The Reserve Bank of India have announced that all banknotes issued prior to 2005 will be withdrawn at the end of this Fiscal year.
So, if you have any banknotes which are from the pre-2005 period, you will have to exchange them at your bank for newer ones.
Why has the RBI announced this rule?
There has been no official statement from the RBI, but the general understanding is that, they plan to reduce the amount of counterfeit notes and also to prevent the black money from pre-2005 period from being circulated.
How will banknotes issued after 2005 prevent counterfeit notes ?
Banknotes issued after 2005 are of a different design, colour and also have an added watermark, which will help in identifying genuine notes and fake notes. Pre-2005 notes do not have these features.
How do I identify whether a note is from pre-2005 or post?
All banknotes printed after 2005 carry the year of printing on the bottom row. Pre-2005 notes do not have the year printed on them. Pre-2004 notes exist in denominations ranging from Rs 5 to Rs 1,000.
Will a pre-2005 banknote lose its monetary value after March 31st?
Not really.You cannot use the old notes for normal transactions, but you can exchange them for newer currency notes at your bank. Such a practice is called a legal tender. If you want to exchange more than 10 pieces of 500 and 1000 Rupees notes after July 1st 2014, you will need to provide a proof of their identity and residence at the bank. Although this rule could only apply to non-customers of the bank.
So make sure you check all your currency notes. and if you find any that do not have the year printed on them, exchange them at your bank if you are not planning to use them before March 31st.
Source: RBI, Money Control.
Image credits: The Hindu