Following the controversial demonetization drive enforced in early November by the Indian government, citizens holding “a large number” of now-outlawed cash notes beyond December 30 could be punished with fines and, according to some reports, even imprisonment.
The Union Cabinet of Indian ministers, chaired by Indian prime minister Narendra Modi who led the demonetization effort, convened on Wednesday to discuss penalties for holding old cash notes. An ordinance was passed, making possession, transferring and distribution of old 500 and 1000-rupee cash notes, a punishable offence, according to the Times of India.
More specifically, there will be fines ranging anywhere between Rs.5,000 and Rs.50,000 for “continued possession” of the demonetized cash notes.
Another report revealed that a four-year jail term was proposed for offenders during the Cabinet meeting, although there is no confirmation about the drastic measure yet.
At the time of announcing the sweeping demonetization run, Indians faced a December 30 deadline (today) to deposit demonetized cash-notes into their bank accounts or exchange them for new currency notes at any bank across teh country. Starting tomorrow, there will be a 3-month-window until March 31 wherein holders will be able to deposit the cash at Reserve Bank of India (RBI) branches.
According to Indian media house NDTV, Indians are allowed a maximum of ten banned currency notes, beyond which they will be punished with a fine of Rs. 10,000, or five times the total value of the notes found in the individual’s possession.
“With this ordinance, Prime Minister Narendra Modi and his cabinet have ended the liability of the government and the central bank on the banned notes to prevent future litigation,” the report added.
Bitcoin Booms amid Cash Crunch
The impact of the fiat cash squeeze has led to a significant increase in interest and subsequent adoption of bitcoin, as investors turn toward the cryptocurrency as a safe asset free from the shackles of governmental controls. In the weeks following the demonetization, searches for “buy bitcoin” swelled, while peer-to-peer bitcoin trading volumes reached all-time highs. It wasn’t long before adopters bought bitcoin at 35% premiums.