Updated
New Delhi, Nov 8 (IANS): As part of sweeping steps to battle black money, Prime Minister Narendra Modi announced that Rs 500 and Rs 1,000 currency notes will cease to be legal tender from midnight of Tuesday.
The Prime Minister said in a televised address that all the 500 and 1,000 denomination notes can be deposited in banks and post offices between November 10 and December 30.
They can also be exchanged across the bank counters by showing government-issued ID proof.
New Rs 500 and Rs 2,000 denomination notes will be issued, he said.
"The existing 500 and 1,000 denomination notes can no more be used for transactions," Modi said, speaking first in Hindi and then in English. "They are now only mere paper."
The Prime Minister said these measures will help the government to fight corruption, black money and counterfeit currency, which he alleged was funding terrorism.
Modi said this was being done to tackle the menace of black money in the country, which he said had sapped the economy.
He also said that ATM withdrawals will be restricted to Rs 2,000 per day till November 11, after which this limit may be increased slowly.
Withdrawals from bank accounts will be limited to Rs 10,000 for the first few days, he said.
Banks have also been ordered to remain shut on Wednesday.
Modi said that for medical reasons, the old notes will continued to be accepted till November 11.
He also said that retail petrol pumps will accept such notes till November 11, after which they will have to keep a register of such notes for some time.
Tuesday's far-reaching decisions came after a cabinet meeting.
RBI to launch new Rs 500/Rs 2,000 notes from November 10
Expressing concern over the circulation of fake currency notes, Reserve Bank of India Governor Urjit Patel on Tuesday said the apex bank will launch new Rs 500 and Rs 2,000 currency notes from November 10.
"RBI will launch new currency notes from November 10," Economic Affairs Secretary Shaktikanta Das said while unveiling the new notes.
Both Patel and Das were briefing media after Prime Minister Narendra Modi in a sudden address to the nation on Tuesday, announced that Rs 500 and Rs 1,000 denomination notes are being withdrawn from midnight. He said that such notes will become "mere paper".
"Banks will keep record of people who will come to exchange cash," Das added.
RBI Deputy Governor R Gandhi said that there were 16.5 billion units of Rs 500 notes in circulation, while the number for Rs 1,000 notes was 6.7 billion.
Withdrawing Rs 500, Rs 1,000 notes surgical strike on black money: FinMin
The Union Finance Ministry on Tuesday said the move to withdraw Rs 500, Rs 1,000 currency notes is the biggest "surgical strike" by the government to curtail black money in the economy.
"This is the biggest and the boldest step by the government for containing black money. It is like a surgical strike on black money," tweeted Revenue Secretary Hasmukh Adhia.
A look at what it means for you:
** You can deposit old Rs 500 and Rs 1,000 notes in banks/post office accounts from November 10 till December 30, 2016, without any limit.
** There will be a limit on withdrawal from banks and post offices to Rs 10,000 a day, and Rs 20,000 a week. The limit will be raised in the coming days.
** You can exchange Rs 500/Rs 1,000 notes at any bank, post office or sub post office, showing ID proof, till November 24, 2016. The limit for this is Rs 4,000.
** ATMs will not work on November 9 (Wednesday), and in some places on November 10.
** Withdrawals from ATMS will be limited to Rs 2,000/day per card. This will be raised to Rs 4,000 later
** For 72 hours, the following services will accept Rs 500/Rs 1,000 notes:
Government hospitals, Railway ticket booking counters, government buses and ticket counters at airports.
Petrol, diesel and gas stations authorised by public sector oil companies.
Consumer cooperative stores authorised by state or central government, milk booths authorised by state government and crematoria and burial grounds.