NEW DELHI: The government has cleared an ordinance or executive order under which possessing, transferring or receiving an amount of over Rs. 10,000 in banned 500 and 1,000-rupee notes will be a punishable offence. The maximum number of banned notes, of any denomination, that a person will be allowed to have is 10.

Punishment for breaking the proposed law is still to be finalised, but sources said a fine of a minimum of Rs. 50,000 or five times the amount in question — whichever is higher — is likely. There will be a criminal liability and a municipal magistrate will hear cases involving violation and decide on penalty.

The draft ordinance includes recommendations of the central board of directors of the Reserve Bank. After December 30, banned notes have to be directly deposited in the Reserve Bank of India or RBI and a grace period will be specified later.

Prime Minister Narendra Modi banned 500 and 1,000-rupee notes on November 8 with an aim to flush out black money and stop money laundering and counterfeiting of notes.

The move took out 86 per cent of money in circulation or Rs. 15.44 lakh crore. More than 13 lakh crores in old notes has already returned to the banking system in deposits, the RBI has said.

  Notebandi