With the announcement of PM (Narendra Modi) regarding Demonetisation of Rs 500 and Rs 1000 notes, nation acted to this decision so positively all over the social media platforms. It has been announced that the Rs 500 and Rs 1000 notes will no longer be valid and cease to be illegal from Nov 8, 2016. There are a lot of confusion and doubts among the people; it is important for us to understand the implications of this move. So we have decided to write a detailed guide on the decision of banning of Rs.500 & Rs.1000 rupee notes.
Summary of the important announcement:
- November 8, 2016, midnight, PM Narendra Modi addressed the nation concerning the discontinuation of Two Largest Currency Notes.
- Government clinics and pharmacy stores will acknowledge Rs. 500 and Rs. 1000 notes for 72 hours from November 8 midnight.
- Modi also notified that there would be no changes in some other type of money transactions be it to check, DD, payment using CC or platinum cards and so on.
- People who possess demonetized the notes can deposit them to their bank or post office accounts till 30 December 2016.
- A series of new notes Rs.500 and Rs.2000 will be brought into circulation from Feb 2017.
- Rs 10K daily cash withdrawal and Rs 20K weekly cash withdrawal limit.
- People can also get support from RBI in Mumbai – 022 22602201, 22602944.
- RBI revealed notes of new Rs. 500 and Rs. 2000.
What is demonetization? read here
So these are the outlines on official announcement addressed yesterday. If you are looking for additional answers, please read on.
What are the Benefits of banning of 500/1000 rupee notes?
- Discontinuation of higher currency denominations will immediately stop a lot of national problems such as Black Money, Corruption, Fake currency and Terrorism once and for all.
- It is easy for the government to track the money exchanged by the people as they need to show any Valid ID card to exchange their old currency notes.
- This announcement will end the era of fake money as these are common denominations that are stashed illegally.
- This will also help in the fair election, as we all know the black money is used by the political parties for distribution. So we can expect that this decision will stop black money distribution as no one will have those currency notes.
- Housing and real estate prices have witness downward pressure.
- People will adapt to save money in banks, and hence every person will have to file the tax returns; it is reported that only 1% of Indian population files their income tax. So it will result from Income to the Government from taxes such as Income Tax, Service Tax, and Sales Tax.
- It will encourage people to migrate to cashless transactions and thus every rural person will have a bank account.
- Property rates may be reduced drastically.
- Gold traders may face the biggest impact on their most significant as more liquid cash is used to purchase gold without any ID or legal documents. So this will end the illegal gold trade.
- Hard to do exchanges as banks acknowledge business of Rs. 4000 every day till Nov 24, 2016, and every person shall need to produce the valid ID card such as Aadhaar card, PAN or Election ID card.
What are the Disadvantages of banning of 500/1000 rupee notes?
- Inconvenience to ordinary people as most of the middle class and poor people tend to retain their money at their home for buying daily household items. Due to this decision, they need to hurry to the bank branches for the exchange of money.
- This will also lead to massive Inflation but not immediate.
- Initially, the GDP of India would see a decline, but this is going to be temporary.
- Lots of millionaires who has stacked millions of cash may become cashless.
- Inconvenience to the people who are living in rural areas where there are no bank branches, hence they need to come to the urban areas for exchange.
What to Do With 500 and 1,000 Rupee Notes?
People can exchange these notes at commercial banks, State Co-op banks or any Head Post Office or Sub-Post Office. The old notes can be deposited in Cash deposit machines after November 9. Although the scheme closes on 30 December 2016, you shall need to exchange your old notes as soon as possible. It is also reported that there will be no change for the cashless transactions such as NEFT, IMPS, RTGS or using any online money wallets.
What is the limit for exchange tender of 500 & 1000 rupees?
It is reported that only Rs.4000 can be exchanged at nay banks or post offices till 24 November 2016 by producing a valid govt ID card. Nevertheless, for 72 hours, Hospitals, railroad, air and government transport ticket booking counters will keep on accepting the old notes. Old records will likewise be acknowledged till November 11 at petrol, diesel and corner stores approved by open area oil organizations, shopper co-agent stores approved by State or Central government, drain stalls supported by States and also crematoriums.
How will the ban on Rs.500 and Rs.1000 Impact Indian economy?
It without a doubt is a surgical strike on the general population who have unaccounted black cash. But this decision will also have a significant impact on Indian economy.
The call to demonetize Rs. 1000 and Rs. 500 notes have been made before inside India too by financial analysts, think-tanks, and even lawmakers. There are insights accessible to demonstrate that the higher group monetary forms additionally extended substantially throughout the years. Between 2011 to 2016 Circulation of all money notes from the lower section to higher category developed by around 40%. Be that as it may, the flow of 500 bills has been expanded by 76 %, and 1000 Bills have been grown by 109%. How regularly amid this period estimation of the economy has extended by 30% as it were. So clearly there is exceptionally lopsided utilization of high category money.
What will be the effect of the Ban of the 1000rs and 500rs notes on the stock market?
Multiple experts have reported that this decision will have a massive impact on the stock exchange.
Short term impact:
Presently, in the near term, an adjustment in the total request is driven by a change in the cash supply in the economy. Bring down the money supply; lesser is the capacity for the general population/government/firms to devour or to contribute.
Given the declaration by Prime Minister Modi today, 85% of what is in blue above ought to in a perfect world either transform into white i.e. hard money in categories of 1000 and 500 should turn into request stores with the Bank. That is if everybody turns in their hard earned money.
Long Term Impact:
Government use: Owing to the large stash of black money/untaxed cash, there will be an expansion out in the open income created by the legislature. This extra income can then be utilized for the clear advantage.
Couple with alternative activities, for example, Make in India, Digital India and so on – the move is probably going to enhance the picture of India as a business goal. The firm and final stand were taken by the Government might increase conclusion and may request encourage venture.
Utilization Expenditure: Given the above two, it is likely that business would increment and open welfare would happen. In this way, the capacity to devour will likewise increment moving customer request upwards.
Twitterati reacted to PM Narendra Modi’s Decision on Black Money:
100 सोनार की, 1 लोहार की।
— Ajay Devgn (@ajaydevgn) November 8, 2016
— Sidharth Malhotra (@S1dharthM) November 8, 2016
New currency notes to bring better futures for our nation. Great great decision and right policy @narendramodi
— Mary Kom (@MangteC) November 8, 2016
— Riteish Deshmukh (@Riteishd) November 8, 2016
This is truly a masterstroke move!!!! @narendramodi hits it out of the stadium!!!! 🇮🇳
— Karan Johar (@karanjohar) November 8, 2016
So these were the most common questions asked regarding the demonization of two currency notes. If you are looking for further information on this subject, you may log on to http://www.rbi.org.in/ or GOI website. Additionally, you can also approach control room of RBI by these phone numbers call 022 22602201 / 022 22602944.