In what appears to be an attempt to curb black money and fake currencies, the Reserve Bank of India (RBI) on Wednesday decided to withdraw all currency notes, including ₹500 and ₹1000 issued prior to 2005.
"After March 31, 2014, it (RBI) will completely withdraw from circulation all banknotes issued prior to 2005. From April 1, 2014, the public will be required to approach banks for exchanging these notes. Banks will provide exchange facility for these notes until further communication," said RBI in a statement.
The Reserve Bank further stated that public can easily identify the notes to be withdrawn as the notes issued before 2005 do not have on them the year of printing on the reverse side.
The apex bank also clarified that the notes issued before 2005 will continue to be legal tender and banks are required to exchange the notes for their customers as well as for non-customers.
However, non-customers will have to furnish proof of identity and residence to the bank branch in which she/he wants to exchange the notes from July 01, 2014 to exchange more than 10 pieces of ₹500 and ₹1000 notes.
RBI has appealed the public not to panic but to actively co-operate in the withdrawal process. It didn't give the reason for the move but it seems to a measure to curb black money and fake currencies from circulation. The added security features in the currencies issued after 2005 could help check fake currency menace.