Connect with us

Business

Centre set to notify new rules for exchanging torn notes

Monitor News Bureau

Published

🕒

on

IST

New Delhi :While the problem of banks handing out torn and mutilated currency to depositors has hogged the limelight off late, the bank customers’ woes may be far from over. Many banks are refusing to exchange old and torn notes of the Rs 2,000 denomination with many saying that the Reserve Bank of India (RBI) does not have any rules in place that require banks to exchange torn Rs 2,000 notes carried by a depositor. Bank officials manning cash counters are turning away customers saying that they should “hold on to their torn Rs 2,000 notes till RBI comes out with a policy to exchange such notes.”
When certain officials at some bank branches were reminded that the RBI has rules for replacement of all torn currency, they said that the old rules do not apply to the new denomination of Rs 2,000 and Rs 200. So why are banks refusing to exchange soiled Rs 2,000 notes by throwing the rule book at customers?
The RBI has robust rules in place for exchange of soiled currency but banks seem to be interpreting them in a way to exclude those with Rs 2,000 denomination from the exchange process. The Reserve Bank of India (Note Refund) Rules 2009 clearly lay down rules for all mutilated notes above the denomination of Rs 50. The rules regarding mutilated notes states, “if the area of the single largest undivided piece of the mutilated note of rupees fifty, rupees one hundred, rupees five hundred and rupees one thousand note presented is at least 70, 75, 80 and 84 square centimeters, respectively, the same may be paid for full value.” The rules further state if the mutilated notes presented to banks is less than these specifications, banks need to pay only half the value on the same.
While these rules pertained to the pre-demonetisation era, the Rs 1,000 note was declared illegal and replaced by the Rs 2,000 note on November 8, 2016. Banks seem to be reluctant to apply the rules that pertained to the Rs 1,000 note to the new Rs 2,000 note. The last time RBI amended its note exchange rules was on July 3, 2017. These new rules states, “In order to facilitate quicker exchange facilities, the definition of soiled note has been expanded. A ‘soiled note’ means a note which has become dirty due to normal wear and tear and also includes a two piece note pasted together wherein both the pieces presented belong to the same note and form the entire note with no essential feature missing. These notes should be accepted over bank counters in payment of Government dues and for credit to accounts of the public maintained with banks.”
While the RBI’s new rules clearly define ‘a soiled note’ irrespective of their denomination, banks seem to be interpreting it in a way to exclude the Rs 2,000 note from the definition. One reason for this behaviour of banks is that the RBI’s new rules which were announced after the note-ban episode do not specify the Rs 2,000 note in particular. These new rules were added to the original Reserve Bank of India (Note Refund) Rules 2009 and the amended RBI rules still have no specific mention of the Rs 2,000 denomination note.
Another reason is that the RBI’s existing note exchange rules determine the amount receivable by the person with a soiled note on the basis of its size which is determined by the value of the currency. But after the RBI started issuing new notes in new dimensions’ post demonetisation, there has been a reduction in the dimensions of every single denomination of currency notes barring the Rs 100 note.
For instance, the RBI’s original rules state that they the highest denomination of Rs 1,000 should have an undivided single piece of atleast 84 per cent of the note’s area for a person to get back the full value of the amount from the bank. The erstwhile Rs 1,000 note had an area of 129 square centimeters. Similarly, the old Rs 50 denomination note had an area of 115 square centimeters. A torn Rs 50 note needed to have a single undivided area of at least 70 per cent of its original area (or at least 90 square centimeters for a person to get back the full value of his torn note.) The irony is that the highest value of currency in India at the moment is smaller in area than even the Rs 50 note (of the older versions). The new Rs 2,000 note has an area of 110 square centimeters. Since the RBI has no specific rules of refund of torn Rs 2,000 notes, banks seem to be in the dark on what rule of what note do they apply to a torn Rs 2,000 note while exchanging it for the common man. Even the Rs 200 denomination which was introduced recently seems to face a similar dilemma.
An RBI official said that the finance ministry should be clarifying on the issue rather than the central bank. Mr Manmohan Sachdeva, Director, Department of Economic Affairs in India’s Ministry of Finance told Business Standard, “We are at an advanced stage of finalising new rules for exchange of torn currency of the new denominations. The Law Ministry is examining the new rules and we will soon notify the same.”


Advertisement
Loading...
Comments

Business

ADB cuts India’s FY20 GDP growth forecast to 7% on fiscal shortfall worries

Press Trust of India

Published

on

New Delhi: Asian Development Bank on Thursday lowered India’s GDP growth forecast to 7 per cent for the current year on the back of fiscal shortfall concerns.

“India is expected to grow by 7 per cent in 2019 (FY20) and 7.2 per cent in 2020 (FY21), slightly slower than projected in April because the fiscal 2018 outturn fell short,” ADB said in its supplement to the Asian Development Outlook 2019.

For the south Asian region, ADB said the outlook remains robust, with growth projected at 6.6 per cent in 2019 and 6.7 per cent in 2020.

 

Earlier in April this year too, the Manila-based multi-lateral funding agency had lowered India’s growth forecast for FY20 to 7.2 per cent from 7.6 per cent estimated previously due to moderation in global demand and likely shortfall in revenue on the domestic front.

Continue Reading

Business

Jalan panel proposes ‘nominal’ transfer of RBI funds to govt over 3-5 years

Agencies

Published

on

New Delhi: The Union government may not get the windfall gain it was expecting from the Reserve Bank of India (RBI) reserves as the Bimal Jalan committee, tasked with reviewing the central bank’s economic capital framework, has proposed a “nominal” transfer of surplus to the central government in a phased manner, according to a source in the know.

“The report has proposed a formula for a nominal transfer of a portion of the RBI’s reserves to the central government in a period of three-five years. This is in line with the current practice being followed by the RBI for transferring dividend annually,” a person close to the development said.

The person said the panel members might “not be unanimous” on the suggestions the committee made. These will be submitted to RBI Governor Shaktikanta Das “in a few days”. The RBI’s central board, headed by Das, will take up the matter.

 

The report would likely include a dissent note by Finance Secretary Subhash Chandra Garg, who is the government’s representative on the panel.

The committee has recommended a periodic review of the RBI’s economic capital framework, according to the source.

Initially, the finance ministry had expected around Rs 3 trillion from the RBI’s reserve funds, which were at the heart of a conflict between the regulator and the government last year.

On the insistence of the finance ministry, the central board of the RBI formed a six-member committee — headed by Jalan and co-chaired by former RBI deputy governor Rakesh Mohan — in December to review the central bank’s economic capital framework.

The main difference of opinion within the panel was over transferring the RBI’s “excess” capital reserves. While most panel members are in favour of a phased transfer of the RBI’s capital reserves to the government over the years, the government’s view, voiced by Garg, was for a one-time transfer.

For this financial year, the government had accounted for around Rs 20,000 crore as “additional dividend” from the RBI, a finance ministry official said. This, the official said, is unlikely to happen.

In the Receipts Budget, allocation towards the “dividend or surplus of RBI, nationalised banks and financial institutions” was increased by Rs 23,130 crore to Rs 1.06 trillion in 2019-20, compared to the Interim Budget.

Continue Reading

Business

Nod to bankruptcy code changes, will help home buyers

Agencies

Published

on

New Delhi: The government today gave its approval to seven amendments to the Insolvency and Bankruptcy Code (IBC), a move that will benefit unsecured creditors like home buyers in a big way.

Minister for Information and Broadcasting Prakash Javadekar said, the IBC (Amendment) Bill, 2019, would be introduced in Parliament during this session and will have retrospective effect. An official statement read: “The amendments aim to fill critical gaps in the corporate insolvency resolution framework as enshrined in the Code.”

of all financial creditors, including unsecured ones (home buyers) covered under Section 21 (6A) “shall be cast in accordance with the decision approved by the highest voting share (more than 50 per cent) of financial creditors on present and voting basis”, it said. It also said greater emphasis had been given “on the need for time-bound disposal at application stage and a deadline for completion of CSRP within an overall limit of 330 days, including litigation and other judicial processes”. Experts say this provision will help unsecured creditors (mostly home buyers) in a big way.

 
Continue Reading
Advertisement

Subscribe to The Kashmir Monitor via Email

Enter your email address to subscribe to The Kashmir Monitor and receive notifications of new stories by email.

Join 1,010,984 other subscribers

Advertisement

Archives

July 2019
M T W T F S S
« Jun    
1234567
891011121314
15161718192021
22232425262728
293031  
Advertisement