The Reserve Bank of India has extended the deadline for the exchange of pre-2005 currency notes. It has asked the holders of such currency to exchange them by January 1, 2015. The earlier deadline was June 30. Thereafter, people would have had to produce identity proof to exchange more than 10 notes of Rs 500 and Rs 1,000.
In the recently released FAQs, the RBI said: “Banks have been advised to freely provide this exchange facility to all members of public, whether customer or non-customer.”
Here is a lowdown on the pre-2005 series banknotes and what the recall means.
What are the pre-2005 series banknotes?
The RBI issued Mahatma Gandhi series (MG series) 2005 banknotes in the denomination of Rs 10, Rs 20, Rs 50, Rs 100, Rs 500 and Rs 1,000. These notes contain some additional or new security features as compared to the 1996 MG series. All banknotes issued before the 2005 MG series are called as pre-2005 series banknotes.
How can one distinguish the pre-2005 series banknotes?
Apart from the additional security features, the 2005 MG series banknotes have the year of printing on the reverse of the notes in the lower middle portion. Banknotes printed before 2005 do not have the year of printing on the reverse side and hence can be easily distinguished.
Why has RBI decided to withdraw pre-2005 series banknotes?
RBI decided to withdraw from circulation all banknotes issued prior to 2005 as they have fewer security features as compared to banknotes printed after 2005. The withdrawal exercise is in conformity with the standard international practice of not having multiple series of notes in circulation at the same time. The RBI has already been withdrawing these banknotes in a routine manner through banks. It is estimated that the volume of such banknotes (pre-2005) in circulation is not significant enough to impact the general public in a large way and the members of public may exchange the pre-2005 series banknotes at bank branches at their convenience.
Do the pre-2005 series banknotes cease to be legal tender?
The notes issued before 2005 shall continue to be legal tender. The notes are only being withdrawn from circulation and this withdrawal exercise is in conformity with the standard international practice of not having multiple series of notes in circulation at the same time.
Can the pre-2005 series banknotes be used for normal transactions?
Members of the public can continue to freely use these notes for their transactions and can unhesitatingly receive these notes in payment, as all such notes continue to remain legal tender.
Is there any time limit for exchanging these notes?
These notes can be freely exchanged at any bank branch till January 1, 2015. The procedure to be followed after January 1, 2015, shall be communicated by RBI in due course.
How is Reserve Bank of India ensuring that these notes are withdrawn from circulation?
Banks have been advised to stop re-issue of the pre-2005 series notes over the counters/through ATMs and they have been instructed to forward them to the RBI.
Is there any restriction on the number of pieces that can be exchanged?
There is no such restriction. Banks have been advised to freely exchange notes till January 1, 2015.
Is it necessary to be a customer of the bank to exchange the notes from its branches?
No. Banks have been advised to freely provide this exchange facility to all members of public, whether customer or non-customer.
Is it necessary to get cash in exchange or the amount can be credited in one’s account?
It is not necessary to get cash in exchange for the pre-2005 notes. If a person desires, he can get the amount credited in his bank account.
Is there any fee to be paid for the exchange facility?
No. The exchange facility is to be provided free of cost by all bank branches.