On 8 November 2016, the Government of India announced the demonetisation of all ₹500 and ₹1000 banknotes of the Mahatma Gandhi Series.
Date: 8 November 2016
Time: 20:15 IST (14:45 UTC)
Casualties: Independent stats: 100 dead as of 8 December 2016
Date and Time
Indian Prime Minister Narendra Modi announced the demonetisation in an unscheduled live televised address at 20:00 Indian Standard Time (IST) on 8 November. In the announcement, PM Modi declared that use of all ₹500 and ₹1000 banknotes of the Mahatma Gandhi Series would be invalid past midnight, and announced the issuance of new ₹500 and ₹2000 banknotes of the Mahatma Gandhi New Series in exchange for the old banknotes.
The plan to demonetise the ₹500 and ₹1000 banknotes was initiated between six and ten months before it was announced, and was kept confidential, with only ten people being completely aware of it. The preparations for printing new ₹500 and ₹2000 bank notes began in early May 2016. The Union cabinet was informed about the plan on 8 November 2016 in a meeting called by the Indian Prime Minister Narendra Modi.
On 8 November 2016, Modi announced the demonetisation in an unscheduled live national televised address at 20:15 Indian Standard Time. In the announcement, Modi declared circulation of all ₹500 and ₹1,000 banknotes of the Mahatma Gandhi Series as invalid effective from the midnight of the same day, and announced the issuance of new ₹500 and ₹2,000 banknotes of the Mahatma Gandhi New Series in exchange for the old notes.
After Modi's announcement, the Governor of the Reserve Bank of India, Urjit Patel, and Economic Affairs Secretary, Shaktikanta Das, stated that while the supply of notes of all denominations had increased by 40 percent between 2011 and 2016, the ₹500 and ₹1,000 banknotes increased by 76 percent and 109 percent, respectively, owing to forgery.
Exchange of old notes
The Reserve Bank of India stipulated that the demonetised notes could be deposited with banks over a period of fifty days until 30 December 2016. The banknotes could also be exchanged for legal tender over the counter at all banks. The limit for such exchange was ₹4,000 per person from 8 to 13 November, was increased to ₹4,500 per person from 14 to 17 November, reduced to ₹2,000 per person from 18 November.
international airports also facilitated an exchange of notes for foreign tourists and out-bound travelers, amounting to a total value of ₹5,000 per person. The exchange of banknotes was stopped completely on 25 November: Modi had previously stated that the volume of exchange would be increased after 24 November.
Cash withdrawals from bank accounts were restricted to ₹10,000 per day and ₹20,000 per week per account from 10 to 13 November.This limit was increased to ₹24,000 per week from 14 November 2016.
A daily limit on withdrawals from ATMs was also imposed varying from ₹2,000 per day till 14 November, and ₹2,500 per day till 31 December.This limit was increased to ₹4,500 per day from 1 January and again to ₹10,000 from 16 January 2017. Limits placed vide the circulars cited above on cash withdrawals from Current accounts/ Cash credit accounts/ Overdraft accounts stand withdrawn with immediate effect. RBI increased the withdrawal limit from Savings Bank account to ₹50,000 from the earlier ₹24,000 on 20 February 2017 and then on 13 March 2017, it removed all withdrawal limits from Savings Bank Accounts.
Under the revised guidelines issued on 17 November 2016, families were allowed to withdraw ₹250,000 (₹2.5 lakh) for wedding expenses from one account provided it was KYC compliant. The rules were also changed for farmers who are permitted to withdraw ₹25,000 per week from their accounts against crop loans.
The government had estimated that ₹3 trillion, or approximately 20%, of the demonetised notes would be permanently removed from circulation. However, by 30 December 2016, approximately 97% of the demonetised banknotes, or ₹14.97 trillion ($220 billion) of the ₹15.4 trillion that had been demonetised, had been deposited with the banking system
Nobel laureate Kailash Satyarthi and others working to fight human trafficking said that the note ban had led to a huge fall in sex trafficking, but that the trade had already begun rebounding by the following month.
Several e-commerce companies hailed the demonetisation decision as an impetus to an increase in digital payments, hoping that it would lead to a decline in COD returns which could cut down their costs
Positive outcome from
1.Demonetisation impact on widening of Tax-base.
2.Demonetisation impact on Direct Tax Collections.
3.14,000 high-value properties under scanner.
4.Lakhs of shell firms detected:
5.Benami properties identified
6.Cash to GDP ratio declined