The Central government and RBI have been accused by Opposition parties of shifting goal posts ever since Prime Minister Narendra Modi announcement on November 8.. (AP Photo/ Anupam Nath) The Central government and RBI have been accused by Opposition parties of shifting goal posts ever since Prime Minister Narendra Modi announcement on November 8.. (AP Photo/ Anupam Nath)

THE FINANCE Ministry and Reserve Bank of India (RBI) Monday said deposits of above Rs 5,000 in scrapped currency notes of Rs 500 and Rs 1,000 can be made only once till December 30. In the 59th communication issued by the RBI-Finance Ministry combine since the currency withdrawal decision was announced on November 8, the central bank said any such deposits can be made “only after an account holder satisfies the bank why it could not be done earlier”. These restrictions have been put in place despite an assurance by the government earlier that people can deposit old notes into their banks accounts anytime till December 30, without any limit.

“Tenders of SBNs (Specified Bank Notes of Rs 500 and Rs 1,000) 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. The credit in such cases 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,” the RBI said.

Alongside this announcement, the Finance Ministry stated that these restrictions will not apply to those making deposits using the withdrawn currency notes under the Pradhan Mantri Garib Kalyan Yojana, 2016.

“Further, an opportunity has been given to the public to make the payments towards tax, penalty, cess/surcharge and deposit under the Pradhan Mantri Garib Kalyan Yojana (PMGKY) 2016 with the old bank notes of Rs 500 and Rs 1,000 denomination upto December 30, 2016,” the ministry said.

In its statement, the RBI asserted that the explanation to be offered by customers to bank officials on deposits over Rs 5,000 “should be kept on record to facilitate an audit trail at a later stage”. An appropriate alert also should be raised in CBS (core banking system) to that effect so that no more tenders are allowed, it said.

Since November 8, the government has repeatedly advised people not to panic, spread out their transactions and freely deposit cash up to Rs 2.5 lakh without inviting tax scrutiny.

While announcing the demonetisation policy, Prime Minister Narendra Modi had said on November 8: “Persons holding old notes of Rs 500 or Rs 1,000 can deposit these notes in their bank or post office accounts from November 10 till close of banking hours on December 30, 2016 without any limit. Thus, you will have 50 days to deposit your notes and there is no need for panic. After depositing your money in your account, you can draw it when you need it.”

On November 11, Finance Minister Arun Jaitley had urged people not to rush in the initial days to deposit old notes.’ “We do believe that there is no need to rush in the initial days because people have a lot of time till December 30 with the entire banking and post office system and therefore more the deposits and the (note) exchanges are spread out, the more will be the convenience to the people itself,” Jaitley had said.

In a change of its stated stance, the Finance Ministry Monday said: “The deposits of old notes of Rs 500 and Rs 1,000 denominations have been reviewed by the government from time to time. Already more than five weeks have elapsed since the time of the announcement of the cancellation of the legal tender character of these notes. It is expected that, by now, most of the people would have deposited such old notes in their possession.”

It added: “Keeping this in view and to reduce the queues in the banks, it has now been decided that amounts exceeding Rs 5,000 in old notes can be deposited only once between now and December 30, 2016. The banks have been advised to conduct due diligence regarding the reasons for not depositing these notes earlier.”

The earlier assurance to people that deposits up to Rs 2.5 lakh in an individual’s bank accounts will not be scrutinised has been now rendered ineffective, with the government arguing that merely depositing money in banks accounts do not make them white.

Any deposits that are suspect from taxation standpoint, even if up to Rs 2.5 lakh, can now be questioned by the tax department and taxes and penalties levied on these.

In contrast, in newspaper ads on November 11, the Finance Ministry had said: “Your hard earned money is absolutely safe, don’t panic. Small businessmen, housewives, artisans, workers, etc., can deposit cash in their bank accounts. Deposits up to Rs 2,50,000 will not be reported to the Income Tax department. There will be no harrassment or investigation. All honest citizens need not worry…You can deposit them (old Rs 500 and Rs 1,000 notes) in banks or post offices till December 30, 2016, without any limit.”

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