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IIF/PR/2016/ 10th November, 2016
" Ban on Rs. 1,000 & Rs. 500 : NOT to PANIC"
urged Prof. J.D. Agarwal
(Chairman & Professor of Finance, Indian Institute of Finance, www.iif.edu)

November 10th, 2016, IIF Delhi & G-Noida :

Prof J D Agarwal
I promise to pay the bearer the sum of One Thousand Rupees? Signed by Governor, RBI

Main Dharak ko Eik Hazar Rupey aada karne ka vachan deta hoon? Signed of Governor, RBI

Guaranted by Central Government?

(See the image of the Currency Note)

IIF Prof. J.D. Agarwal whole heartedly welcome the decision of the government announcing ban on Rs. 1000 and Rs. 500 to unearth black money, reduce corruption, curbing the use of counter fiet currency, and blocking the funding of terrorism and other activities including pumping in real estate and stock markets. It is indeed a bold and a very right decision. People should cooperate to bear inconvenience caused due difficulty in their daily life including on special occasions like Marriages, or emergency situation (being stranded on the road side, stations, bus stands or in hospitals)etc, due to non-availability of smaller currency notes.

But after the announcement of Ban on Rs. 1000 and Rs. 500 by the Hon'ble Prime Minister of India Mr. Narender Modi, an extreme panic situation has emerged particularly after his announcement that the currency of this denomination is reduced to a piece of paper after midnight of 8th November 2016. People in general, disheartened and extremely worried about their holdings of these currency notes are burning currency, or treating these notes like garbage or spending in distress. In Prof. Agarwal's opinion there is nothing to worry about their holdings. As a holder of these currency notes, you have right to get other valid currency in exchange from Reserve bank of India, through various banks under RBI?s control or recover it from central government- the guarantor of these currency notes.

The currency note of Rs. 1000 & Rs. 500 with you is a promissory note issued by the Governor of Reserve Bank of India. It is guaranteed by Central Government. It is the duty of the Governor of Reserve Bank of India to replace your Rs.1000 or Rs 500 with equivalent valid currency of other denomination. In any case the if Reserve Bank of India does not do it, you can ask the Central Government to give you the equivalent value of this currency as it is guaranteed by the Central government. A guarantor (central government in this case) cannot withdraw its guarantee given to these currency notes. The following promise does not say that you are to be holder-in-due course. At most various departments of the government can ask for the source of money which you exchange or deposit in your bank account.

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Indian Institute of Finance

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