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Get ready to replace your pre-2005 currency notes

As you may have read, RBI has decided to completely withdraw from circulation, the old series of bank notes issued prior to the year 2005. This is in line with its policy to phase out old notes from time to time.

Identification of such notes is pretty simple. The accompanying picture shows a note with the 'year of printing' at the back of note in the middle of the bottom row. This is a valid note. 

However, those notes which DO NOT have the 'year' printed on the reverse side are the ones that belong to the pre-2005 era and are supposed to be withdrawn from circulation.

In this regards, the action plan proposed by RBI is under:
Year printed on the reverse of notes after 2005

- Pre-2005 notes would be a valid currency and acceptable for all transaction only till Mar 31, 2014

- April 1st onward, you will have to approach the bank branches to exchange the aforesaid old currency notes. Banks will do this exchange on an ongoing basis

- July 1st onward, banks have to additionally obtain proof of identity and address if they are collecting more than 10 pieces of Rs.500 / Rs.1000 notes from individuals who are not their normal bank customers.

Since the notes printed from 2005 onward have many security features making them difficult to fake, removal of pre-2005 notes is expected to substantially reduce the risk of counterfeit currency notes. This, of course, is the general opinion as RBI has not specified any reasons per se for their notification to withdraw pre-2005 notes. 

Another speculation is that this is being done to curb black money. This has been denied by RBI, stating that such replacement is in the normal course.

All said and done, there is nothing to panic about. Even after April 1, these notes will remain legal tender and banks cannot refuse to replace your notes. Moreover, you have a 3-month "no-questions-asked" window from April to June 2014 to replace your old notes. 

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