The Union Cabinet has cleared an ordinance to extinguish the liability of the government and the RBI on the demonetised high denomination notes.
The ordinance was brought as it was found to be necessary to prevent future litigations against the government for junking Rs 500 and Rs 1,000 notes.
Seeking to prevent harassment and any ambiguity, a proviso has been added to ensure that certain category of people can still deposit the old notes in RBI branches between 31 December and 31 March next, they said.
The category may include people in armed forces, people who were abroad and ordinary citizens who can explain that the money is part of their legitimate income and they could not deposit it in banks due to some reasons.
The government has also imposed penalty on people for possessing certain quantity of old notes after 30 December.
In 1978, a similar ordinance was issued to end the government’s liability after Rs 1,000, Rs 5,000 and Rs 10,000 notes were demonetised by the Janata Party government under Morarji Desai.
The government had, while announcing the demonetisation of the old currency on 8 November, allowed holders to either exchange them or deposit in bank and post office accounts.
While the facility to exchange the old notes has since been withdrawn, depositors have time till Friday to deposit the holding in their accounts.
Reports said that there could be a cap of holding no more than 10 notes of each after 30 December and violation of the rule could draw a fine of a minimum of Rs. 50,000 or 5 times the amount in question — whichever is higher.
The Ordinance, which will have to be converted into a proper legislation by passing of a law by Parliament within six months, makes possession, transfer or receiving an amount of over Rs 10,000 in the now-demonetised 500 and 1,000-rupee notes a punishable offence.
A maximum of 10 banned notes may be allowed to be held by any person.
Sources said while the deadline for the deposit of old currency in bank or post office accounts expires on Friday, time till March 31 is available for doing so with RBI with stiff conditions by people who were abroad, armed forces personnel posted in remote areas or others who can give valid reasons for not being able to deposit the cancelled notes at banks.
Sources said the legal amendments are needed every time the government decides to scrap any legal tender to put an end to its promissory note.
Of the Rs 15.4 lakh crore worth of currency that was scrapped, about Rs 14 lakh crore has been deposited in banks or exchanged.
(With inputs from PTI)