6 things you need to know about depositing old notes in banks

Under the PMGKY scheme, black money holders can deposit unaccounted cash in account which will be subject to 50 per cent tax and 4-year interest free lock-in for the remaining 25 per cent of the amount

The Reserve Bank, on Monday, imposed stiff restrictions on depositing more than Rs 5,000 in the scrapped Rs 500 and Rs 1,000 notes, mandating that it can be deposited only once per account till December 30, that too after explaining to bank officials the reasons for not having done that so far.

Stipulating that restrictive conditions will also apply on the cumulative deposit of such notes in a single account when it exceeds Rs 5,000, RBI said that defunct currency up to any amount can be deposited under the new black money amnesty PMGKY scheme.

"It has been decided to place certain restrictions on deposits of SBNs into bank accounts while encouraging the deposits of the same under the Taxation and Investment Regime for the Pradhan Mantri Garib Kalyan Yojana, 2016," RBI said in a notification.

RBI said old notes in excess of Rs 5,000 into a bank account will be received for credit only once during the remaining period till December 30, 2016.

Old bank notes in excess of Rs 5,000 into a bank account can be deposited only once till December 30.

The credit shall be afforded only after questioning the tenderer, on record, in the presence of at least two officials of the bank, as to why this could not be deposited earlier and receiving a satisfactory explanation.

Even when notes smaller than Rs 5,000 are made in an account and such notes taken together on cumulative basis exceed Rs 5,000 they may be subject to scrutiny.

No more notes can be deposited after December 30.

Full value of notes in excess of Rs 5,000 shall be credited to only KYC compliant accounts and if the accounts are not KYC compliant credits may be restricted up to Rs 50,000 subject to the conditions governing the conduct of such accounts.

The curbs are not applicable to notes for the purpose of deposits under the Taxation and Investment Regime for the Pradhan Mantri Garib Kalyan Yojana, 2016.

The explanation, RBI added, should be kept on record to facilitate an audit trail at a later stage. An appropriate flag also should be raised in CBS (Core Banking Solution) to that effect so that no more tenders are allowed.

However, old notes up to Rs 5,000 received across the counter will be credited to bank accounts in the normal course until December 30, 2016.

"Even when tenders smaller than Rs 5,000 are made in an account and such tenders taken together on cumulative basis exceed Rs 5,000 they may be subject to the procedure to be followed in case of tenders above Rs 5,000, with no more tenders being allowed thereafter until December 30, 2016," RBI said.

Photograph: Krishnendu Halder/Reuters

Recommended by Rediff.com