A near-full validation of the old notes would deal a blow to Mr Modi's plans of getting at the country's 'black money', the local term for undeclared or untaxed money. (Image source: Pixabay) Photograph:( Others )
The Indian government has made holding of more than 10 junked Rs 500/1000 notes a penal offence punishable with a minimum Rs 10,000 fine, but the harsher four-year jail term has been dropped.
The Specified Bank Notes Cessation of Liabilities Ordinance, approved yesterday by the Cabinet headed by Prime Minister Narendra Modi, allows individuals to hold no more than 10 notes of the old currency. It allows 25 such currencies to be held by research scholars.
Top sources said the ordinance, which will be sent to the President for his assent shortly, will come into effect from December 31.
It provides for making holding of old 1,000 and 500 rupee notes after March 31 a criminal offence that will attract a fine of Rs 10,000 or five times the cash held, whichever is higher.
Furnishing wrong information while depositing the old currency between January 1 and March 31 -- a window provided only for exigencies -- will attract a fine of Rs 5,000 or five times the amount, whichever is higher.
The ordinance also provides for amending the Reserve Bank of India (RBI) Act to provide legislative support for extinguishing the demonetised banknotes that are not returned.
The 50-day window for depositing the old notes in bank accounts and post offices expires tomorrow.
While the high-denomination currency ceased to be a legal tender from midnight of November 8, 2016, a mere notification was not thought to be enough to end the central bank's liability and avoid future litigations.
Currency notes carry RBI's promise to pay the bearer the amount of the value of the note, a pledge that can be nullified only by legislation after giving due opportunity to everyone to return old notes.
Sources said the proposal for a four-year jail term for anyone possessing large number of demonetised currency after March 31, 2017 was not approved.
The ordinance, which will have to be converted into proper legislation by passing of a law in Parliament within six months, makes possession, transfer or receiving an amount of over Rs 10,000 in the now-demonetised 500 and 1,000-rupee notes a punishable offence.