Government notifies Specified Bank Notes (Cessation of Liabilities) Act, 2017

The Union Government has notified the Specified Bank Notes (Cessation of Liabilities) Act, 2017 to prohibit the holding, transferring or receiving of scrapped old Rs.500 and Rs. 1000 currency notes from 31 December, 2016,
This law makes possession of more than a certain number of the old Rs. 500 and Rs. 1,000 notes a criminal offence.

Key Features of Act

• It ends the liability of the Reserve Bank of India (RBI) and the government on the demonetised Rs.500 and Rs. 1000 currency notes.
• It prohibits the holding, transferring or receiving of demonitised notes from 31 December, 2016 and confers power on the court of a first class magistrate to impose the penalty.
• Possessing more than 10 pieces of old notes by individuals and more than 25 pieces for study, research or numismatics purposes will attract a fine of Rs. 10,000 or five times the value of cash held, whichever is higher.
• Fine of a minimum of Rs, 50,000 will be imposed for a false declaration by persons for being abroad during the demonetisation period (9 November-30 December, 2016).

Background

The Union Government had demonetised old Rs.500 and Rs. 1,000 notes from November 2016 on the recommendations of the RBI’s central board to eliminate unaccounted money and fake currency notes from the financial system. As a follow up, The Specified Bank Notes (Cessation of Liabilities) Act, 2017 was passed by Parliament in February 2017 and received assent of President Pranab Mukherjee on 27 February 2017. The law aims to eliminating the possibility of running a parallel economy using demonetised currency notes.  The demonetisation had abruptly sucked out 86% of the currency in circulation in the form of Rs.500 and Rs. 1,000 out of the system.

Month: Current Affairs - March, 2017