11 curbs on deposits above Rs 5,000: All you should know

The RBI said these restrictive conditions would apply on cumulative deposit of notes in a single account if it exceeded Rs 5,000

The government and the Reserve Bank of India (RBI) on Monday imposed strict deposits curbs 11 days before the deadline to deposit scrapped Rs 500 and Rs 1,000 notes in bank accounts.

In separate notifications, the finance ministry and RBI said over Rs 5,000 worth of scrapped notes could be deposited in bank accounts only once, after the depositor had been questioned in the presence of at least two bank executives on why he or she could not deposit the amount earlier. The finance ministry’s notification came on Saturday but was released on Monday. RBI’s statement was also released on Monday.

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Demonetisation Saga

Nov 8:  Demonetisation announced. Rs 500 and Rs 1,000 notes become null with immediate effect. Deposits of old notes for over-the-counter exchange capped at Rs 4,000. Deposits in accounts with incomplete KYC norms capped at Rs 50,000.

Nov 14:  Exchange limit increased to Rs 4,500 from Rs 4,000

Nov 15:  Indelible ink to be used on people exchanging notes to weed out proxies

Nov 18:  Exchange limit reduced to Rs 2,000

Nov 24:  Exchange of old notes banned, foreigners exempted

Dec 19:  Deposit of old notes exceeding Rs 5,000 limited to only once per account till Dec 30, that too after scrutiny

 

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What will RBI do with scrapped currency notes?

With about Rs 8.45 lakh crore worth of scrapped notes of Rs 500 and Rs 1,000 bank notes deposited in bank accounts across India over 20 days from Prime Minister Narendra Modi’s demonetisation announcement on November 8, banks are plush with cash and depositing it with the Reserve Bank of India (RBI). And RBI has been supplying banks newly printed Rs 500 and Rs 2,000 notes, besides other valid currency notes, to meet the demand of people queueing up at banks and ATMs for cash.

Related Story: Petrol pumps, airlines will accept banned Rs 500 notes only till Dec 2

But, what will RBI now do with the humongous stock of scrapped currency notes? It has already chalked out a plan. Even as sorting, verification and shredding of banned notes are underway at multiple centres of the central bank, a Kerala-based plywood company has received the contract to pulp these notes. The company has already accepted tonnes of currency notes over the past three weeks.

An Economic Times report quoted P K Mayan Mohamed, managing director of Western India Plywood (WIPL) as saying that the plywood company had received “over 140 tonnes of Rs 500 and Rs 1,000 notes for pulping over the past three weeks”.

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