Reserve Bank of India on Thursday extended the deadline for exchanging pre-2005 currency notes of various denominations, including of Rs 500 and Rs 1,000, by six months till December 31, 2015.
RBI had, in December 2014, set the last date for public to exchange these notes as June end.
A majority of the old banknotes have been withdrawn through bank branches. It has, therefore, decided to withdraw the remaining old design notes from circulation. Not having currency notes in multiple series in circulation at the same time is a standard international practice. The banknotes in Mahatma Gandhi series have now been in circulation for a decade.
– RBI Press Release
The earlier deadline was January 1, but later the Reserve Bank had extended it till the end of June.
The rationale behind the move to withdraw banknotes printed prior to 2005 is to remove them from the market because they have fewer security features compared with banknotes printed after 2005.
–Reserve Bank of India
It is standard international practice to withdraw old series notes.
Post-2005 notes have added security features and help in curbing the menace of fake currency.
What to do With the old Currency Notes?
Seeking cooperation for withdrawing pre-2005 currency notes from circulation, the RBI has asked the public to deposit the old design notes in their bank accounts or exchange them at a bank branch convenient to them.
These notes can be exchanged for their full value at bank branches.
It is easy to identify pre-2005 notes. The currency notes issued before 2005 do not have the year of printing on the reverse side.
In notes issued post 2005, the year of printing is visible at the bottom on the reverse.
All pre-2005 notes continue to remain a legal tender.
What Does the Govt do With Them?
Over 164 crore pre-2005 currency notes of various denominations, including of Rs 1,000 were shredded in regional offices of Reserve Bank in 13-month period ending January.
The face value of the shredded currency notes was around Rs 21,750 crore.
As per the details given in Parliament in March, 86.87 crore pieces of Rs 100, 56.19 crore pieces of Rs 500 and 21.75 crore pieces of Rs 1,000 were shredded.