The Specified Bank Notes (Cessation of Liabilities) Act, 2017
Administered Ministry: Ministry of Finance / Department of Economic Affairs
Act details
| Short title | The Specified Bank Notes (Cessation of Liabilities) Act, 2017 |
|---|---|
| Long title | An Act to provide in the public interest for the cessation of liabilities on the specified bank notes and for matters connected therewith or incidental thereto. |
| Act number | 2 of 2017 |
| Act year | 2017 |
| Enactment date | 27 Feb 2017 |
| Ministry | Ministry of Finance / Department of Economic Affairs |
| Department | Department of Economic Affairs |
| Jurisdiction | Central (Parliament of India) |
| Sections | 13 |
| Status | Not repealed |
| Last checked on India Code | 28 Oct 2026 |
| Source | India Code, Government of India |
Summary
Summary of the Specified Bank Notes (Cessation of Liabilities) Act, 2017
*Act Name: Specified Bank Notes (Cessation of Liabilities) Act, 2017
*Enactment: By Parliament in the Sixty-eighth Year of the Republic of India
*Commencement: Deemed to have come into force on 31st December, 2016
*Primary Objective: To provide in the public interest for the cessation of liabilities on specified bank notes (₹500 and ₹1000 series existing on or before 8th November, 2016) and related matters.
Key Provisions
1. Cessation of Liability: - Specified bank notes ceased to be legal tender as per a notification dated 8th November, 2016.
• These notes ceased to be liabilities of the Reserve Bank of India and lost the guarantee of the Central Government from 31st December, 2016.
2. Exchange of Specified Bank Notes: - Eligible Persons:
• Citizens of India who were outside India between 9th November, 2016 to 30th December, 2016 (with conditions).
• Classes of persons specified by the Central Government for valid reasons.
• Process: Tender within a specified "grace period" with declarations/statements at designated Reserve Bank offices.
• Outcome for Genuine Cases: Value of notes credited to a Know Your Customer (KYC) compliant bank account after verification.
3. Prohibitions and Penalties: - Prohibition: Holding, transferring, or receiving specified bank notes after the appointed day, with exceptions (e.g., up to 10 notes in total for individuals, more for study/research/numismatics, and for authorized entities).
• Penalties:
• For false declarations under Section 4: Fine up to ₹50,000 or 5 times the face value of the notes, whichever is higher.
• For contravening Section 5 (holding/transferring/receiving beyond allowed limits): Fine up to ₹10,000 or 5 times the face value of the notes involved, whichever is higher.
4. Corporate Liability: - Companies found guilty under Sections 6 or 7, along with responsible directors/managers, are liable for punishment.
• Provision for appeal against the Reserve Bank's decisions.
Legislative history
Legislative History:
The Specified Bank Notes (Cessation of Liabilities) Act, 2017
Short Title The Specified Bank Notes (Cessation of Liabilities) Act, 2017
Act Number / Year Act No. 2 of 2017
India Code Act ID 201702
Presidential Assent Date February 27, 2017
Enforcement Date Deemed to have come into force on December 31, 2016
Nodal Ministry Ministry of Finance (Department of Economic Affairs / Department of Revenue)
Precedent & Statutory Rationale
1. Formal Extinction of Central Bank & Government Liabilities:
o Legally terminated the statutory guarantee of the Central Government and the liability of the Reserve Bank of India (RBI) under Sections 26 and 34 of the RBI Act, 1934 for the demonetized ₹500 and ₹1,000 currency notes existing prior to November 8, 2016.
2. Prohibition and Penal Framework for Holding/Parallel Circulation:
o Imposed a strict legal ban on holding, transferring, or receiving specified high-denomination notes beyond permissible threshold limits post the designated cutoff period, penalizing violations to prevent the re-entry of unaccounted cash into informal channels.
3. Statutory Grace Period & Exempted Declarations:
o Created a formal mechanism permitting certain categories of individuals—such as Non-Resident Indians (NRIs) and citizens traveling abroad during the demonetization window—to deposit/exchange specified notes at designated RBI branches subject to verification.
Parliamentary Trajectory & Enactment
• Formulation: Promulgated initially as an Executive Ordinance on December 30, 2016, and subsequently drafted into a Parliamentary Bill by the Ministry of Finance under Finance Minister Arun Jaitley.
• Parliamentary Passage: Introduced in the Lok Sabha on February 1, 2017; debated and passed by the Lok Sabha on February 7, 2017; and subsequently considered and passed by the Rajya Sabha on February 9, 2017.
• Presidential Assent: Received formal Presidential Assent on February 27, 2017, entering the statute book as Act No. 2 of 2017.
• Enforcement: Retrospectively brought into operational force effective December 31, 2016.
• Source: India Code Official Repository and Ministry of Finance Official Records