What changed
RBI decided to completely withdraw all old series banknotes issued prior to 2005 from circulation. These notes will be acceptable for transactions only until March 31, 2014, after which they must be exchanged at bank branches. From July 1, 2014, exchanging more than 10 pieces of Rs 500 and Rs 1000 notes from non-customers requires proof of identity and residence.
What it means for you
Banks must prepare for a surge in exchange requests from the public, especially after March 31, 2014. They need to sort and deposit these notes into currency chests or forward them to RBI Issue Offices. This withdrawal aims to phase out older series systematically without disrupting cash flow.
What you must do
- Issue instructions to all branches to stop re-issuing pre-2005 banknotes and provide exchange facilities to the public.
- Ensure branches sort and deposit pre-2005 notes into currency chests under the Linkage Scheme or forward to nearest RBI Issue Office.
- From July 1, 2014, require non-customers exchanging over 10 pieces of Rs 500 or Rs 1000 notes to provide proof of identity and residence.
- Advise branches to cooperate with the public for a smooth and non-disruptive withdrawal process.
Who it affects
All Scheduled Commercial Banks, Primary (Urban) Co-operative Banks, Regional Rural Banks (RRBs), Bank customers and general public
Are pre-2005 banknotes still legal tender after March 31, 2014?
Yes, they remain legal tender even after March 31, 2014, but must be exchanged at bank branches instead of being used directly for transactions.
What documentation is needed for exchanging pre-2005 notes from July 1, 2014?
For non-customers exchanging more than 10 pieces of Rs 500 or Rs 1000 notes, banks must obtain proof of identity and residence.
What should banks do with pre-2005 notes received over the counter?
Banks should sort these notes immediately and deposit them in currency chests under the Linkage Scheme or forward them to the nearest RBI Issue Office for disposal.