The government is planning an ordinance or executive order to bring a new law 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.
The ordinance has to be issued before December 30, the deadline for people to deposit old notes that they are holding in their bank accounts, sources said.
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.
