By TIOL News Service

MUMBAI, MARCH 17, 2014: WHILE releasing an FAQ on its decision to withdraw pre-2005 banknotes the RBI has stated that the decision to do so was taken only because they have fewer security features as compared to banknotes printed after 2005. The withdrawal exercise is in conformity with the standard international practice of not having multiple series of notes in circulation at the same time. The RBI has already been withdrawing these banknotes in a routine manner through banks. It is estimated that the volume of such banknotes (pre-2005) in circulation is not significant enough to impact the general public in a large way and the members of public may exchange the pre-2005 series banknotes at bank branches at their convenience.

The RBI had issued Mahatma Gandhi series (MG series) 2005 banknotes in the denomination of Rs 10, Rs 20, Rs 50, Rs 100, Rs 500 and Rs 1000. These notes contain some additional security features as compared to the 1996 MG series. All banknotes issued before the 2005 MG series are called as pre-2005 series banknotes.

Apart from the additional security features, the 2005 MG series banknotes have the year of printing on the reverse of the notes in the lower middle portion. Banknotes printed before 2005 do not have the year of printing on the reverse side and hence can be easily distinguished.

The notes issued before 2005 shall continue to be legal tender. The notes are only being withdrawn from circulation and this withdrawal exercise is in conformity with the standard international practice of not having multiple series of notes in circulation at the same time.

Members of the public can continue to freely use these notes for their transactions and can unhesitatingly receive these notes in payment, as all such notes continue to remain legal tender.

These notes can be freely exchanged at any bank branch till January 1, 2015. The procedure to be followed after January 1, 2015, shall be communicated by RBI in due course.

Banks have been advised to stop re-issue of the pre-2005 series notes over the counters/through ATMs and they have been instructed to forward them to the Reserve Bank of India.

There is no such restriction. Banks have been advised to freely exchange these notes till January 1, 2015. Banks have been advised to freely provide this exchange facility to all members of public, whether customer or non-customer.

It is not necessary to get cash in exchange for the pre-2005 notes. If a person desires, he can get the amount credited in his bank account. The exchange facility is to be provided free of cost by all bank branches.