Responding to several questions about the decision to withdraw the legal tender status of the Rs 1000 and the old series of Rs 500 notes, Reserve Bank of India Governor Urjit Patel today said the motivations for the decision were to deal with the problem of high quality counterfeit notes in these denominations and unearth black money that may be held in cash.
The RBI Governor said decision has not been taken in haste but after detailed deliberations. There had to be a high level of secrecy surrounding this decision and the fact is that such a large country was indeed taken by surprise when the decision was announced. The Reserve Bank and the Central Government were conscious of certain immediate difficulties that the public at large could face and all efforts were being made to minimize them and mitigate them. The problems of the common persons were at the top of the policy-makers’ radar and all dispensations were calibrated to address them without at the same time jeopardizing the achievement of the larger policy objectives, he added.
Disagreeing with the arguments that the people in the country were losing confidence on the currency, Urjit Patel strongly felt that the demonetization decision was unavoidable to eliminate counterfeit currency, flush out black money and to curb terrorist activities being fuelled by the neighboring country. The RBI chief said the currency note printing presses were working to their full capacity and all efforts are being made to reach the notes to every part of the country. In fact, during this period (from November 10 to December 5), the Reserve Bank has supplied to the public banknotes of various denominations worth Rs 3.81 trillion.
As regards lower denomination notes of Rs 100, Rs 50, Rs 20 and Rs 10, Urjit Patel stated that the RBI, over its counters and through bank branches all over the country, has supplied 19.1 billion pieces of denominations in this period. (Rs 100 – 8.5 billion, Rs 50 – 1.8 billion, Rs 20 – 3.1 billion and Rs 10 – 5.7 billion). This is more than what the Reserve Bank had supplied to the public in the whole of the last three years.
“We reiterate that there was adequate supply of currency notes and hoarding of notes helps nobody’s cause. We also strongly advocate the public to switch to digital payment modes given that there are several options, there are adequate safeguards and there is an increasing acceptability of this mode of payment by a large number of recipients”, he added. (NSS)