Throwback Thursday: Demonetisation in Bombay way back in 1978

Updated: Dec 29, 2016, 13:54 IST | mid-day online correspondent

India's previous experience with demonetisation was when the then President of India N Sanjiva Reddy promulgated the demonetisation of the Rs 1,000, Rs 5,000 and Rs 10,000 currency notes

 

A photo posted by Old BOMBAY (@oldbombay) onNov 15, 2016 at 1:27pm PST

India's previous experience with demonetisation was when the then President of India N Sanjiva Reddy promulgated the demonetisation ordinance on January 16, 1978, demonetising the Rs 1,000, Rs 5,000 and Rs 10,000 currency notes with the objective of eliminating "the possible use of such notes for financing illegal transactions."

 

People Waiting outside the bank for currency exchange 1978 #oldbombay

A photo posted by Old BOMBAY (@oldbombay) onNov 15, 2016 at 1:29pm PST

It was through the All India Radio’s (AIR) 9 am news bulletin that people were informed about the policy decision. It added that all banks and treasuries would be closed the next day, on 17 January.

Rs 1,000 and higher denomination notes were first demonetised in January 1946 and again in 1978. The highest denomination note ever printed by the Reserve Bank of India was the Rs 10,000 note in 1938 and again in 1954. But these notes were demonetised in January 1946 and again in January 1978.

Under the law all 'high denomination bank notes” ceased to be legal tender after January 16, 1978. There was a prohibition of transfer and receipt of high denomination bank notes. Plus, all banks and government treasuries had to send to the Reserve Bank the total value of high denomination bank notes held by it at the close of business on the January 16.

People who possessed these notes were given a week's time till January 24 to exchange any high denomination bank notes.

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