Preserving credibility in the system, Finance Minister Arun Jaitley on Wednesday said demonetisation of higher denomination notes — Rs500 and Rs1,000 notes — will expand the country’s Gross Domestic Product (GDP) and make the economy clean.
Besides, he assured the public by saying banks and post offices will start giving out replacement currencies or new notes from Thursday.
The Government has also ordered banks to remain open for full day this Saturday and Sunday to deal with rush of people wanting to deposit the defunct currency notes.
Referring the black money on taxation front, Jaitely said, “It should be clear that it is not an immunity scheme. The deposit in banks does not provide any relief from taxation. The law of land will apply (on source of fund). If the money is legitimate which had been previously withdrawn from bank or earned legally and saved and had been disclosed, there is nothing to worry about.”
“But if it is illegal money, source will have to be disclosed and if it is a crime money, or bribe money, then it is trouble,” he added.
The FM said housewives and farmers with genuine savings need not worry about depositing cash in their bank accounts. “The small amounts that people will deposit like Rs25,000, Rs30,000 or Rs50,000 lying in house for expenses, whatever money could be there for meeting normal family expenses they need not worry. They can go to banks,” he told a channel in the morning.
Economic Affairs Secretary Shaktikanta Das tweeted, “For public convenience, banks will remain open on coming Saturday and Sunday.”
“The decision, made by Prime Minister Narendra Modi on Tuesday late evening, will expand the GDP and make the system cleaner, increasing the revenue base. It will also push more money into the banking system,” said Jaitley while addressing the media a day after the Government scrapped higher denomination currency.
In a surprise move, the Prime Minister made it public that higher denomination of Rs500 and Rs1,000 notes will remain invalid from November 8 midnight and also announced the introduction of the new Rs500 and Rs2,000 ones with additional security features as well. All ATMs were closed on Wednesday.
Admitting some causes of inconvenience to the people due to this hard decision of the Prime Minister, Jaitley said larger benefits would accrue to the economy in the long term.
Also, the Government announced a slew of measures to avoid public inconvenience, including extension of banking hours, doing away with ATM charges and expanding credit limits.
The Reserve Bank of India (RBI) also came out with an order instructing all the banks will remain open for the public on the coming weekend, including Saturday and Sunday, while ATMs will remain closed on Thursday as well. “As an exception, till November 11 midnight, people will be able to use the withdraw currency notes for metro tickets, toll plazas, lPG gas cylinders, railway catering and ASI monuments entry,” he said, adding that these would be in addition to certain exceptions announced on Tuesday.
As far as the demonetisation of currency notes is concerned, the FM said it was part of the drive undertaken by the NDA Government to check the menace of black money in the country. It had earlier come out with two schemes to deal with the problems of black money stashed abroad and kept at home, he said.
“Entire society has welcomed the decision. India’s credibility will be preserved in the eyes of the world. The whole chain of the black economy will run into difficulty after the GST is implemented as tracking of cash flow will become easier. The move is an attempt to change the spending habit and lifestyle,” said Jaitley.
Explaining the decision as a significant advantage to the economy, he said the States too would benefit with the revenue kitty going up.
Following the Government’s abrupt decision, almost all lenders announced customer-friendly measures such as extension of banking hours, doing away with ATM charges and expanding credit limits. For, there is a speculation that a big jump in footfalls may occur in different banks and post offices to deposit or withdraw cash.
The nation’s largest lender, State Bank of India (SBI), was among the first to announce an extension in banking hours, till 6 pm on Thursday and also said each of its branches will be having a dedicated ‘exchange counter’ to change the currency notes.
ICICI Bank Managing Director and CEO Chanda Kochhar also said the bank’s branches will be open till 8 pm on Thursday and Friday. The bank also introduced a slew of relaxations on the electronic payments or withdrawals front. “All charges pertaining to cash deposit into one’s accounts will be waived till November 30 and the fees for transacting at ATMs will also be scrapped till December 31,” ICICI Bank said in a statement.
“We ensure that Rs 2,000 and the existing notes of Rs 100 notes are available at its main branches from Thursday. An expansion of up to 20 per cent in the credit limits for worthy customers using its credit cards,” ICICI Bank said.