Ending Corruption Only Motivator For Note Ban: RBI

Responding to several questions raised on the decision to withdraw the legal tender of the Rs. 1,000 and the old series of Rs. 500 notes, Reserve Bank of India (RBI) Governor Urjit Patel today said that the motivation behind the decision was the increasing problem of high quality counterfeit notes in the old denominations and the ever-increasing caches of black money in the nation.

The RBI Governor said that the decision was not taken in haste but after detailed deliberations. There had to be a high level of secrecy surrounding the decision, and the fact was that such a large nation would indeed be taken by surprise when it 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 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 jeopardizing the achievement of the larger policy objectives, he added.

Disagreeing with the argument that the people in the nation were losing confidence on the new currency, Patel said strongly that demonetization was paramount to eliminating counterfeit currency, flush out black money and curb terrorist activities being fuelled by the Neighbour.

The RBI chief said that the currency note printing presses were working to their full capacity and all efforts were being made to distribute the notes to all parts of the country. In fact, during this period (from November 10 to December 5), the Reserve Bank had supplied bank notes of various denominations worth Rs. 3.81 trillion to the public.

Speaking about the 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, had 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 was more than what the Reserve Bank had supplied to the public in the whole of last three years, he claimed.

"We reiterate that there is 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, adequate safeguards and an increasing acceptability of this mode of payment by a large number of recipients," he added.