RBI Clarifies on the pre-2005 note withdrawal announcement today:
Further to our Press Release dated January 22, 2014 on the subject and in response to the queries raised, the Reserve Bank of India (RBI) clarifies that the rationale behind its move to withdraw banknotes printed prior to 2005 is to remove these banknotes from the market because they have fewer security features compared to banknotes printed after 2005. It is standard international practice to withdraw old series notes.
The RBI has already been withdrawing these bank notes from the market in a routine manner through banks. In Reserve Bank’s view, the volume of the banknotes printed prior to 2005 today, still in circulation, is not significant enough to impact the general public in a large way.
However, it advises that the members of public may initiate the process of exchanging notes at bank branches at their convenience. Further, even July 1, 2014 onwards, members of public can exchange any number of these old series notes from the bank branches where they have their accounts.
The RBI assures that it will continue to monitor and review the process of withdrawal of old series notes so that the public is not inconvenienced in any manner.
Regardless of the above, the RBI reiterates that the notes printed prior to 2005 will continue to be legal tender.
Note carefully the four things that RBI is telling you, and what’s left unsaid:
- The problem was that older notes could be counterfeited easily. The RBI move is to address that by removing those notes. Unsaid part: This has nothing to do with black money.
- The notes printed prior to 2005, in total, aren’t significant in number. Unsaid part: They aren’t telling us the exact amount still in circulation, just saying it is “not significant enough”. (and the RBI knows, because it keeps track). Which probably means it is more significant than the statement will have you believe.
- You can change these older notes anytime. After July 1, without needing to show any ID, you can exchange them at the bank branches where you have accounts. So, don’t panic. (Unsaid part: At the branches where you don’t have an account, after July 1, you’ll have to show an ID proof and address proof).
- The pre-2005 notes are legal tender. No one can refuse those notes, especially not banks. Unsaid part: But it probably knows by now that people will not accept those notes for exchange.
If you find a pre-2005 note, don’t panic. Banks will change them. Even if it’s black money. Just make sure it isn’t fake.