If you have black money in the old currency, you better declare it or spend it, thanks to currency recall announced by the Reserve Bank of India (RBI).

RBI had on Wednesday announced that currency notes issued before 2005 were to be withdrawn and people should exchange old notes to new notes at banks from April 1, 2014 onwards.

“This is a very interesting move by RBI. This is possibly due to some security reasons and also weed out fake notes/unaccounted money,’’ M. Bhagavantha Rao, Managing Director, State Bank of Hyderabad (SBH), told Business Line on Thursday.

RBI guidelines

Bank branches could expect ‘rush’ for exchange of old notes given the seriousness of the matter, he said, adding: “We are awaiting operational guidelines from RBI.’’

Some say this was the probably the first time that such a decision was taken by RBI. “I remember the withdrawal of Rs 1,000 notes by RBI in early 1970s when I just joined the service,’’ M. Anjaneya Prasad, Executive Director, Syndicate Bank, said.

A chief of a public sector bank, who did not want to be identified, said there could be a sudden spurt in spending of unaccounted money.

“The currency involved could be upwards of Rs 11,000 crore. I am sure up to 20-30 per cent of it could be black money because the norms were not that stringent at that time. This is a huge sum. One has to either declare it or spend,’’ he said.

Banks and insurance companies are expected to tighten the vigil on anti-money laundering guidelines, he added.


(This article was published on January 23, 2014)
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