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President Pranab Mukherjee on Friday gave his assent to the much talked about 'Note ban' ordinance.
The ordinance-Specified Bank Notes (cessation of liabilities ) Ordinance 2016 --among other things provides for fine of Rs 10,000 or five times the amount of face value of SBN involved in contravention (holding, transferring and receiving demonetised Rs 500 and Rs 1,000 notes) beyond March 31,2017.
In the case of non-residents, the facility of returning the demonetised notes will be available till June 30,2017 to allow them adequate time to plan a visit as per their convenience.
This Ordinance is a follow-up to the decision taken by the Modi-led Government to cancel the legal tender character of the existing series of banknotes, as on November 8, 2016, in the denominations of Rs.500 and Rs.1000 (Specified Bank Notes-SBNs) in circulation.
The main objectives of the Ordinance are (i) to provide clarity and finality to the liability of the Reserve Bank of India and the Government of India for the SBNs; (ii) to provide an opportunity to those persons who were unable to deposit the SBNs within the time provided; and (iii) to declare holding, transferring or receiving SBNs as illegal, with provisions for penalty for contravention of any of the provisions of the Ordinance.
As on 30th December, 2016 a part of the Specified Bank Notes (SBN) have come back to the Reserve Bank of India and these are now a part of the formal financial system, increasing the deposit base of the banks and improving their ability to lend. People have also embraced and are continuing to adopt different digital forms of payments. The ecosystem of digital payments infrastructure is continually being improved and strengthened to make it easier for more people to adapt to this form of payment.
For NRIs, at the time of their return to India, the ordinance requires the number and denominations of the SBN to be declared to the Customs authorities at the airports and other entry points. Necessary form for such declaration will be given out by the CBEC. The details of the declaration and statements that are required to be submitted along with the SBNs at the time of deposit in RBI Issue Offices will be separately announced by RBI. Any false declaration will invite a fine of Rs. 50,000 or five times the amount of the face value of the SBN tendered, whichever is higher, according to an official release.
After the period of exchange is over, the liabilities of the Reserve Bank and the guarantee of the Central Government towards the Specified Bank Notes will stand extinguished, the release added.
This Ordinance follows a number of steps taken to eliminate the menace of unaccounted money in the economy including setting up of a Special Investigation Team (SIT); enacting a law regarding undisclosed foreign income and assets; amending the Double Taxation Avoidance Agreements between India and Mauritius and India and Cyprus; reaching an understanding with Switzerland for getting information on Bank accounts held by Indians with HSBC; encouraging the use of non-cash and digital payments; amendments to the Benami Transactions Act; and implementation of the Income Declaration Scheme 2016. It is a move in line with the government’s initiatives to curb unaccounted money in the system, money laundering and tax avoidance.
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