Saturday, November 26, 2016

Re: [IAC#RG] Public Query on Demonetisation of Rs. 500 and Rs. 1000 OHD

Dear Sarabjit

The RBI Note Refund Rules referred by you apply to exchange of mutilated notes, which function is supposedly undertaken as a matter of grace as per Section 28 of RBI Act:

""28. Recovery of notes lost, stolen, mutilated or imperfect. 

3[* * *] Notwithstanding anything contained in any enactment or rule of law to the contrary, no person shall of right be entitled to recover from the 4[Central Government] or the Bank, the value of any lost, stolen, mutilated or imperfect currency note of the Government of India or bank note: Provided that the Bank may, with the previous sanction of the 5[Central Government], prescribe the circumstances in and the conditions and limitations subject to which the value of such currency notes or bank notes may be refunded as of grace and the rules made under this proviso shall be laid on the table 6[* * *] of Parliament."""

2. For limited numbers of such notes tendered, no identity is required. The function is also delegated to public and private sector banks and even coop banks having a currency chest.



On Sat, Nov 26, 2016 at 7:15 PM, Sarbajit Roy <> wrote:
Dear RIM Chennai

AFAIK there is no specific identity requirement on "bearer" notes, but RBI does have some Note Exchange Rules.

The operative clause is section 26 of RBI Act 1934

"26. Legal tender character of notes.—
(1) Subject to the provi­sions of sub-section (2), every bank note shall be legal tender at any place in India in payment, or on account for the amount expressed therein, and shall be guaranteed by the Central Government.
(2) On recommendation of the Central Board the Central Govern­ment may, by notification in the Gazette of India, declare that, with effect from such date as may be specified in the notifica­tion, any series of bank notes of any denomination shall cease to be legal tender save at such office or agency of the Bank and to such extent as may be specified in the notification.

This implies that each and every change the Central Govt (ie. all those daily flip-flops Modi/Jaitley are doing) must be done on a recommendation of the RBI's Central Board (defined in Section 8 of RBI Act.

Although there are many PILs on this, the one to watch out for is by SC advocate V.K.Biju where section 26(2) is under challenge.

It is almost definite (ie. a sure thing) that Modi has been doing all those daily changes without explicit recommendations of the RBI's Central Board (although since it a rubber stamp board now with Raghuram Rajan gone they will probably fabricate and backdate these).

I don't know how any Govt / Central Bank can argue that it can issue (ie. print) unlimited Notes, that we fool citizens are meant to accept them blindly, and then they can withdraw these notes without notice and say we shall only return 1 out of every 1,000 notes we issued to you and that too at any time we please.

I would love to see/hear RBI Governor URJIT PATEL say this from his own lips.

So don't rush to exchange / sell at a steep discount all those old notes as yet !!


On Sat, Nov 26, 2016 at 10:20 AM, RIM Chennai <> wrote:
Sir, is there any clause in RBI promise that mentions about identity?.
Moreover, please let enlighten me on this point: Who has the power to announce demonetisation: the RBI Governor or the Government. I do not have much knowledge on this.


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