Lok Sabha passed Specified Bank Notes (Cessation of Liabilities) Bill, 2017

The Lok Sabha in February 2017 passed the Specified Bank Notes (Cessation of Liabilities) Bill, 2017. The bill replaces the Specified Bank Notes (Cessation of Liabilities) Ordinance, 2016. The ordinance was promulgated by the President Pranab Mukherjee on 30 December 2016.

Features of Specified Bank Notes (Cessation of Liabilities) Bill, 2017

• The bill specifies that the old Rs 500 and Rs 1,000 notes will cease to be liabilities of the Reserve Bank of India (RBI) from 31 December 2016 onwards. And, these notes will no longer be guaranteed by the union government.

• These notes were demonetised on 8 November 2016 by the Central Bank through a notification issued under the RBI Act, 1934.

• The notification specifies that the banned notes must be deposited in banks or post offices by 30 December 2016.

• A person will be prohibited from holding, transferring or receiving the specified bank notes from 31 December 2016 onwards.

• The bill exempts persons belonging to following categories from this prohibition –

i. A person who holds up to 10 old notes (irrespective of denomination)

ii. A person who holds up to 25 notes for the purposes of study, research or numismatics (collection or study of coins or notes)

iii. A person who holds notes on the direction of a court

iv. In addition, the RBI or any person authorised by it are also exempted from this prohibition.

• Any person holding the specified bank notes, except in the circumstances mentioned above, will be punishable with a fine that may extend to Rs 10,000 or 5 times the value of notes possessed, whichever is higher.

• If a person acting on behalf of a company commits an offence under the bill, the company would also be held liable for such an offence.

• Any fine for contravening provisions of the bill will be imposed by the Court of a Magistrate of the First Class or the Court of a Metropolitan Magistrate.