New Delhi: The Cabinet today approved an ordinance to penalise people for possessing any scrapped Rs 500 and Rs 1000 notes beyond a specified cut-off date.

The Cabinet, headed by Prime Minister Narendra Modi, also approved an ordinance to amend the RBI Act so that the government and central bank will no longer be liable for the demonetised high-denomination notes, effectively preventing future litigation.

While official sources confirmed that the ordinance has been cleared, there was no word on whether these penalties will apply after the 50-day window to deposit old notes in banks closes on December 30 or March 31 next year, which is the date till which the RBI has said holders of old currency can deposit their notes at specific branches with a declaration form.

The penalty for holding old currency in excess of ten notes of either denomination may include financial fines and a jail term of up to four years in certain cases.

While announcing the demonetisation on November 8, the government said those with old currency could either exchange or deposit the old notes in bank or post office accounts.

While the facility to exchange the old notes has since been withdrawn, those who still have old notes have till Friday to deposit their money.