What is demonetisation?
It is an act of stripping a currency unit of its status as legal tender. Demonetization is mandatory whenever there is a change of national currency. In this process, the new currency unit replaces the old unit of currency which is retired.
Demonetisation in India
  1. For the first time in January 1946, Rs 1,000 and Rs 10,000 banknotes were demonetised. However, these two denominations were reintroduced in 1954 along with currency notes of Rs 5,000.
  2. All these three denominations were again demonetised in January 1978.
  3. The RBI more recently in 2014, had demonetised all banknotes printed before 2005.
  4. Rs 500 and Rs 1000 denominations are now being demonetised in 2016

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