreign exchange equivalent to ₹5000 using these OHD notes at airport exchange counters within 72 hours after the notification, provided you present proof of purchasing the OHD notes.

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

You can use the OHD notes for paying for your hospitalisation charges at government hospitals, for purchasing bus tickets at government bus stands for travel by state government or state PSU buses, train tickets at railway stations, and air tickets at airports, within 72 hours after the notification.

24. 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.

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

Further information is available at our website (www.rbi.org.in) and GoI website (www.rbi.org.in)

26. 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

how to use old notes of 500 and 1000
How To Exchange Your Old Notes…All You Need To Know…

Decision was not sudden… It merely started with bank account for all. Then linked bank accounts with aadhar… Then brought disclosure of bank account passport and aadhar no. in income tax return… Add to it the various data mining and collection tools in the hands of the income tax department… Then the income disclosure scheme… And this masterstroke… Truly a systematic change in the last 2 years!!!

Timing is also key – 8 pm announcement means no possibility to make last moment transaction at jewellers shop or any impact on share market

Guys, just look at the timing! He’s totally screwed the satta bazaar who are betting thousands of crores on the US elections results today. The results will be out by 1 am, whereas the currency notes will be worthless from 12 am tonight…: That’s okay, Be at home. Don’t worry, Eat wat u have, Travel as u can, Ask for lift if u don’t have change

Don’t worry

This is a drastic change,  It’s for good ..We can support this

Don’t complain or frustrate …it’s our chance to raise India back to what it was… Sone ki chidiya

It’s our chance to support Our leader

Indeed why only army has to support the fight

Let’s all come together and fight back Let us do for us n our coming generations, Let’s do for our country

Let’s support our PM

Drastic change does not come slowly.. it hits like a hammer and breaks all that is … 😎

Congratulations India for a legendary leader.

It can be chaos in the moment, it will be revolutionary transforming for our coming generations.

I don’t mind bearing this inconvenience now, for a better future.

Proud of my PM 😎

bank request slip for exchange of notes
Request Slip For Exchange Of Old High Denomination Bank Notes In Denominations of Rs 500/- and Rs 1000/-

Please insure to write the following points
For depositing upto 2.50 lac in New Account pls write – “Earnings in cash for FY 2016-17 deposited due to demonetization”

For Depositing Cash in Ladies Account pls write following in Pay Slip n PAN Card Photo copy – “Savings from House Hold Expenses over the years deposited due to demonetization”

For depositing in Children Account pls write – “Cash gifts received during growing up years deposited due to demonetization”

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Why Demonetization Of Rs 500 and Rs 1000 Notes And Its Impact
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