The Reserve Bank has advised the public to start exchanging pre-2005
notes at banks, saying the
volume of such notes that are being withdrawn
from circulation is ‘not significant.’
“Members of public may initiate the process of exchanging notes at bank
branches at their convenience,” the RBI said in a statement.
The removal of older currency notes from circulation is a standard international practice, the RBI said.
The central bank is already withdrawing pre-2005 bank notes in a routine
manner through banks as they have fewer security features than those
printed subsequently.
In the Reserve Bank’s view, the volume of bank notes printed before 2005
that are still in circulation is not significant enough to affect the
public in a large way.
“The notes printed prior to 2005 will continue to be legal tender,” it
said, adding that even after July 1, any number of these old series
notes can be exchanged by people at bank branches where they have
accounts.
The RBI said it would continue to monitor and review the withdrawal of old notes so that the public is not inconvenienced.
The central bank announced the withdrawal of pre-2005 bank notes from the public in a statement on Wednesday.
On Thursday, Reserve Bank Governor Raghuram Rajan said the order was not
an attempt at demonetisation, nor had it anything to do with the
forthcoming general elections.
“I have to say that it (withdrawal of notes) has nothing to do with
elections, which certainly is not the objective,” Dr Rajan had said.
He said that these notes had, unfortunately, become less secure. The
notes printed after 2005 have greater security features and the Finance
Ministry had sought withdrawal of the pre-2005 notes.
The central bank had earlier discontinued printing of five-rupee notes, but reintroduced the denomination to meet demand.
Earlier, the RBI had withdrawn a certain series of currency notes at the
bank level, but bearers were not asked to get them replaced.
As per RBI data, 7,351 crore pieces of currency notes were in
circulation on March 31, 2013. Of this, 14.6 per cent were Rs 500 notes
and 5.9 per cent were Rs 1,000 notes.
