'Guarantee scheme' back to deal with piles of Rs 500/1000 notes

MUMBAI: The Reserve Bank today said massive accumulation of now invalid Rs 500/1000 notes at various banks and chests is putting strain on processing capacities and storage facilities, while reviving its 'guarantee scheme' to deal with the problem.

The central bank said in view of the problem of mounting deposits it has decided to revive the Guarantee Scheme wherein banks can deposit the notes directly with the offices of RBI under whose jurisdiction they are located.

The notes will remain in the vaults of RBI, under the lock and key of the depositing banks till taken up for examination.

"As you (banks) are aware there is a massive accumulation of SBNs at branches of banks and currency chests putting strain on processing capacities and storage facilities. This is slowing down the deposit of accumulated SBNs into chests," it said through a notification.

Under the scheme aimed to decongest the storage facilities at banks, RBI will provide credit to their current accounts maintained with RBI.

Thereafter, if any shortage, counterfeit note, mutilated note, is detected during detailed processing at RBI, the value of the same will be recovered from the bank concerned.

The old Rs 500 and Rs 1000 have lost their legal tender characteristic from November 9. Holders of the currency have option to exchange them with new ones or deposit in bank accounts.