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Demonetization
- 2. h4ps://www.youtube.com/watch?v=rn64Vf6GEoo Addressing the country, Prime Minister Narendra Modi said: "We need to take a new solid step to fight black money. From now on, Rs 500 and Rs 1000 notes will not be used. Have 50 days to turn them into banks and post offices."
- 3. Meaning • Demone&za&on is the act of stripping a currency unit of its status as legal tender. Demone&za&on is necessary whenever there is a change of na&onal currency. The old unit of currency must be re&red and replaced with a new currency unit. • A recent example of demone&za&on occurred when the na&ons of the European Monetary Union adopted the euro. In order to switch to the euro, authori&es first fixed exchange rates for the varied na&onal currencies into euros. When the € was introduced, the old na&onal currencies were demone&zed. However, the old currencies remained conver&ble into euros for a while so that a smooth transi&on through demone&za&on would be assured. • The case of break-up of USSR and end of ruble zone is an alterna&ve case of demone&za&on. in 1993, the Central Bank of Russia (CBR) unilaterally demone&zed soviet era ruble notes and exchanged them for Russian rubles. The ruble zone was effec&vely terminated and the remaining 9 ruble zone countries (some countries had le_ even earlier) were forced to adopt their own currencies. Ul&mately, the ruble zone broke up because Russia (or more precisely CBR) was not prepared to pay the economic price required for its con&nua&on. • Even a_er winning the war of independence, Bangladesh retained the old currency for several months. The statute seang up the Bank of Bangladesh stated that “all Bank Notes, Coins and Currency Notes … which were in circula&on in Bangladesh [on December 16, 1971] shall con&nue to be legal tender”. Subsequently, Bangladesh printed new currency and exchanged the old notes. • The context and coverage of Indian Demone&za&on 2016 is different.
- 4. Urjit Patel, 24th RBI Governor : Very Bold Step Notes of Rs 500 and Rs 1000 “will not be legal tender from midnight tonight” and these will be “just worthless piece of paper.” 38 years ago, Jan 16,1978, right after emergency was lifted from India, Janta Party government led Prime Minister Morarji Desai, had decided to demonetise Rs 1,000, Rs 5,000 and Rs 10,000 notes in a bid to combat corruption and black money. Did not support demone&za&on then
- 8. RK Laxman's Cartoon when demonetization was tried back in 1978 The cartoon is made in the context of 1978, when the largest denominations formed a very little part of the overall economy, we can never really be sure of the moves taken by the government.
- 12. Factors Leading Genera&on of Black Money • Black money arising from illegal ac&vi&es such as crime and corrup&on has an underlying an&social element. The ‘criminal’ component of black money may include proceeds from a range of ac&vi&es including racketeering, trafficking in counterfeit and contraband goods, smuggling, produc&on and trade of narco&cs, forgery, illegal mining, illegal felling of forests, illicit liquor trade, robbery, kidnapping, human trafficking, sexual exploita&on and pros&tu&on, chea&ng and financial fraud, embezzlement, drug money, bank frauds, and illegal trade in arms. Some of these offences are included in the schedule of the Preven&on of Money Laundering Act 2002. • The ‘corrupt’ component of such money could stem from bribery and the_ by those holding public office – such as by grant of business, leakages from government social spending programmes, speed money to circumvent or fast-track procedures, black marke&ng of price-controlled services, and altering land use regularizing unauthorized construc&on. All these ac&vi&es are illegal per se and a result of human greed combined with declining societal values and inability of the state to prevent them. • Factors leading to their genera&on are both social and administra&ve. • These illegal ac&vi&es are punishable under various Acts of the central and state governments which are administered by various law enforcement agencies. Effec&ve implementa&on of these Acts is the responsibility of both state and central governments.
- 13. Black money generated from permissible economic ac&vi&es • Significant amount of black money, however, is generated through legally permissible economic ac&vi&es, which are not accounted for and disclosed or reported to the public authori&es as per the law or regula&ons, thereby conver&ng such income into black money. The failure to report or disclose such ac&vi&es or income may be with the objec&ve of evading taxes or avoiding the cost of compliance related to such repor&ng or disclosure. It may also be the result of non- compliance with some other law.
- 14. Culture and social prac&ces • Culture and social prac&ces may also play a vital role in deciding the preferences of ci&zens between tax compliance and black money genera&on. • In a society where tax evasion and under-repor&ng of ac&vi&es and income is perceived to be very common or the norm, such ac&vi&es may be considered acceptable and honest tax compliance and paying one’s due share to the public fund may not be considered a virtue. • Studies indicate that countries with rela&vely poor implementa&on of regula&ons tend to have a higher share of unaccounted economy, whereas countries with properly implemented regula&ons and sound deterrence have smaller ‘black’ economies.
- 16. Processes followed to generate black money from permissible economic ac&vi&es - Manipula&on of accounts : Financial Statement Approach - Land and Real Estate Transac&ons - Bullion and Jewelry Transac&ons - Financial Market Transac&ons - Public procurement - Non-profit sector An OECD (Organisa&on for Economic Coopera&on and Development) es&mate puts the figure for public procurement in India at 30 per cent of the GDP whereas a WTO (World Trade Organisa&on) es&mate puts this figure at 20 per cent of the GDP.2 The Compe&&on Commission of India had es&mated in a paper that the annual public sector procurement in India would be of the order of Rs. 8 lakh crore while a rough es&ma&on of direct government procurement is between Rs. 2.5 and 3 lakh crore. This puts the total public procurement figure for India at around Rs. 10 to 11 lakh crore per year.
- 17. Informal Sector and Cash Economy • The issue of black money is related to the magnitude of cash transac&ons in the informal economy. The demand for currency is determined by a number of factors such as income, price levels, and opportunity cost of holding currency. • Factors like dependence on agriculture, existence of a large informal sector, and insufficient banking infrastructure with large un-banked and under-banked areas contribute to the large cash economy in India.
- 18. External trade and Transfer Pricing • More than 60 per cent4 of global trade is carried out between associated enterprises of mul&na&onal enterprises (MNEs). Since alloca&on of costs and overheads and fixing of price of product/services are highly subjec&ve, MNEs enjoy considerable discre&on in alloca&ng costs and prices to par&cular products/services and geographical jurisdic&ons. Such discre&on enables them to transfer profit/income to no tax or low tax jurisdic&ons. • Transfer pricing has emerged as the biggest tool for genera&on and transfer of black money. • Tax evasion through transfer pricing is largely invisible to the public and difficult and expensive for tax officers to detect. Chris&anaid es&mates that developing countries may be losing over US$160billion of tax revenues a year, primarily through transfer pricing strategies. Chris&anaid, Death and Taxes: The Truth of Tax Dodging, March 2009
- 19. Tax Heavens
- 21. Methodology of es&ma&ons of Black Money Two dis&nct approaches: (i) Kaldor’s approach of quan&fying non-salary incomes above the exemp&on limit of income tax; and [ This was followed by the Wanchoo Commi4ee , 1971] (ii) The Edgar L. Feige method of working out transac&on income on the basis of currency-deposit ra&o and deriving from it the ‘black’ income of the economy. Also refer to variables used by O.P.Chopra (1973-74), S Acharya of NIPFP (1985), Gupta & Gupta (1981), D.K.Rangnekar (1982), M.C.Joshi (2011).
- 22. Ins&tu&ons to Deal with Black Money • Central Board of Direct Taxes • Enforcement Directorate • Financial Intelligence Unit • Central Board of Excise and Customs and DRI - The Directorate General of Central Excise Intelligence (DGCEI) - The Directorate of Revenue Intelligence (DRI) • Central Economic Intelligence Bureau • NCB • The Central Bureau of Narco&cs (CBN) • SFIO func&ons under the Ministry of Corporate Affairs • The Registrar of Companies (ROC) • The Registrar of Socie&es (ROS) • The Bureau of Immigra&on (BOI) • The Economic Intelligence Council (EIC) • The Inter-Ministerial Coordina&on Commi4ee on Comba&ng Financing of Terrorism and Preven&on of Money Laundering (IMCC) • The Na&onal Crime Records Bureau (NCRB) • The Na&onal Inves&ga&on Agency (NIA) • CBI and Police Authori&es
- 25. XE Currency Converter: USD to INR 1 USD =68.1800INR Live mid-market rate 2016-11-20 15:27 UTC US$ Billion Current Exchange rate INR Billion % Currency in Circula&on to GDP GDP 2073.54 68.18 141373.96 Size of shadow economy (30%) 42412.19 Currency in Circula&on 16400.00 11.60% Shadow economy in currency (11.6%) 4920.00
- 26. Reference : New Es&mates for the Shadow Economies all over the World Friedrich Schneider, Andreas Buehn, and Claudio E. Montenegro This is a background paper for In from the Shadow: Integra1ng Europe’s Informal Labor, a World Bank regional report on the informal sector in Central, Southern Europe and the Bal&c countries (Task number P112988).
- 27. RBI Working Paper Series 3 / 2013 : Es9ma9on of Counterfeit Currency Notes in India – Alterna9ve Methodologies , March 19,2013 by Shri Sanjoy Bose and Dr. Abhiman Das Counterfei&ng poses increasing challenges to currencies all over the world, including India. Recent advances in prin&ng technology have only aided produc&on of counterfeit notes. Despite the extent of counterfei&ng being apparently small in India, it poses serious threats to the currency and financial system. The Government and the Reserve Bank have responded to this threat by redesigning notes as also by a4emp&ng to improve public understanding about authen&city of currency through awareness campaigns. To assess the effec&veness of various measures to deter counterfei&ng, however, one needs to understand the exact nature of the threat that counterfei&ng poses on economic ac&vity. It is necessary to examine the level of counterfei&ng on a regular basis. Such examina&on is cri&cal both from theore&cal and empirical points of view. The extent of counterfei&ng is usually judged by observing the current flow of recoveries, or by es&ma&ng the outstanding stock of counterfeits as a ra&o against total notes in circula&on. However, the flow of recovery as well as seizure of counterfeits is directly observable, whereas the total stock of counterfeits cannot be measured directly. To fill this lacuna, the paper has proposed a probability model based methodology that could poten&ally provide a scien&fic and prac&cal solu&on in obtaining credible sta&s&cal es&mates of counterfeits in an enduring way.
- 31. NIC Mar-16 Counterfeit notes RS Million Pieces Per million No.in pieces Amount in Rs. cr. 500 15710 16.4 257644 12.88 1000 6330 16.4 103812 5.19 18.07 Only 1/3 rd Fake currency is detected X3 54.21 Based NIC ( 500 &100) in March 2016
- 32. A study on Fake Indian Currency Note (FICN) issues, including es&ma&on of FICN in circula&on, was conducted by Indian Sta&s&cal Ins&tute (ISI), Kolkata under the overall supervision of NIA (Na&onal Inves&ga&on Agency). As per the study, the face value of FICN in circula&on was found to be about Rs 400 crore [Minister of state for finance Arjun Ram Meghwal said in a wri4en reply to a Rajya Sabha ques&on on 2.8.2016]
- 34. RBI said no to demone9za9on during UPA-II KC Chakrabarty, former DG of RBI spills the beans: In an interview, he says RBI was asked earlier as well. The proposal did not even move to the Board level ! • You were the deputy governor of RBI when the UPA-II government was at the centre. Was there any such proposal from the government during your tenure? • Yes, it had come from the UPA government. A_er examining the proposal, we had said that this should not be done. The proposal never went to the board level. • Was it a formal proposal? What was the reason for declining it? • Whether it came officially or over telephone, is not the issue. But I definitely remember it had come. We said ‘no’ because it does not serve any purpose… the cost is high and the benefit is less. • It has already impacted the banking system. For the next couple of months, banks will only concentrate on exchange of notes, no business can happen.
- 38. The presses supplied around 6 billion pieces of Rs 500 and Rs 1000 in 2014-15 and 5 billion pieces in 2015-16. In 2016-17, the original indent for Rs 500 and Rs 1000 notes was around 8 billion. If the en&re prin&ng capacity is pressed into ac&on, then it might be possible to produce around 23 billion pieces a year (inclusive of all denomina&ons). But with Rs 500 and Rs 1000 alone accoun&ng for 22 billion notes in circula&on, it might not be possible to meet the demand for new Rs 500 and Rs 2000 in the short term.
- 39. Historical perspec&ve • 1978 demone&za&on • Demone&za&on in Philippines • Buharinomics in Nigeria (1982) • Demone&za&on in Ghana ( 1979&1981) • Soviet Monetary Reform (1991)
- 40. A Look Back to 1978 When Currency Notes Were Last Scrapped • It was on 16 January 1978 that the country was told that the Janata Party coali&on, which had assumed office a year earlier, has decided to scrap Rs 1,000, Rs 5,000 and Rs 10,000 notes. • The quantum of Rs. 1000, 5000 and 10,000 notes in the total economy which was in circula&on was only 10 % in 1978. The Scheme was not successful. • It was in the early 1970s that the Wanchoo commi4ee made recommenda&ons about withdrawing the bank notes while talking about the menace of black money in the country. • However, these recommenda&ons could not be publicised for the fear of it being counterproduc&ve – black money operators could get rid of high-value notes.
- 41. • In his ar&cle for India Today, Jay Dubashi wrote that the move was directed at freezing the secret funds of poli&cians, especially Indira Gandhi’s Congress. Morarji Desai, the then Prime Minister said that the party had been spending money “like water”. Gandhi had reportedly denied allega&ons saying that “even a ten-rupee note is a luxury to me”. • What’s interes&ng to note, however, is that IG Patel, the then RBI governor, was not in favour of the step. He felt that many in the government perceived the step as a measure targeted at the “corrupt predecessor government or government leaders”. • In his book, Glimpses of Indian Economic Policy: an Insider’s View, Patel writes that when the then finance minister HM Patel told him about the step, he asserted that steps like these rarely have striking results. • He added that most people in possession of black money rarely keep their ill- go4en earnings in the form of currency for long. Thinking that black money is stashed away under ma4resses or suitcases is naive A Look Back to 1978 When Currency Notes Were Last Scrapped
- 42. • Dubashi in his ar&cle also wrote : Black money stashed as high- value currency is much less than black money as untaxed income, part of which might be splurged in conspicuous consump&on or used for investment in real estate, commodi&es, stocks, benami lending or plain gra_ to secure poli&cal or administra&ve goodwill. • 1978 demone&za&on scheme was not successful primarily because of two reasons: - insufficient secrecy - Most of the holders of high denomina&on notes did not turn up at the bank to exchange their notes. Instead, they sold them to others (mainly to the poor labourers) who could present them at the bank with less suspicion. A Look Back to 1978 When Currency Notes Were Last Scrapped
- 44. Demone&za&on in Philippines • The Bangko Sentral ng Pilipinas (BSP) has been reminding consumers that their old peso bills, which were issued before 2010, can only be used un&l December 31, 2015 for daily transac&ons. • This is because from January to December 2016, the old notes cannot be used for regular transac&ons and can only be exchanged at authorized banks and BSP offices. From January 2017 onwards, these old bills will be demone&zed, or will no longer have monetary value. • BSP defines demone&za&on as the process of removing the monetary value of a legal tender currency. This means that demone&zed currency is no longer accepted to pay for goods and services. • This process is done to safeguard the integrity of the currency, protec&ng it against counterfeiters.
- 45. Nigeria During the government of Muhammadu Buhari in 1984, Nigeria introduced new currency and banned the old notes. It was great success. See Slides 27-28 how Buharinomics salavaged Nigerian economy. Ghana In 1982, Ghana demone&zed 50 cedis note to tackle tax evasion and empty excess liquidity. This made the people of the country support the black market and they started inves&ng in physical assets which obviously made the economy weak. See Slides 29-30 how the case of demone&za&on in Ghana was different. USSR Mikhail Gorbachev ordered to withdrew large-ruble bills from circula&on to take over the black market. The move didn’t go well with the ci&zens which resulted into a coup a4empt which brought down his authority and the led to Soviet breakup. See Slide 31 Demone&za&on in other Countries
- 46. Buharinomics - General Buhari’s economic program marshaled out to salvage the nation in 1984 Buharinomics was General Buhari’s economic program marshaled out to salvage the nation in 1984. He summarized the objective of his economic policy (as articulated in the 1984 budget) as follows: "To arrest the decline in the economy, to put the economy on a proper course of recovery and solvency, and to chart a future course for economic stability and prosperity" (West Africa, May 14, 1984). Buharinomics was to wean the nation off consumerism and profligacy, while channeling it towards frugality and productivity. To accomplish this, the government was to cut down on its expenditure, engage in more efficient restricting and controlling of foreign exchange outflow, undertake the revival of the country's productive capacity (concentration was on agriculture), and broaden government's revenue base.
- 47. Buharinomics - General Buhari’s economic program marshaled out to salvage the nation in 1984 • The first test of Buharinomics was implemented to revive the comatose banking industry and arrest local currency hoarding. In April 1984, the government ordered a change in the color of the Naira. This action was dubbed the “real coup” by unscrupulous business men and politicians who had almost eliminated the need for commercial banking in Nigeria by keeping their moneys under their mattresses or by trafficking them into neighboring West African countries. • This currency change, which forced all holders of the naira notes into exchanging them for the new naira notes at commercial banks, infused billions that had remained unaccounted for into the banking industry and eliminated counterfeited currencies, which had inflicted inflationary and other nefarious effects on the economy. This measure had an immediate revitalizing effect in the banking industry and was an unqualified success. Banks that were close to collapsing became vibrant again, to the extent that some of them began to hire hitherto unemployed Nigerians.
- 50. On January 22, 1991, Gorbachev signed a decree elimina&ng all 50-rouble and 100-rouble banknotes issued since 1961 and restric&ng bank withdrawals from private accounts. Under the presiden&al decree, the Soviet financial system stopped accep&ng banknotes issued since 1961 and started exchanging them for other currency denomina&ons, as well as 50- rouble and 100-rouble banknotes issued in early 1991. Beginning on January 23, 1991, the government restricted monthly bank deposit withdrawals to 500 rubles. The government said this measure would freeze unearned incomes, the assets of speculators, corrupt officials, illegal businesses, and counterfeit money, and this would result in a condensed money supply and a halt on infla&on. The confiscatory monetary reform was conceived by Soviet Minister of Finance Valen&n Pavlov. In the summer of 1990, Pavlov sent a secret note to Gorbachev and Nikolai Ryzhkov, chairman of the USSR Council of Ministers, arguing in favor of exchanging 50-rouble and 100-rouble banknotes due to be issued in 1991. He wrote that a significant amount of large-denomina&on Soviet banknotes had been accumulated abroad and by illegal businesses. The final Soviet monetary reform began on January 22, 1991. It was named the Pavlov Reform after its architect, Minister of Finance Valentin Pavlov, who also became the last prime minister of the Soviet Union.
- 51. The final Soviet monetary reform began on January 22, 1991. It was named the Pavlov Reform after its architect, Minister of Finance Valentin Pavlov, who also became the last prime minister of the Soviet Union. The standard of living in the country plummeted. By the end of 1991, the economy of the USSR was in a disastrous state. Production continued to slump. The average national income dwindled by 20% compared with 1990. The state budget deficit, namely, the excess of expenditures over revenues, reached an estimated 20-30% of the GDP. The nationwide growth of the money supply was fraught with the loss of control over the financial system and hyperinflation exceeding 50% each month, which had the potential to paralyze the entire economy. The main consequence of the reform was the people’s loss of confidence in the government’s actions. Many politicians and historians think that the 1991 Soviet political and financial reforms completely undermined the people’s trust in the Kremlin and seriously influenced subsequent developments, including the August Coup of 1991 and the Belavezha Accords of December 1991 on dissolving the USSR.
- 53. Date Close Shares Traded Turnover (Rs. Cr) 8-Nov-16 8543.55 201759648 8515.57 9-Nov-16 8432 323968654 15536.37 10-Nov-16 8525.75 271196930 12386.39 11-Nov-16 8296.3 275221694 12485.11 15-Nov-16 8108.45 370298063 17387.22 16-Nov-16 8111.6 277801233 13705.03 17-Nov-16 8079.95 197183084 8713.06 18-Nov-16 8074.1 166199545 7901.64 21-Nov-16 7929.1 225608889 9199.11 7.19% 7600 7700 7800 7900 8000 8100 8200 8300 8400 8500 8600 1 2 3 4 5 6 7 8 9 Dates Ni_y 50 : 8 Nov-21 Nov 2016
- 54. Demonetization a bold move, but could hurt markets for 6 months: Christopher Wood CLSA MD Christopher Wood on Narendra Modi’s demonetization move against black money and impact on markets “I think it is going to impact the economy in the next six months. But I am hoping it is short and sharp. The biggest negative is for the real estate market. It is negative for equities in the short term and positive for bonds. The question is how long will the pain remain (for equity markets)—six months or one year? I am hoping it’s six months, but that’s just an initial estimate. It all depends on how quickly they get the new money in place. If the new money comes in soon, things will not be so bad. If it goes beyond six months, the markets will be vulnerable. The real estate sector was already doing badly, that’s hit, but then it was already lying on the ground. Autos, cement and housing finance were doing well, and are now going to be hit. On the positive side, tax revenues will rise and this will help in reining in the fiscal deficit. The other benefit will be to the bond market and currency. The currency has been very stable and this will be a positive for it.”
- 56. Impact of Demonetization on Residential Real Estate The luxury and high-end segments of residential real estate will also see a major impact from this exercise, since it is another area which has seen a lot of payments done in cash. The legal banking/financing channels have accounted for only a small part of all transactions in this space. The demonetization move is likely to result in luxury property prices dipping by as much as 25-30% as sellers struggle to offload properties to generate liquidity. This means that luxury home buyers will suddenly have a much wider bandwidth of options to choose from. Ashwinder Raj Singh, CEO – Residential Services, JLL India
- 57. The Nega&ves • Extracts of “Black Money” and India’s Demone9za9on Project Prominent Ci9zens Ques9on Delhi Government's Inten9ons By Prof Prabhat Patnaik • Black money is generated through evasion of taxes on income from lawful ac&vi&es and money generated from illegal ac&vi&es. In the absence of steps to curb the genera&on of black money, demone&za&on is a fu&le exercise, as it proved to be in 1978. • In the last 5 years, IT raids have found that only 5-6% of black money is kept in hard cash. Moreover, those who have amassed sizable black money are equipped to find ways around demone&za&on by conver&ng their exis&ng cash to bullion, gold jewellery, real estate and foreign currencies through brokers and middle-men. In fact, organized middle-men and touts have already emerged to convert black money into white for a commission. • As per The Indian Sta&s&cal Ins&tute, Kolkata study done on behalf of the Na&onal Inves&ga&on Agency (NIA), Rs 400 crores worth of fake currency is in circula&on in the Indian economy. This is only .028% of Rs 14,180 billion worth currency demone&sed in Rs 500 and Rs 1000 notes. • 86% of currency in circula&on is in Rs 500 and Rs 1000 notes. 97% of all transac&ons by volume are done in cash. Summary demone&za&on has created chaos all over the countr • Only about 30% of the Indian popula&on has access to the banking system as per data compiled by the banking division of the finance ministry. Moreover, the distribu&on of banks is highly skewed with a third of all bank branches in only 60 Tier 1 and Tier 2 ci&es/towns. Consequently, people in rural India who o_en also suffer from inadequate informa&on have become the worst vic&ms of demone&sa&on.
- 59. Which will be affected § Effect on parallel economy: Cash Economy to Witness Contraction § Effect on GDP: Downward Bias to GDP Growth § Lower Money Supply has a Defla&onary Effect § Impact on Bond Markets § Credit Impact across Sectors § Effect on Banks § Effect on Online Transac&ons and alterna&ve modes of payment § Bank Deposit Rates to So_en § NBFC’s Asset Quality Faces Pressure § Payment Banks to Benefit
- 60. “This [demonetization] is a step which will make a positive difference, if the transition challenges get handled well by the administration,” says Jitendra V. Singh, Wharton emeritus professor of management. “We will need to be careful of potential attempts to derail this positive agenda.” The International Monetary Fund (IMF) echoes those sentiments. “We support the measures to fight corruption and illicit financial flows in India,” said a spokesperson Gerry Rice. “Of course, given the large role of cash in everyday transactions in India’s economy, the currency transition will have to be managed prudently to minimize possible disruption.”
- 61. According to Mauro F. Guillen, a Wharton management professor and director of the School’s Lauder Institute: “important source of problems” such as corrup&on, black money, terrorism and counterfeit money. “The eurozone will be elimina&ng the largest euro note. The U.S. is also trying to reduce the [number of] 100 dollar bills in circula&on.” Dr. Felix Zandman Professor Professor of International Management Director, The Lauder Institute
- 62. Withdrawal of Legal Tender Status for 500 and 1000 Notes: RBI Notice - Government of India vide their Notification no. 2652 dated November 8, 2016 have withdrawn the Legal Tender status of 500 and 1,000 denominations of banknotes of the Mahatma Gandhi Series issued by the Reserve Bank of India till November 8, 2016. - Starting from November 10, 2016, members of public/corporates, business firms, societies, trusts, etc., holding these notes can tender them at any office of the Reserve Bank or any bank branch and obtain value thereof by credit into their respective bank accounts. - For their immediate cash needs, these notes of value up to 4,000 per person can be exchanged for cash over the counter of these bank branches. Public are advised to present a valid proof of identity for availing this exchange facility. - Value credited to their bank accounts can be freely used by issue of cheques or by remitting through various electronic modes of transfer like NEFT, RTGS, IMPS, mobile banking, internet banking etc. -Cash withdrawals from bank accounts, over the bank counters, will be restricted to a limited amount of 10,000 per day subject to an overall limit of 20,000 a week from November 9, 2016 till end of business on November 24, 2016. The limits will be reviewed after this. - All ATMs and other cash machines will remain shut on November 9, 2016 to facilitate recalibration. When ready, they will be reactivated and cash drawals from ATMs will be restricted to 2,000 per day per card up to November 18, 2016 and the limits shall be raised to 4000 per day per card from November 19, 2016. -Any person who is unable to exchange or deposit the specified banknotes in their bank accounts on or before December 30, 2016 shall be given an opportunity to do so at specified offices of the Reserve Bank or such other facility until a later date as may be specified by the Reserve Bank.