The government is planning an ordinance to impose penalties on those found holding 'high amount' of the banned Rs 500 and Rs 1,000 notes beyond December 30 when the deadline to deposit them in banks expires.
Under the new law, possessing, transferring or receiving an amount of over Rs. 10,000 in banned notes will be a punishable offence.
The proposed ordinance has to be issued before December 30, the deadline for people to deposit old notes , reports say.
There was no official word on the move which is likely to come up before the Cabinet on Wednesday but sources said penalties may be imposed on anyone holding more than 10 notes each of the old currency after December 30.
The ordinance may also extinguish the liability of the government and RBI towards the promise to pay the bearer of these notes their value because of a statutory requirement.
In 1978 a similar ordinance was issued to end the government's liability after Rs 1,000, Rs 5,000 and Rs 10,000 notes were demonetised by the Janata Party government under Morarji Desai.
The government had while announcing the demonetisation of the old currency allowed holders to either exchange them or deposit in bank and post office accounts.
While the facility to exchange the old notes has since been withdrawn, depositors have time till Friday to deposit the holding in their accounts.
For those depositing any accounted funds, or black money, it has offered them an amnesty provided they paid 50 per cent of it as tax and penalties and parked a quarter of it in a zero-interest bearing deposit for four years.
Reports said that there could be a cap of holding no more than 10 notes of each after December 30 and violation of the rule could draw a fine of a minimum of Rs 50,000 or 5 times the amount in question -- whichever is higher, but there was no confirmation.
Holders of such currency have an option to deposit them in RBI by March 31 but even that period may be curtailed, they said.
Out of the Rs 15.44 lakh crore worth of 500 and 1000 rupee notes in circulation on November 8, close to Rs 13 lakh crore have been deposited in accounts or exchanged for valid currency.