The Union Cabinet approved promulgation of Specified Bank Notes Cessation of Liabilities Ordinance to penalise persons holding banned 500 and 1,000 rupee notes.
It will come into force once it gets Presidential assent as per Article 123 of the Constitution. It will make possession of a large number of demonetised 1,000 and 500 rupee notes beyond threshold amount a penal offence.
- The ordinance amends Reserve Bank of India Act to provide legislative support for scrapping the demonetised banknotes that are not returned.
- It removes the liability of the government and the central bank on the demonetised high-denomination notes to prevent future litigations.
- It provides a limited window for depositing the cancelled notes at select RBI branches until March 31, 2017.
- The possession demonetised notes will attract a monetary fine of 10,000 rupees or five times the cash held, whichever is higher.
- The penalty for holding old high value currency in excess of 10 notes may include financial fines and no jail term.
- However, the old demonetised notes will be allowed only for the purpose of research and numismatics.
Note: In 1978, a similar ordinance was issued by then Morarji Desai-led government to end the government’s liability after Rs 1,000, Rs 5,000 and Rs 10,000 notes were demonetised.