Those who will hold the demonetised currency of Rs1,000 and Rs500 notes after March 31, 2017, are likely face a criminal offence, which may attract a certain amount of monetary penalty and even a jail term as the Cabinet approved promulgation of an Ordinance in this regard on Wednesday.
Sources said the Specified Bank Notes Cessation of liabilities Ordinance makes holding of old Rs1,000 and Rs500 notes after March 31 beyond a threshold amount of Rs10,000 a criminal offence that will attract a monetary fine of Rs10,000 or five times the cash held, whichever is higher. “Besides, furnishing wrong information while depositing the old currency between January 1 and March 31 will attract a fine of Rs5,000 or five times the amount,” it added.
Sources said the proposal put to the Cabinet was for a four-year jail term for anyone possessing demonetised currency above Rs10,000 after March 31, 2017, but it was
not immediately clear if it was approved thereof. “The Ordinance will have to be sent to the President, and after his assent it will come into force,” it added.
Prime Minister Narendra Modi on his November 8 speech had set December 30, 2016, as the deadline for depositing the scrapped currency in banks and post offices, following which those still holding such notes would be able to deposit them at the Reserve Bank of India (RBI) up to March 31, 2017, after an explanation as to why they failed to deposit the notes before December 30.
As far as the Ordinance is concerned, it provides for amending the RBI Act to provide legislative support for extinguishing the demonetised banknotes that are not returned. While the high-denomination currency ceased to be a legal tender from midnight of November 8, 2016, a mere notification was thought to be not enough to end the central bank’s liability and avoiding future litigations.
However, official sources said the Cabinet approved the Ordinance but details are still awaited. They did not say if the penal provisions will apply to holding the junked currency after the 50-day window to deposit them at banks ends on December 30 or after March 31, till which time deposit of old currency notes at specified branches of the Reserve Bank after submitting a declaration form is open.
The Ordinance which will have to be converted into a proper legislation by passing of a law by Parliament within six months, makes possession, transfer or receiving an amount of over Rs 10,000 in the now-demonetised Rs 500 and Rs 1,000 notes a punishable offence. A maximum of 10 banned notes may be allowed to be held by any person.
Sources said while the deadline for the deposit of old currency in bank or post office accounts expires on Friday, time till March 31 is available for doing so with RBI with stiff conditions by people who were abroad, armed forces personnel posted in remote areas or others who can give valid reasons for not being able to deposit the cancelled notes at banks.
In 1978, a similar Ordinance was issued to end the Government’s liability after high value currency notes were demonetised by the Janata Party Government under the then Prime Minister Morarji Desai. Sources, however, said the legal amendments are needed every time the Government decides to scrap any legal tender to put an end to its promissory note.
As per the RBI estimate, Rs 15.4 lakh crore worth of currency was scrapped in the demonitisation drive, but about Rs 14 lakh crore has been deposited so far in banks or exchanged.