Cabinet clears ordinance to impose penalty for holding old notes

NEW DELHI: The Union Cabinet on Wednesday approved promulgation of an ordinance to impose a penalty, including a jail term, for possession of the scrapped 500 and 1,000 rupee notes beyond a cut-off.The Cabinet headed by Prime Minister Narendra Modi also approved an ordinance to amend the RBI Act to extinguish the liability of the government and the central bank on the demonetised high-denomination notes to prevent future litigations.Official sources said the ordinance has been cleared, but did not say if the penal provisions would apply for holding the junked currency after the 50-day window to deposit them in banks ends as of December 30 or after March 31, till which time deposit of old currency notes at specified branches of the Reserve Bank after submitting a declaration form is open.The ordinance on denotification of Rs 500 and Rs 1000 notes has been sent to President Pranab Mukherjee for his assent.The penalty for holding old currency in excess of 10 notes may include financial fines and a jail term of up to 4 years in certain cases.After December 31, the government through a separate notification and clarification will specify cases eligible to get the banned currency deposited in specified branches of the RBI.While announcing the demonetisation of the old currency on November 8, the government had allowed holders to either exchange them or deposit in bank and post office accounts. While the facility to exchange the old notes has since been withdrawn, depositors have time till Friday to deposit the holding in their accounts.The ordinance is expected to be replaced by a law in the Budget session of Parliament, likely to begin by the end of January.Of the Rs 15.4 lakh crore worth of currency that was scrapped, Rs 14 lakh crore has been deposited in banks or exchanged.