New Delhi, Feb 7 (IANS): The Lok Sabha on Tuesday passed the bill to ban old bank notes of Rs 500 and Rs 1,000 and provides for punishment for holding such currency notes.

The Specified Bank Notes (Cessation of Liabilities) Bill, 2017, seeks to replace the ordinance on demonetisation promulgated by the government in December 2016.

Replying to the debate on the bill which was passed after amendments by the opposition were negatived, Finance Minister Arun Jaitley said the decision on demonetisation was not easy.

He said the government had been holding consultations with the Reserve Bank of India from February last year.

Jaitley said there was rush for currency in the initial days after the November 8 demonetisation announcement and then the situation eased.

Taking a dig at opposition parties, he said they appeared to be troubled by the decision but not people of India.

Earlier, moving the bill Jaitley said once a currency ceases to be legal tender, it cannot be allowed to operate.

"Holding the currency beyond the permissible limit, will become an offence," Jaitley said.

The bill, like the ordinance, provides that the specified bank notes, which have ceased to be legal tender, shall "cease to be liability of Reserve Bank of India".

Brought as a money bill, the Rajya Sabha will not have any major role in its passage.

A financial memorandum with the bill said it involves decision having impact on the "contingent liabilities of the central government and thus on the consolidated fund of India".

It prohibits the holding, transferring or receiving of the 'specified bank notes' after December 31, 2016.

"On and from the appointed day, no person shall, knowingly or unknowingly or voluntarily hold, transfer or receive any specified bank notes," the bill said.

As per the bill, an individual cannot hold more than 10 of the demonetised currency notes irrespective of value, and for the purpose of study or research, not more than 25 notes can be held.

For violation of these provisions, as per Section 5 of the bill, a fine will be imposed which can be of Rs 10,000 or five times the amount of the old currency notes held - whichever of the two is higher.

Those individuals who were outside India during November 9 to December 31, or any other class of persons specified by the central government, can make a declaration which will be verified by the Reserve Bank of India. If the RBI is satisfied with the reason cited it may credit the value of the old bank notes in the individual's "Know Your Customer compliant bank account".

Anyone aggrieved by RBI's refusal to credit the value of old notes may approach the Central Board of the Reserve Bank within 14 days of communication of refusal.

Citing a false statement under this provision would be fined upto Rs 50,000 or five times the amount of bank notes tendered, whichever is higher.