Finance Ministry Freezes 60% of the Economy with Demonetization of 500 and 1000 Rupee Bank Notes

· New RBI Governor Plays Fin Min Game

· Board Passes Resolution to Impose Ban on Ground of Black Money Curb and Terrorist Financing which are not in RBI Mandate

· Fin Min Reneges on Resolution to Honor Promise and Support Currency to Meet Bank Note Value on Demand

· Gross Violation of Negotiable Instruments Act, 1881 on Promissory Notes with Government itself Dishonouring its own Issue of Rs. 16 lakh crores in Circulation

· RBI Liable under Promissory Estoppel Law as Cash with User Loses Volume Suddenly

· New Procedures Onerous and Discretionary, Nothing to do with Value of Currency which is fully Transferable Negotiable Instrument

Scanner Comments	Notification on Denomination of Bank Note of Rs. 500 and Rs. 1000 Ministry of Finance Department of Economic Affairs Notification dated 8 November 2016
Finance Ministry Issues Notification but under RBI Act, 1934 which is for Bank Management. Reserve Bank has nothing to do with Black Money and Terrorism. Why use RBI Sec 26(2) can be used by Finance Ministry only on RBI Board Recommendation. This alone will not curb terrorism, they can, and do, use dollars and will fake the new series too in due course.	S.O. 3407(E).─ Whereas, the Central Board of Directors of the Reserve Bank of India (hereinafter referred to as the Board) has recommended that bank notes of denominations of the existing series of the value of five hundred rupees and one thousand rupees (hereinafter referred to as specified bank notes) shall be ceased to be legal tender;
Only one out of 4000 are Fake (Finding of Indian Statistical Institute Study), Normal Ratio in All Currencies, Nothing Special for Indian Rupees Will this Stop Now? Rs. 2,000 Note makes it easier to store and transport cash. Foreign currency dollars are also used widely to store currency.	And whereas, it has been found that fake currency notes of the specified bank notes have been largely in circulation and it has been found to be difficult to easily identify genuine bank notes from the fake ones and that the use of fake currency notes is causing adverse effect to the economy of the country;
This cannot be stopped by demonetization. In fact, this will be easier now with the availability of 2000 note in new dispensation. Will the Government limit the print runs to control black money? Making currency available to the public is a sovereign function of the Government, like law and order and relations with foreign Governments.	And whereas, it has been found that high denomination bank notes are used for storage of unaccounted wealth as has been evident from the large cash recoveries made by law enforcement agencies; And whereas, it has also been found that fake currency is being used for financing subversive activities such as drug trafficking and terrorism, causing damage to the economy and security of the country and the Central Government after due consideration has decided to implement the recommendations of the Board; Now, therefore, in exercise of the powers conferred by sub-section (2) of section 26 of the Reserve Bank of India Act, 1934 (2 of 1934) (hereinafter referred to as the said Act), the Central Government hereby declares that the specified bank notes shall cease to be legal tender with effect from the 9th November, 2016 to the extent specified below, namely:-
Will this be used as base to conduct raids? Who will do it? Income Tax? CBI? Local Police?	1. (1) Every banking company defined under the Banking Regulation Act, 1949 (10 of 1949) and every Government Treasury shall complete and forward a return showing the details of specified bank notes held by it at the close of business as on the 8th November, 2016, not later than 13:00 hours on the 10th November, 2016 to the designated Regional Office of the Reserve Bank of India (hereinafter referred to as the Reserve Bank) in the format specified by it.
	(2) Immediately after forwarding the return referred to in sub-paragraph (1), the specified bank notes shall be remitted to the linked or nearest currency chest, or the branch or office of the Reserve Bank, for credit to their accounts.
Exchange period ends 30 December, Cases after this date? Go to local RBI Branch.	2. The specified bank notes held by a person other than a banking company referred to in sub-paragraph (1) of paragraph 1 or Government Treasury may be exchanged at any Issue Office of the Reserve Bank or any branch of public sector banks, private sector banks, foreign banks, Regional Rural Banks, Urban Cooperative Banks and State Cooperative Banks for a period up to and including the 30th December, 2016, subject to the following conditions, namely:-
There are only 30mn income tax payers in India but 170mn PAN Card holder, many multiple card holder. Misuse of PAN No. is common. Who will monitor these cases?	(i) the specified bank notes of aggregate value of Rs.4,000/- or below may be exchanged for any denomination of bank notes having legal tender character, with a requisition slip in the format specified by the Reserve Bank and proof of identity; (ii) the limit of Rs.4,000/- for exchanging specified bank notes shall be reviewed after fifteen days from the date of commencement of this notification and appropriate orders may be issued, where necessary; (iii) there shall not be any limit on the quantity or value of the specified bank notes to be credited to the account maintained with the bank by a person, where the specified bank notes are tendered; however, where compliance with extant Know Your Customer (KYC) norms is not complete in an account, the maximum value of specified bank notes as may be deposited shall be Rs.50,000/-; (iv) the equivalent value of specified bank notes tendered may be credited to an account maintained by the tenderer at any bank in accordance with standard banking procedure and on production of valid proof of Identity; (v) the equivalent value of specified bank notes tendered may be credited to a third party account, provided specific authorisation therefor accorded by the third party is presented to the bank, following standard banking procedure and on production of valid proof of identity of the person actually tendering; (vi) cash withdrawal from a bank account over the counter shall be restricted to Rs.10,000/- per day subject to an overall limit of Rs. 20,000/- a week from the date of commencement of this notification until the end of business hours on 24th November, 2016, after which these limits shall be reviewed; (vii) there shall be no restriction on the use of any non-cash method of operating the account of a person including cheques, demand drafts, credit or debit cards, mobile wallets and electronic fund transfer mechanisms or the like;
Value limit too small for companies and business.	(viii) withdrawal from Automatic Teller Machines (hereinafter referred to as ATMs) shall be restricted to Rs.2,000 per day per card up to 18th November, 2016 and the limit shall be raised to Rs.4,000 per day per card from 19th November, 2016;
Can they handle the traffic?	(ix) any person who is unable to exchange or deposit the specified bank notes in their bank accounts on or before the 30th December, 2016, shall be given an opportunity to do so at specified offices of the Reserve Bank or such other facility until a later date as may be specified by it.
The process will fail on account of volumes. Who is accountable for the loss to users.	3. (1) Every banking company and every Government Treasury referred to in sub-paragraph (1) of paragraph 1 shall be closed for the transaction of all business on 9th November, 2016, except the preparation for implementing this scheme and remittance of the specified bank notes to nearby currency chests or the branches or offices of the Reserve Bank and receipt of bank notes having legal tender character. (2) All ATMs, Cash Deposit Machines, Cash Recyclers and any other machine used for receipt and payment of cash shall be shut on 9th and 10th November, 2016. (3) Every bank referred to in sub-paragraph (1) of paragraph 1 shall recall the specified bank notes from ATMs and replace them with bank notes having legal tender character prior to reactivation of the machines on 11th November, 2016. (4) The sponsor banks of White Label ATMs shall be responsible to recall the specified bank notes from the White Label ATMs and replacing the same with bank notes having legal tender character prior to reactivation of the machines on 11th November, 2016.
This could have been done earlier to tide over shortage of small value tender. Rs. 200 notes should have been released by Nov.	(5) All banks referred to in sub-paragraph (1) of paragraph 1 shall ensure that their ATMs and White Label ATMs shall dispense bank notes of denomination of Rs.100 or Rs. 50, until further instructions from the Reserve Bank. (6) The banking company referred to in sub-paragraph (1) of paragraph 1 and Government Treasuries shall resume their normal transactions from 10th November, 2016.
More work for banks, RBI has no staff of interest in the returns.	4. Every banking company referred to sub-paragraph (1) of paragraph 1, shall at the close of business of each day starting from 10th November, 2016, submit to the Reserve Bank, a statement showing the details of specified bank notes exchanged by it in such format as may be specified by the Reserve Bank. [F.No.10/03/2016-Cy.I]