Only govt can tell if note ban beat black money: RBI chief
The Reserve Bank of India (RBI) accepted the government’s proposal to recall ₹500 and ₹1,000 banknotes because it was getting “increasingly difficult” to differentiate between genuine and counterfeit currency notes, the central bank has told a parliamentary panel.
The demonetisation decision, announced by Prime Minister Narendra Modi in a televised address on November 8, had sparked a nationwide cash crisis and left millions queuing up for hours at ATMs and banks.
Though the government came under persistent attack from opposition parties for putting people through a harrowing time, the ruling BJP got a thumbs up in the recent assembly elections that were projected as a referendum on demonetisation.
In a note to the parliamentary standing committee on finance recently, the central bank quoted the government as stating in its reference that counterfeit notes were being used for financing activities such as drug trafficking and terrorism and withdrawal of high-value notes could be a solution to it.
“RBI, on its part, found that counterfeit notes of high denomination of ₹500 and ₹1,000 have been largely in circulation and it was becoming increasingly difficult to identify genuine bank notes from the fake ones. RBI saw an opportunity to put an end to the menace of counterfeit notes, particularly when the introduction of new design notes was in the offing,” the bank said.
HT has accessed the panel’s report.
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