Pre-2005 currency notes: What you should do with them?

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Pre-2005 currency notes: What you should do with them?
With RBI's statement of withdrawal of pre-2005 currency notes in all denominations from beginning of the next fiscal year, general public has been seen in commotion. However, it is to be noted that such currency notes shall continue to be legal tender, with such a direction banks will be accountable for exchanging pre-2005 currency notes both for customers as well as non-customers.

Exchange pre-2005 currency notes at your convenience

For determining whether the currency note is issued prior to 2005 and individual possessing need to exchange them or note at bank branches, you need to ascertain the year of issuance. For determining, you need to check the reverse side of the note and if it does not bears the year of issuance, it means you need to segregate that and take it for the exchange.

Swapping of such currency can be more hassle free if done now as according to the RBI instructions for exchanging such currency after July1, 2014 (10 units of currency in denomination of Rs. 1000 or Rs.500), non-customers of banks will have to furnish a proof of Identification and proof of address.

If depositing pre-2005 currency notes with either the banks or post office in an amount over Rs. 50,000, you shall need to provide PAN as in the other cases. However if you do not have PAN, you can submit declaration in form 60.

Rationale for withdrawal of pre-2005 currency notes

As according to RBI, an important reason for the complete withdrawal of circulation of such pre-2005 currency notes is that they lack several security attributes that are otherwise found in currency notes issued after 2005.

Such an instruction is expected to reduce illicit activities in the system by curbing black money transactions to an extent. Also, as suggested by experts, timing of such an instruction that is well ahead of general elections, shall check any illicit sourcing of funds for the purpose.

Read more about: rbi, currency notes, security, black money
Story first published: Saturday, January 25, 2014, 14:02 [IST]
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