The limit to exchange Rs 500 and Rs 1000 notes is Rs4000/person

The Dollar Business Bureau 

With the mad rush to exchange old Rs.1000 and Rs.500 notes, because of the demonetisation move by the government, chaos and confusion reigned supreme.  Many people who came to get their old notes exchanged were  under the impression, that the limit for exchange is Rs.4000 per person  per day. The limit as per the FAQs released by the Reserve Bank of India though is Rs.4000 per person . This limit will be in practice till further review by the Reserve Bank of India. 

In the RBI website under the FAQ section specifically given for demonetisation, in reference to a question, the reply says, “You will get upto ₹4000 per person in cash exchange irrespective of the size of tender and anything over and above that will be receivable by way of credit to bank account.” 

According to their Nov 8th notification wherein the subject of the notification was Withdrawal of Legal Tender Character of Rs 500, Rs 1000 Bank Notes the bank states, “the specified bank notes of aggregate value of Rs 4,000/- or below may be exchanged for any denomination of bank notes having legal tender character, with a requisition slip in the format specified by the Reserve Bank and proof of identity; the limit of Rs 4,000/- for exchanging specified bank notes shall be reviewed after fifteen days from the date of commencement of this notification and appropriate orders may be issued, where necessary.” 

This gives room for many who wish to circumvent the direction by visiting different banks under the same ID to exchange old notes for new ones as many times as he/she wants. 

When posed with the question about the loophole, a senior bank official of State Bank of India agreed that there is every chance that the loophole could be misused by those who could gain more than Rs 4000 by visiting different banks under the same ID or with different IDs. But since the Government has now proactively taken steps to monitor all the notes being deposited or exchanged in a bank, people who would have taken undue advantage of the system may in time come under the scanner.