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Cabinet May Consider Ordinance on Old Notes

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The union cabinet may consider an ordinance on Wednesday to settle all issues regarding demonetisation, clearly providing for the extinguishing of the Reserve Bank of India's liability in respect to cancelled Rs.500 and Rs.1,000 notes.
The ordinance is likely to provide for a limited window to return the cancelled currency in special cases to the RBI.The old Rs.500 and Rs.1,000 notes can be deposited with banks and post offices until December 30.
“The cabinet may consider an ordinance on Wednesday,“ a source told E
While announcing demonetisation on ncing demonetisation on November 8, Prime Minister Narendra Modi had said the cancelled currency can be deposited with RBI till March 31, but subsequent notifications did not mention the date.
The ordinance may give time till March 31 for notes to be submitted to the central bank but with stiff conditions and only for people who were abroad, armed forced personnel posted in remote areas or others who can give valid reasons for not being able to deposit the cancelled notes in banks.
ET reported on December 7 that the government may take the ordinance route to extinguish RBI's liability in respect of the cancelled notes.
All notes carry RBI's promise to pay the bearer the amount of the value of the note. Experts have said this pledge can be nullified only via legal means after giving due opportunity to everyone to return old notes.
Finance minister Arun Jaitley had also said last month that some legal measures may be needed. “So far, formally the high-denominational currency has ceased to be legal tender. Some more legal steps will be required later on if one is to extinguish that,“ he had said.
Former RBI governor D Subbarao had also said that legal changes may be needed before the money not returned can in some way be passed on to the government.
The government may also provide for a limit on holdings of the old currency with strict penalties for possession in the ordinance besides providing for exceptionalcircumstances in which exchange will be allowed after December 30. The limit is likely to be set at Rs.10,000 and the penalty at Rs.50,000.

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