Deposit of banned notes in one go to help avoid confusion, says Jaitley

A one-time deposit of all the banned banknotes left in the hands of individuals or entities will help escape repeated questions over its origins while also helping government agencies like the Income tax Department and the Enforcement Directorate better assess the flows of banned notes and thereby the sources of black money, finance minister Arun Jaitley has said.

Close on the heels of RBI tightening rules for depositing old Rs500 and Rs1,000 notes, limiting further deposits above Rs5,000 to once, finance minister Arun Jaitley said no questions will be asked if any amount of junked currency is deposited in one go.

The finance minister seemed to tone down a Reserve Bank of India notification, which said customers depositing more than Rs5,000 will have to satisfactorily explain why they did not do so early on, even if it is just once.

"Tenders of SBNs in excess of Rs5,000 into a bank account will be received for credit only once during the remaining period till December 30, 2016. The credit in such cases shall be afforded only after questioning tenderer, on record, in the presence of at least two officials of the bank, as to why this could not be deposited earlier and receiving a satisfactory explanation. The explanation should be kept on record to facilitate an audit trail at a later stage. An appropriate flag also should be raised in CBS to that effect so that no more tenders are allowed," the RBI notification said.

Jaitley said all exemptions to certain sectors and utilities, which had been allowed to accept the banned currency post demonetisation, ended last week and all those in possession of the old notes are supposed to have deposited the remaining with banks.

Nearly Rs13,00,000 crore out of the Rs15,40,000 crore worth of Rs500 and Rs1,000 junked noted have already flown back into bank deposits, since the 8 November announcement.

The government had allowed free deposits of these banknotes until recently and the sudden change ahead of the earlier 30 December deadline is yet to be explained.

Now, The RBI says individuals can deposit over Rs5,000 in old currency notes only once until 30 December and that too after explaining why it had not been done so far.

"Anyone who has old currency notes is not allowed to trade in them. He can only go and deposit them with banks," he said.

Jaitley also said depositing all the money in one go, rather than going to banks repeatedly, will also help curtail queues at banks With a view to curtail queues at banks.

"If they go and deposit with bank any amount of currency no questions are going to be asked to them and therefore the Rs 5,000 limit does not apply to them if they go and deposit it once.

"But if they are going to go everyday and deposit some currency, same person that gives rise to suspicion that where is he acquiring this currency from. In that event a person may have something to worry about. Therefore everyone is advised whatever old currency you have, please go and deposit it now," he said.