Demonetisation ordinance prescribes 4-year jail for possession of old Rs500, Rs1,000 notes

The union cabinet today approved an ordinance formalising the 30 December deadline for depositing old Rs500 and Rs1,000 notes with banks and prescribing strict action against those who fail to do so.

The legislation, named 'The Specified Bank Notes Cessation of Liabilities Ordinance', is intended to end the liability of the government and the Reserve Bank of India on the demonetised high-denomination notes.

The cabinet also cleared promulgation of an ordinance to penalise persons holding junked Rs500 and Rs1,000 notes.

As per the ordinance, people involved in transaction of old notes will face penalty of Rs5,000, while those possessing old notes in excess of 10 notes after 31 March will face 4-year Jail term in certain cases.

Official sources said the ordinance has been cleared, but did not say if the penal provisions would apply for holding the junked currency after the 50-day window to deposit them in banks ends on 30 December or after 31 March, till which time deposit of old currency notes at specified branches of the Reserve Bank after submitting a declaration form is open.

The government had, while announcing the demonetisation of the old currency on 8 November allowed holders to either exchange them or deposit in bank and post office accounts. While the facility to exchange the old notes has since been withdrawn, depositors have time till Friday to deposit the holding in their accounts.